Getting Your Debt Snowball Rolling!

Hi Friends!

I hope you have enjoyed “Debt Free Week” here on the blog — there is so much information to share and it has been tough to get it all out there!

Monday: Steps to Financial Freedom

Tuesday: Budgeting and Paying off Debt

On Tuesday I explained how to set up your budget (Matt commented to me yesterday that is a great resource — and it is! Jason and I recently started using that program — check it out!) With your budget, you are able to see how much money you can throw at your debt snowball. Today I want to share some other ideas on how to scrape up some money to throw at your debt, or to put into savings!

I’m going to do my best to include all that we did, but bear with me since we did most of this almost 2 years ago. I’m including some options that we thought about, but ultimately didn’t do. Maybe they will work for your situation. Also, all of our debt was credit card debt. But I think the same advice would apply if you have student loan debt, car loans, etc.

1. We stopped using credit cards. We took them out of our wallets and cut them up.

2. Demand lower interest rates on your credit cards.

Jason called the credit card companies and got them to lower our interest rates. He had to talk to about 5-6 different people, but he kept at it. He called the 1-800 number on the cards and kept saying “I want a lower interest rate. If you can’t help me, get me someone who can”. He wasn’t rude about it, just firm and to the point. He explained that we want to pay our bills, but the interest is too much and our payments aren’t making a dent in the balance. He alluded to the fact that we might not pay them at all since the interest was so high. Two of our credit cards were with Bank of America – they lowered the interest from 18% to 4% on both of the cards. In doing so, our payments went from $900/month (for 2 cards) to $450/month. I’m not kidding. (we stopped using the credit cards anyway, but that was part of the “deal” — that we could no longer use the credit cards and our payments had to be taken directly from our checking account)

3. We started using a zero-based budget (see this post)

Also look at what you are spending most of your money on. We were spending too much on restaurant meals, so that was an area where we could definitely cut back on. The other big money pit for us were our car payments. Last year we traded in Jason’s truck for a smaller car. Our payment for the truck was almost $500/month, and the car payment is under $300 — so that saved us some money. Plus the gas mileage is waaaaay better than what the truck got. We were able to shave hundreds (yes, hundreds!) off of our gas budget from doing this. Obviously this may not work for everyone, but it was a smart decision for us.

4. Garage sale. Sell stuff!!!

We had a huge garage sale and made over $1000 from doing the sale on 2 weekends. This was a lot of work but it was so worth it. We basically went room to room and looked at what we absolutely NEEDED. Anything else got thrown in the garage. I advertised on Craigslist and made really nice bright pink signs that I put all over our part of town. It was a big success. We have also sold a ton of stuff on Craigslist – it takes time to put up the posts, call/email people back, etc, but it worked great for us. We sold furniture, computer equipment, old cell phones, dishes, etc.

5. Switch from Whole Life Insurance to Term Life Insurance.

I don’t feel qualified to explain why you would want to do this, but we read about it in TTM and talked to our insurance agent. In doing this, we lowered our insurance payment by a good amount, and we were able to cash out the $3000 we had in Jason’s Whole Life Insurance policy. Again, talk to your insurance agent if this is a good choice for you. We were able to take that $3000 and make a big payment on the credit cards.

6. Look at your bills!!!

We switched to a different cell phone plan and saved some money. We looked into ways of cutting our electricity bills, cable bills (get rid of it!), internet bills, etc. Do you get magazine subscriptions? Cancel them. Do you belong to a gym? Can you switch to a cheaper one? We switched from a $70/month gym to a $25/month gym – sure it isn’t open 24 hours but we don’t need that. Plus I get $20 reimbursed through my health insurance if I go 8 times per month. Hello we pay $5 for our gym membership! This part takes time — but look at your bills and look at your subscriptions — what do you truly NEED and what can you get rid of/cut back on?

7. Stop spending.

Seriously.  This irritated me to even think about — I didn’t think we spent a lot on “stuff” —  but look at your bank statements, don’t get defensive and look at what you can cut back on. A friend of mine has told me that she didn’t think she was spending tons of money each month — but when she looked at her banks statements, she realized that she bought a $4 coffee 3x per week, ate out for lunch at least 2x per week and bought new clothes for work because she “needed” them. There is nothing wrong with buying clothes — but think about what you need. Once the debt is paid off you can spend more on clothes, but for now, make the sacrifice and pay off your debts. Jason and I didn’t have a lot of “stuff” that we had bought — it was lots of restaurant meals, food, booze, movies, etc.

