Apparently I’m not the only person in the world doing crazy things with their finances. A fellow entrepreneur (and local supermodel) in the little town I live in got herself out of debt in 14 months – over $18k – by taking control of her finances with little tips and tricks she learned listening to audible finance books.
I was intrigued and wanted to learn from her to find out what I could do better this year in the financial department. The financial spending freeze isn’t enough, I needed real tips and tricks to get the most bang for my change this year.
I’m in complete awe of what Kristy has accomplished and I hope you find it as valuable and inspiring as I have.
Wow! Looking back at everything I was doing at the time I didn’t even realize how dedicated and driven I was. I made lots of sacrifices, but looking back I do not feel like I missed out on anything fun. Because of all these sacrifices, I paid everything off way earlier than planned! (Paying off $18,300+ in 14 months)
Hope the tips and tricks below helps! The majority of this info might sound like common sense, but all the little amounts I saved over a year’s period made a really big impact.
#1 I created a budget.
And I stuck to it like my life depended on it!
Here’s the resources that helped me budget!
I love listening to audibles while running, driving, cleaning the house, etc..
These audibles were recommended to me, they did have a TON of tips:
“Millionaire Next Door” by Thomas Stanley (how to accumulate wealth over your lifetime)
“Money Master the Game” by Tony Robbins (7 steps to financial freedom) This book took a while to get to the point, but I did learn tips for the future in terms of investments, as well as how to pay off mortgage faster.
“Minimalism” by Joshua Fields Millburn
How to eliminate material excess things, instead begin focusing on life’s most important “things”: health, relationships, passion, growth and contribution.
“Rich Bitch” by Nicole Lapin. She is a news anchor…and she is kind of intense, but aside of the foul language, she has many noteworthy tips. For example: like what percent of income should be spent on essentials, savings, mortgage, car, etc..
This is also where I learned how I could negotiate my credit balance (more on that below),etc..
Main thing that helped my budget was dividing my spending into two groups.
a) “Groceries”, b) “Other”
a) “Groceries”. Setting a limit on groceries helped tremendously…I didn’t realize how much I was spending on random foods that ended up wasted. More on groceries/meal planning below.
Groceries include anything consumable: food, trash bags, diapers, deodorant, shampoo, laundry detergent, cleaners, vitamins, etc…
Standard budget amount for groceries is $100 per person in household. And yes, a baby counts as their own “person”. I, however, gave myself a couple extra hundred dollars for groceries because I do shop for organic foods. So instead of a $400 grocery budget for my family of 4, I gave myself a $600 budget. That was even tight considering I was used to spending around $800+/month on groceries….yikes..I know. Meal planning helped a lot though (more on the app I use below)!!
Note: One thing I do not cut quality on are groceries. That drove my husband crazy when money was tight, but maintaining a healthy lifestyle is very important to me.
The grocery budget was the hardest for me to stick to so I’ll admit, I think I went over budget almost every month on groceries….but at least I was aware of it. I’d have to “take” money out of my “others” budget..often, ugh.
b) “Other” includes everything else. I set this budget at $200 ($50/wk). This category includes eating out, date night, hair cuts, clothing, kids activities, etc..And yes, that is tight too..eeek.
#2. I cut up all credit cards, literally.
I paid for everything in cash/debit. (Trust me, they will send you new credit cards because they’ll notice your inactivity.) Just put them somewhere safe in your home, just not in your wallet.
Note: I do not suggest closing your cards, just cut them up until debt is paid off, then afterwards start using responsibly enjoying your cash-back rewards.
Other money saving tips:
Saving money on groceries.
I use a mobile app called ibotta.com. You can find my referral link for ibotta here!
This is a FREE app that pays you for shopping and buying products you already buy. As soon as I come home from the grocery store, I pull up the app and scan whatever products I purchased that have a rebate available and then scan my receipt in. It takes all of about 5 minutes or less, Beats coupons..I don’t coupon. Also check out Checkout 51 as another grocery saving app.
We cut out boxed items. Nothing individually wrapped (applesauce, yogurt, raisins, etc.) opting for the larger containers. Then dividing into smaller containers from home for school lunches.
Cut out flavored drinks (juice boxes, Capri suns, etc). The options at home were only milk or water.
Water only on the go. No plastic water bottles. Thermos’ only.
Buy “in season” organic produce. Out of season foods, say goodbye. Too expensive. You can find a list of in-season foods online. Paying special attention to the “Dirty Dozen” and “Clean 15” to know which produce is the most important to purchase organic due to high pesticide exposure (again, you can look up these lists online).
THIS helped us save a TON of money – eMeals.com and Dave Ramsey approved!
Choose your Meal Plan, select the meals you want for the week, cook and enjoy! This app includes recipes, shopping list (by grocery store!), & cooking instructions. It comes out to be about $4/month. They even offer “Budget Friendly” meal plans. WORTH IT.
No more, “what do you want for dinner?”. No more wasted food. No more frequent stops to the grocery store throughout the week.
Gifts. Birthdays/baby shower/Christmas/etc.
I have been using Swagbucks for about 6 months and have bought several gifts online for FREE. Try using this as your search engine for shopping online since you earn more Swagbucks leading to more free cash/giftcards…trading in the SBs for amazon gift cards.
