How to Pay Off Debt Without Sacrificing Your Lifestyle

  It reminds me of a client. They had a bunch of debts. And so what we did was we put kind of line items in their debt tracker. And every time they hit a milestone, They would go on a fancy dinner together. So it was super fun for them to have a goal and a vision in front of them for them to like hit it and then celebrate.

Yeah. And we had another client one of our very good friends, Becky. She, every time she paid one off, she had to go to Starbucks. That was her little reward system for herself. And because she kind of cut that from her budget in order to get out of debt. And then we have the clients I was just talking about.

They. Increase their spending money a little bit, like 25 or 50 every time they paid a big debt off. So so that was their way of rewarding themselves. And that’s what we want you to do. Reward yourself, celebrate these wins. It’s not, you know, it’s not a life sentence. It’s, it’s, we’re still living life.

We’re still having a good time. We’re still excited and celebrating. You’re just in a season. Like this is a season right now of whatever you’re going through and you want to get out of it. So that way you can get back to living your lifestyle. So that goes into the next point, guys, create a plan to pay off your debt based on your real life situations, whatever you have going on.

So if this month you have no birthdays, no events, no school parties, no nothing, maybe you get to put a thousand dollars on debt next month. Hey, maybe you have two kids that have birthdays and you have a festival going on. So you only get to put 500 on debt. That is okay. You’re still making progress. Yeah.

And it’s also, we don’t want it to just be, you don’t necessarily have to do the snowball. We’ll get into all of that. It’s. If you have a bonus, do what you want, you know, whichever one makes the most sense. And we’ll explain the different ways, but it doesn’t have to be this one, only this one way that you have to pay off debt.

One way or the highway and yeah, no, we don’t want that. And so what we’re going to, we’re going to talk about this. We’re going to hear us say it again and again, but we want you to swap the credit card for the debit card, right? This is the new way. This is the right way to pay off debt. We’re going to use our debit card.

We’re going to leave the credit cards. We’re going to crush them, like literally burn them, shoot them, fight, whatever you need to do to get rid of them. But the debit card is your credit card. And this alludes to being your own bank. Okay. You have the opportunity to have the money in the bank to pay for the things that you want.

You don’t need credit or any line of whatever to be able to do that with. You have your own cash, hard earned cash. Earned cash to be able to pay for things. And so yes, swap that credit card for the debit card and listen, don’t be fearful of using a debit card. I had a client who got their identity stolen, right.

But they were actually so thankful that we had them set up this stuff the way that we did, because it did not affect their bills account. It only affected their spending account. And there was only like a couple hundred dollars in there and their bank immediately paid them back for that while they were researching the dispute.

Right. So all of their bills got paid and they didn’t have to worry about it. And they still use a debit card. Yeah. And honestly, a lot of the debit cards these days have the credit card thingy on them. Anyway, I don’t know what the, like well, it’s like the logo, but the, or the little security security, so you’re going to get the same protections that way anyway.

And then the other thing is and we teach you about this with how to do your budget is you’re going to track this as each month. We’re going to update the jet trackers. We’re going to see. The, the debt dwindle as you go, as, as, as it drifts away because you’re paying it off. You’re going to keep your eyeballs on it.

I think Shana, you said that when you guys paid off your debt, one time you wrote it. Did you write it on your bathroom mirror or did you have a paper? We had a paper because I’m, I don’t know if I could deal with that, but we had a paper. And on one side, it was the amount and the other side was the date.

And we would just cross through, write the new amount, write the date. And it would be something that we could keep it front and center. So you can do it that way. You can use your debt tracker either way. Use your debt tracker and print it. It’s really pretty. Yeah. And you can just watch the numbers go down.

Okay. So Shana, all of this is amazing, but how, how do we do this? How do we create a get out of debt plan? Your good plan? Well, you have already heard us talk about how to So, you’re going to want to set up your simple budget, right? We’re all about that five column simple budget. That’s what we’re here for.

One page. One page, simple, five column budget, right? So you have to set that up first. That’s imperative, right? And then, but that part’s done, you’re already there, so now we’re going to move on. Yeah, that’s so easy. And it’s, ours just makes it so simple and so pretty to be able to want to do too. Alright, so step two.

You Cut up those credit cards. Y’all close those accounts and start paying with cash. Okay. If you’re thinking, I don’t want to close my credit cards because I’ve been with this company for 10 years. Nobody, it doesn’t matter if you’re not buying a car right now and you’re not buying a house or buying land, close those cards.