8. Get a second job/donate plasma/etc.

We didn’t do these things. We focused mainly on selling stuff and not spending as much.

9. Give money.

It sounds counterproductive, but it was good for us to do. Dave recommends it – he doesn’t say who to give the money to, and it doesn’t have to be a church if that isn’t your thing. But give some of your money away. You set the amount. We started with $100 per month. It sometimes SUCKED to give that away, but it felt good. We donated it to different places: churches, Shriners hospital, a memorial for a local fallen police officer, etc. It felt good to have money set aside (sometimes we’d just stash that money away for a while) – for example, it felt good to give a few hundred dollars to the police officer’s memorial. If we hadn’t set that money aside we probably would not have been able to do that.

10. Save a little bit each month.

Again, we chose $100/month. That way, we could save for something “big” – a new TV, a new laptop, car expenses, clothes, etc. And you already have the $1000 emergency fund for things like car repairs, etc. But we wanted to save a little extra.

11. Any “extra” money?

Put it towards the debt: tax refunds, extra paychecks (some months we have 3 paychecks based on how the days fall), work bonuses, money gifts, etc.

12. Look for deals, sales, etc.

If you absolutely need something, shop around — read reviews online, ask your friends, and ask yourself if you truly “need” that item. Sorry if this sounds really silly, but this helped me tons!

Reading some of these suggestions in books and online made me honestly very upset — it was hard to look at what we were doing because I didn’t realize how we were KEEPING ourselves in debt. Remember, the suggestions above are for people who want to scrape up more money to pay off debt or put into savings — this is not a list of things that everyone should do because we did it. You need to do what is best for you — everyone has a different situation. I just wanted to share what worked for us!

Any other questions? Email me! couchpotatoathlete (at) gmail (dot) com.

Tomorrow I’ll wrap all of this info up and Friday I’m having a giveaway 🙂

25 Responses to “Getting Your Debt Snowball Rolling!”

  1. Matt @ The Athlete's Plate Says:

    I actually only use my credit card to make purchases, but I have always paid it off in full every month. I’ve never paid $.01 in interest! I like the rewards 😉

    My dad is a CPA and told me NEVER get in debt. It is pretty much engraved in my brain.

    Thanks for this post though. I really do need to manage my money a little better.

    • Holly Says:

      Matt that is great that you pay it off every month! I just fell into the trap of not paying it off in full for a few months and the interest started racking up. That is where it got out of control for me.

      My parents also use a credit card for EVERYTHING and pay it off EVERY month

  2. Hollie @ Lolzthatswim(andRun) Says:

    I love that you emphasize the importance of giving money away too. These are such good and informative blogs Holly.

    As a college student, I like to leave my credit card locked away so that if I don’t bring it everywhere…I can’t use it.

  3. 1970kikiproject Says:

    once again, this post shines, holly!! your tips are all suggestions that are not “rocket science” or leave me scratching me head, thinking “what does she mean by that?!” – every point is something that is do-able.
    i really like paying cash. it’s a once-n-done approach, and find it so easy to keep track of how much i’m spending.
    thanks, too, for including giving to church or to charities. it doesn’t seem like a “waste” when you give to something that is close to your heart.
    looking forward to tomorrow’s info!

  4. Beth Says:

    Wow I’m so impressed Jason got the interests lowered on the cards just by asking!! My interest rate was 24.99 on my BofA card, and I called and they lowered it to 20.99 but that’s still SO high. I’m going to call them again today!

  5. Sarena (The Non Dairy Queen) Says:

    Thank you for sharing all of this Holly! It is always a great reminder.

  6. Dorry Says:

    Your tips are so great! I know your experience will really help other people.

  7. Toni Says:

    Your absolutely right that the credit card companies can lower your interest rate. They often say they can’t but I know they can – we also argued with them and got them to cut it down. Makes a huge difference in your monthly payments!