Savings account: (at the end of the month I turned this into an extra credit card payment)
I was weary at first, but it’s a FREE savings account designated to be out-of-sight, out-of-mind.
It analyzes your income and spending, and finds small amounts of money it can safely set aside for you. Every 2 or 3 days, Digit transfers some money (usually $5-50) from your checking account to your Digit savings. They do not transfer more than you can afford, so you don’t have to worry about over-drafting your account. In fact, they have a no-overdraft guarantee. They also allow unlimited transfers, with no minimums, and no fees. Pretty cool.
I scaled back on monthly expenses.
For example: we quit using paper towels, we use small rags/wash cloths instead. I do a load of laundry every day, so we just throw them in the wash. That saved us about $20/wk alone I think!
Tip: Write out a list of ALL your extras and cut whatever items you think you can do away with for one year. (Think…kid’s gymnastics, gym membership, pedicures, cable, etc).
I cut my gym membership, chick-fil-a, coffee shops – made it at home instead, etc..
I made a significant amount $ selling things that just sat in our garage and house that we no longer liked/needed anymore.
For example: We sold…
Furniture, Rugs, Kids Clothes, Home decor…Among other things.
Each sale I made I put the money aside and at the end of the week I immediately sent to credit card company as an extra credit card payment. I needed the money out of sight or else I’d just spend it on a coffee or Ice cream for the kids, etc…
Often times I would make 4-5 credit card payments each month, some payments as little as $5-$25.00.
Track debt progress:
App: “Pay Off Debt” (when searching, the icon pic says “PAID” in blue and white) It does cost money. I think $5.99 (it was worth it to me). I became very competitive towards myself and felt that sense of satisfaction and excitement each time I made an extra payment and watched the “Estimated Time Left” date get smaller and smaller which encouraged me to move even faster!
Negotiate debt balance.
Try a settlement.
Believe it or not, you can negotiate debt balance. I did this just recently with my last credit card balance of about $5700. I got it reduced to 75%, paid it in full for about $4200.
It wasn’t easy. I called SEVERAL times and got denied.
Then they finally said they could do 80%, but I wanted 75%.
Called a couple more times and Saturday, Feb. 18 they finally accepted my request. Otherwise it would have taken me 11more months to pay off remaining balance saving me around $4,000 in the end because of eliminating interest and reducing balance by 25%.
If you do this, be prepared to pay the money right then and there! However, it’s standard to pay the settlement balance over a three-month period.
What to do with your TAX RETURN:
If you can, put the ENTIRE amount towards debt. Act as if you never received a $ return. Again, out of sight, out of mind.
I unfortunately do not have that “luxury”. With my business, I OWE taxes as an independent contractor. However, my husband, on the other hand, receives a tax return each year.
As for the settlement payoff of $4,284 It was actually perfect timing because my husband had just received his tax return days prior to the settlement which is why I was able to go through with it.
I don’t count the money I “borrowed” from him as debt per se, but I am paying back my husband now (0% interest 😛 ). Currently I owe him $1,100. That might sound really crazy, but we have separate bank accounts, we always have. And I am the one that got myself into this mess so I agreed to dig myself out.
Negotiate credit card interest rate.
Ask for a lower interest rate.
Didn’t work for me, but it has worked for others.
Increase credit score: by eliminating debt.
Trick: Call credit card companies and ask to extend your credit limit. Only for credits score leverage purposes, remember you are not charging anything to these cards! You’ll have a lower debt-to-limit ratio which makes your credit look better.
You do not want debt balance to exceed 20-35% max of your total credit limit. So, the higher the credit limit, the lower your debt balance looks in terms of percentages if that makes sense!
I often times would do a one week freeze…
Meaning, for seven days no eating out, no Redbox/Netflix rentals, no gifts…no extras, not even gas or groceries. We got creative with meals by digging through the pantry, fridge and freezer! Exceptions: emergencies, or a bill due.
Calculate whatever you would have spent that week normally, put that $ amount towards debt/ or savings. If you have debt, I recommend debt over savings at this time!
I exchanged walking my neighbor’s dog for free babysitting for date nights.
I only got one haircut last year. I would have done that anyways, I’m pretty low maintenance?
I quit pedicures.
I quit the gym. Instead I ran outside and did 100 pushups a day (still do). Sometimes I’d treat myself to a gym class.
I have been referring customers to a consumer packaged goods manufacturer for 3 years now. It’s like a Procter & Gamble/Johnson & Johnson manufacturing company except their niche is healthier and nontoxic.
This has allowed me to make an extra $500-$1,000 credit card payment each month.
If you want to see me in action, how I drive consumers to their storefront, how they pay me for customer referrals, how I educate consumers on how to shop wellness on a budget, and how I teach others how to make make money from customer referrals too, tune into one of my weekly live webcasts.
Personal decision..after a while I decided to put a hold on contributions until debt balance was paid off. The amount I would have been tithing, I gave to my credit card company instead. I understand that was a personal decision I made that you may not necessarily agree with. I prayed about it a lot! I just knew I would be able to give more once the debt was paid off. In exchange I donated my things and my time instead.
Back to tithing 10% income now.