Yes. Maybe your points will go down for a month and they’re going to go right back up that next month as you continue to pay on debt. Right? So don’t worry about that. That is small minded thinking. Cut up the cards, stop using them, close the accounts and move on with your life paying in cash. Yeah. And I think, you know, sometimes people have to like baby step toward this.

I mean, at very minimum, if you’re really committed to getting out of debt, you’ve got to take those out of your credit card. You’ve got to remove them from any way to pay. That’s like even first, like step one, take them away from your ability to pay. Then usually they eventually get on board with cutting them up once they start seeing progress, especially and then once you pay them off You’re gonna close them like Vanessa said either you already have Mortgage or car payment that’s that’s quote unquote helping your credit score, which by the way, we just told you we don’t care about But if you if you already have those those are better debt anyway And you don’t you don’t need to keep playing that game so you can close them and be fine with it Yeah All right So step three it lists out all of your debts from smallest to largest Including all the balances and minimum payments the due dates the interest rates all of that We want to See it all on paper.

Okay. Yeah. And so you’ll see, this is exactly how we have you do it in our, our simplified budget system. On the debt tracker, it’s exactly that. You’re gonna have the name of the debt, then you’re gonna have your current, your original balance, and then your current balance. ’cause that’s gonna go down. It’s so exciting.

And you’re gonna have the interest amount. Mm-hmm . And then debt, and then the minimum payment. And that is gonna allow you to see it all at once. And it might not be that much fun. Not gonna lie, it’s not gonna be that much fun. But once you have it all on one piece of paper. Then you’ll be able to see, see it for what it is and really start to attack it.

Well, what I think is fun is that when you type that information in Shana on our debt tracker, it makes a beautiful pie chart. And it’s very colorful. It is so pretty. But guys, it is, it’s the first step of just like owning what you have going on. And we do like to list them smallest to largest because there is something to that when you, when you can kind of go, okay, this is only 300 bucks.

This is only 500 bucks. I can tackle that. I can take care of that. And then of course you get your mortgage and maybe your car payments and student loans at the bottom. But really being able to visualize what you have going on and going, taking a deep breath and like, all right, I got this. And that, like that has a sense of ownership in it.

And on our debt tracker, it’s so pretty cause it allows you to say, Hey, when am I starting this? It has my start date. And you can put in any extra minimum payments that you’re making on debt. And it does all the math for you to show you when your payoff date is. Yeah. So you’re going to use your budget.

So remember in step one, you set up the simple budget. You’re going to use that to show you how much extra you can pay toward toward debt each month.

And this is important because we want you to pay. So that should be a step. Which one? Pay it on, so we can use that for that. Pay it on payday. So, we’ll use the paycheck plan. Oh, yeah, use your paycheck plan to pay it on payday. So, you’re going to use your budget. It’s going to show you, right, after you do your income minus your debt minimums, minus your bills, minus your spending, and whatever savings are necessary.

You’re going to see that number. It’s going to tell you what’s extra each month. That number is going to be part of your payoff plan, right? You’re going to use that each month. each payday to pay extra on debt. Remember we said before, we’re not letting it dwindle. Oh, I think there’s some extra money. I’ll just do it.

We’re going to on payday, according to your paycheck plan, you’re going to pay off that amount on debt each month. And I love how you said on payday, because you know, if you’re new at this, allow yourself a buffer. Like I had a client session this morning and they put a 200 buffer in their budget for the, just in case this is what I forgot.

Oopsie, kind of column, the miscellaneous section. But after that, you shouldn’t really need any more than 100, 200, a buffer on your budget. So anything extra, take that money. If it’s 1, 000, y’all, I can do math. Watch this. If it’s 1, 000 that you have extra at the end of the month, you do 500 on your first paycheck, 500 on your second paycheck, and voila, by the time the month is over, you have now put 1, 000.

on that debt. Because if you wait until the end of the month, like we said before, it’s not going to happen. So do it purposely on payday. Yeah.

 And so what you’re going to do to figure out how to do that, right? Which debt do I tackle is, you know, in our debt, in our simplified budget system, we have each method that we sort of, we kind of go back and forth with our clients.