    • Holly Says:

      Good for you! I’m glad you got those rates knocked down — we figured we had already paid an arm and leg in interest that they could at least lower those rates. I’m sure we’ve still paid them PLENTY of interest all together.

  8. Lisa @ Thrive Style Says:

    This is so inspiring! I’m not at a debt reduction phase, but I would love to save more money. I can’t seem to focus on it—and I just always see “what’s left” and throw it into savings, but I bet if I did some of these things I could make it add up much faster!

    I’m totally intrigued by the donating plasma thing! I once considered donating eggs, until I found out what it entailed…thanks for another great and informative post!

  9. the neurotic yogini Says:

    Another great, highly informative post! Thanks again Holly!

  10. Amykinz Says:

    Thanks Holly! Not sure if you came up with these on your own or if it will be covered in Financial Peace University, but either way, I hadn’t heard them yet! We just completed our first budget for April. It’s going to be tight (with no room for giving yet) 😦 but I’m confident we an do it! All your suggestions are so practical and things I can totally see us doing to help get that debt gone faster, so that the giving & saving can take place sooner!!! Thanks for sharing! P.S. I hope you’re getting some “extra” traffic – I’ve been posting links to your posts on my Facebook page! 🙂

    • Holly Says:

      Hi Amy!

      Yes I have gotten a few hits from Facebook — and I didn’t know where they were coming from! 🙂

      Some of the ideas I mentioned in the blog are things our group came up with in our FPU class, and some are from Dave (the life insurance one for sure!), but some we came up with on our own.

      Our budgets were TIGHT for a few months, but after a while we got the hang of it and found more ways to cut expenses. You’ll get it in no time.

      When do you start FPU?

  11. Katherine: Unemployed Says:

    whoop whoop giveaway. I’m stopping spending money without keeping track of it. I’m super frugal but I still think it’s good to get a visual on the expenses

  12. Averie (LoveVeggiesAndYoga) Says:

    I love that you shared all of this, Holly!

    Stop spending – common sense, but people apparently can’t very easily 🙂

    Garage sales/craigslist/ebay – when I wasnt working and was a new mom and we had bills and needed cash, I sold TONS of my nice-ish clothes on ebay by the lot. Like 5 sweaters for 50 bucks. I wasnt going to wear them anymore and altho it’s a PITA to deal with it, if you need money, you need to get creative.

    Selling plasma, lol. I know men and women who have made TONS of money selling other things, ahem. 🙂

    • Holly Says:

      Thanks Averie!

      Yes you are my Craigslist guru — you gave me the suggestion months ago and I’m so glad you did.

      I’ve heard you can make a good chunk of change for selling your eggs, but that is not a road I’m going to travel 🙂

  13. bakebooks Says:

    Great info. Yeah, it’s rough – I’m reading through a book by David Bach now and when it comes to the student loans – he talks about how you should really think about if it’s worth it to go into debt.

    My biggest regret. All those years of school – and I hate my profession and work – but that’s what’s got over $140,000 in debt. It’s heartbreaking. Just think of the money I could be saving!! Or I could explore work I might actually enjoy…

    Yep. Blows. And your right – you just have to face up to it.

    Sad thing is – I actually don’t buy clothes, coffees, eat out, etc!! And I work an extra job. So I’m doing what I can. But the amount I owe is so great that it’ll still take years – 15 at least to pay it off.

    What about a vacation?! I need one…

    Thanks for your efforts doing this as well. Amazing – are you being paid? 😉

  14. Living Debt Free Wrap-Up « The Couch Potato Athlete Says:

    […] Getting Your Debt Snowball Rolling! […]

  15. Sara @ OurDogBuffy Says:

    Very helpful, Holly. We cut up our credit cards and three of them are actually on a debt management program. They lower the interest rates through negotiations they make with your credit card companies. It’s working well so far. We cut back on eating out and things we didn’t really need. It is hard and sometimes we feel deprived, but it’ll be worth it in the end. It’s just so sad to see our paychecks go mostly to debt!

    • Holly Says:

      It is hard to practice the delayed gratification! But when you’re done with the debt you’ll be able to have things and not feel deprived. We had to remind ourselves of that all the time!!

  16. Christin@purplebirdblog Says:

    I am super impressed at how much he was able to get your credit card interest rates lowered!!! That is HUGE!

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