Admitting that we were way over our heads was one of the first steps that we had to take in order to put our financial in order. It is never easy a thing to do and it is frustrating, a lot of pride has to be swallowed to over come this hurdle. However it is totally worth it. Once we admitted that we were in over our head we put together a plan that would set us up for success.
Here are the steps that we took to get to where we are today:
1. Find a way to increase your income whether that is working more then one job or trying to get a promotion or starting a side business. I was able to find a job that massively increased my pay and my wife was able to stay home to take care of my son. It also allowed us to put away some money for a rainy day and start paying into our debt.
2. Decrease expenses. Yes this is easier said then done, but whether it is selling the expensive car you have for a cheaper one or moving further from work for a cheaper house do it. I read about cutting out drinking coffee from Starbucks, if you are drinking nothing but high end drinks sure but if you just drink coffee…I don’t know that is personnal preference. What we did was move in with my parents in law (yes this not for every one but it definitely helped pay down a lot of debt). My wife also learned how to cut my hair (although she still would get her hair cut professionally).
3. Look at where you want to go or in other words set goals. Whether its paying of all debt, buy a house or what ever. You are in charge of your own life. My wifes and my goals were to pay of our debts and have 2-4 months of living expenses. Also it would be great to have my wifes student loans paid off. In the next article on digging yourself out of a hole I will address where I am. It is a lot further then I thought I would be. Oyeah, the number one goal I had was to have over 100,000 in assets by the time I am 40. Am I almost there, just wait and I will tell you.
4. Read about finances. I don’t know how many blogs and financial books I have plowed through in order to figure out what I should be doing with my money. You don’t wake up one day knowing how to pay of debt or how to invest, this all takes time and diligence. I recommended Dave Ramseys website and books. Once you start that you can always do searches on Google that will give you advice on how to pay of debt and invest.
5. Be willing to sacrifice, but don’t be martyr. Many people who think that paying of debt essentially means cutting out everything are going too far. Yes it will hurt to pay of debt however does all the fun have to end? No. You can still go out to eat on occasion. You can still have your coffee however it is all with moderation and budgeting.
This is what my wife and I went through to get to where we are today. One last point I forgot to make, write down where you want to go and do it every month until you get to the place where you want to be. I will continue writing more about these events and where we are today.