There’s three different methods, the snowball method, the avalanche and the minimum payments. So snowball is that traditional classic Dave Ramsey method. Pay the first one off, use that minimum payment that you were doing to put that toward the next debt and then pay off that debt and keep going and snowball gets bigger every time, right?

That’s one way to do it. And that might be where you start off, right? That might be like your go to fallback regular debt payment method. But there are other ones. Well, I think it’s just the most popular. It’s the most popular. I think it’s the most talked about. It makes the most sense. Yeah. For many of you, you are going to have avalanche moments or minimum moments, right?

So what that, what that means is, okay, I’m getting a bonus of 12, 000. Okay. I could either pay off these little piddly ones, or I can pay off this one. That’s 10, 000. That’s going to take me a year to get to, but it has 20 percent interest. So I really want to tackle this one in this moment because I have this bulk amount of money right now.

And then next month, I’m probably going to go back to the snowball, but that is the avalanche method. And that is a different way. to tackle paying off debt. Yeah. So the avalanche method is when you’re tackling the one with the highest interest rate. And like Shana said, in that moment, because they had that bulk amount of money, it just made the most sense.

And then, and the way that we kind of caveat too, is that it can also be a bigger balance. It might not be like the biggest, it might be like on par with some of the other interest rates, but you’re like, I’m not, it’s going to take me so long to get to that. If I do the monthly way, I’m, I might just want to get that bigger balance one too, instead of going.

And we tell people, like, listen, if you have two debts that are one’s 5, 000, one’s 4, 000, but one’s 4 percent interest and one’s 20 percent interest, like, yes, let’s tackle the one that’s 20 percent interest because that 1, 000 is barely, it’s not big of a difference. We’re not sticking to that rule just because it’s a rule of interest.

We get to decide, you get to decide what that is. And then the minimum payment one, minimum payment method is to pay off your debt with the highest minimum payment. And the reason why some people want to do this is because they want to get that amount of money back in their budget. So if you have a car payment.

That’s 800 a month and you only have like 3, 000 left to pay on it. Like you may be, you may want to tackle that one first and pay that off. So you now get 800 back in your budget each month, each month. It doesn’t matter the interest rate. Like some people get so caught up on the interest rate amount.

There’s so much more to your debt tracker and so much more to focusing on which. Debt payment you should make with other factors. Well, and to be fair, and to be honest, a lot of times that, that might be the only method available to you because you only can come up with a hundred bucks every month extra, but when you have more, which most of you do, if you’re reading or you’re not reading it, if you’re listening to this podcast, That’s probably you.

You probably have a little bit extra. That’s why we want you to know you don’t have to do that particular, that snowball system only. You can be a good judge of your own money. There’s another way. There is another way. Yeah. Okay, so why is getting out of debt worth it, Shana? Like, what is the point? Why?

Like, oh gosh, this seems so exhausting. I’m not really sure I want to do all this. Like, what do you think? The debt is stealing your money every month. It’s just, like, imagine, and you don’t have to, I know you literally, this is happening, but you Imagine you’re getting a 3, 000 paycheck and 1, 000 of it you already know is going to a debt.

Like, that’s not fun. Nobody loves that. Yeah. So, and the other thing is your money should be funding your future, not paying for your past. And that’s what it’s doing. When you are sitting there making 1, a month on minimum debt payments a month, you are literally paying for your past every month instead of funding your future, which is all those fun savings buckets that we know you want to fund, that we hear people want to fund, Now they just financially can’t.

So that’s what we want to do. I want to focus on the future. And you know, we’re talking about why getting out of debt is so worth it. Imagine being your own bank. That’s where we’re getting to. We’re not relying on debt. We’re not relying on credit cards. You’re going to have, maybe you have 5, 000 in your pet savings account, just in case, you know, old Snookums.

I don’t know why that’s the name of your pet. You should probably get a better name, but in case something happens to old Snookums, now it’s Shmookums. See, it’s just really evolving. It’s getting better. But you could have that money set aside in case of something, instead of relying on credit cards or whatever, you’re going to become your own bank and that’s going to be for everything.

You’re not going to use credit card points to pay for travel because you have your savings bucket that is making you money over here that you’re using to pay for travel. That’s what we want for you is to be your own bank. And guys, the reality too is that the freedom of using cash to make these purchases is such a blessing.

Okay. It’s not a burden. So being able to have the cash and go, yep. Let me just swipe my debit card. Didn’t you have a client that was buying a new car in cash or a car in cash? And you said, Oh, yeah. Do bring a briefcase full of cash. That’s the only way to do it. Or she’s, well I know she swiped a debit card.

But it’s just, the fun thing is that you get to just swipe the card, debit card, or pay in cash, write a check or whatever it is, and know that it’s coming out of your bank account and you don’t ever have to pay that back. And the best example I have of this is when we went to Disney. And we had everything, remember, I’ve talked about it before, we funded the whole thing in cash and we had part of that was funding the spending money and imagine going through that trip and it all being on debt.

How does, you know, not me, because I love to spend money, but my husband, how does he react to everything that we do when he knows it’s going on a credit card? Right? That’s not gonna make you. Versus. Now, how does he react on Kraft Mac and Cheese still costing 15 when he’s paying cash? It’s still, it’s still questionable.

It’s not the best reaction. But knowing that it’s just, I’ve already got the money saved, whatever, buy another stupid snow cone, whatever. Like, it’s not. It’s such a different, like Vanessa said, it becomes a blessing to do these fun things in life. Then it becomes a burden where I know, okay, every time I see the register cha ching, cha ching, it’s like weighing me down, knowing I’m going to have to figure out how to pay for that later.

Absolutely. And you know, it reminds me of my client, Joe, you remember him? He was so fun. He came to us with a lot of debt and it was all travel debt. It was all vacation debt. I’m not even kidding besides his car. And he goes, listen, I’ll do this. I am not giving up my vacations. And I said, done. I said, however, I’m going to, I’m going to I’m going to do some backlash on that.

I said, but for every vacation you take from here on out, you have to pay cash for. So let’s make a deal. Yes, that was my deal. So he took about two years to get out of debt, but he didn’t care because he went on He had the best time of his life. He paid cash and he said, this is the first time in my life I’ve ever paid cash for a vacation.

And so he started that. We started a vacation fund for all future stuff, but he paid cash for all of his vacations. Plus he paid off all of his previous vacations in two years. And he just, I mean, he just, oh gosh, when he finished, he had everything set up, all of his accounts, everything.

He just loved it. Yeah. I loved it. I loved it for him. I know he did. Like, this is the best story. All you had was travel debt and all you did was pay for travel. Like, let’s go. Okay. Now, what we, so what we want you to know is you make too much money. To let debt control your life, to let it control your paychecks.

It’s telling your paychecks what they’re going to do instead of you getting to do that. Right. We don’t love that for you. Yeah. You can still enjoy your lifestyle while paying off debt. We’ve talked about that. We’ve given you plenty of examples of clients who have done that. It just takes a plan. Got to put it on a piece of paper and, you know, we, or, you know, our simplified budget system.

We also recommend that, but that’s all it is. It’s just, I want to spend money. I want to save money. I want to pay off debt. Put it on paper. Let’s do the math. It’s not, it’s totally doable. Yeah. So guys, again, you want, what you want to say to yourself is I make too much money to be in this much debt. I make too much money to be in this much debt.

It’s not worth it. Yeah. And don’t forget, we want you to swap the credit card for the debit card. Right. And as a fun little exercise to close this out. We want you to, you know, you’re, you’ve probably done all of this, but just go ahead, go look at your minimum payments, right? What, what are you paying in minimum payments and debt every month?

And we want you to think about what would I do with this money if I wasn’t having to pay them on debt? What could I do with this money? What could you invest in? What vacations could you plan for? How much Lululemon? I’m wearing, I’m wearing, what is it? You’re new. Passionate. Your new passionate jacket. How much?

No, I’m scuba. Your scuba jacket. I’m very much scuba. How much Lululemon could you buy? Whatever it is, that’s fine. Think of how different Christmas is going to feel. Yeah. When it’s all paid for in cash. And just think of like if you weren’t making like that 1, minimum payment every month. You would have that much extra money to plan with and play with and have fun with, right?

That’s the, that’s, we want you to dream. Yeah. We want you to dream. And so we’d love to hear from you. Go ahead, leave us a review, put it in your review what you’re going to do with your minimum payments. Once you get them back, send us an email. Hello at budgetbestiescom. com. Come to our Facebook group.

Tell us, we want to know what would you do with that money and go ahead and get started on everything we told you. We told you exactly how to do it. It’s just that easy. No, I’m just kidding. It’s not that easy, but we believe in you. We know you can do it.