change your mindset

What I Wish I’d Known Sooner When Paying Off Debt

We may earn money or products from the companies mentioned in this post. I never recommend anything I don’t personally use and fully stand behind.

Today, I’m excited to share a post from Jackie Beck. 

Jackie is an empty nester who lives in metro Phoenix with her husband and their high-energy dog. She’s the creator of the smart phone app Pay Off Debt by Jackie Beck, and the founder of JackieBeck.com. She and her husband have been debt free since 2012.

Jackie shares what she would have done differently during her debt free journey. Enjoy!

My husband and I are completely debt free now (we paid off over $147K) but it took us a long time to get this way. In part, I think that’s normal, because it does take a while to grow, change, and make that much progress.

But I also know that we could have done it so much faster if only I’d known then what I know now. Hindsight is 20/20, right? Here are 5 lessons I learned that could have made a massive difference early on.

1. Changing your mindset is the key to paying off debt for good.

change your mindset

It’s easy to get stressed out and frustrated when trying to payoff debt.

What’s not so easy? Changing the way you think about debt.

Like most people, I was frustrated by high interest rates. I would struggle to pay a little extra to the credit cards, and then feel hopeless when I saw what a tiny dent it made in the balance. So much of my payment went toward interest! So naturally, I thought high interest rates were the problem.

In truth, the real problem was that I was looking toward debt as a solution. When I had an emergency, I used the emergency credit card. If I “needed” something and didn’t have the money, I used the credit card. When I decided I wanted to finish up my last year of graduate school without working full time, I took out a student loan.

The thing is, “solving” your problem by borrowing only gives you a new problem: debt.

It wasn’t until I realized that the actual problem was borrowing money that I began to make real progress. If you want to get out of debt, you have to commit to only spending money you already have.

Approach things from that point of view, and use a debt snowball, and you will eventually get out of debt.

Once you commit to only spending money you already have, it’s only a matter of time before you’re tested. This may mean you need to say no or “not right now” to things you’d like to do, or find ways to do things for free. But it definitely means you will need an emergency fund.

2. An emergency fund can save your bacon and help you pay off your debt faster.

emergency fund

I like to think of an emergency fund as a debt prevention fund, because that’s exactly what it is.

I was in my 30s before I built my first emergency fund, but it’s never too late or too early to start. In my case, I treated building an emergency fund as an emergency, because I could see the writing on the wall at my job. So I went out and got a second full time job, and put all of the money from that job into it. It wasn’t long before I got laid off from the first job, so that money definitely came in handy.

How much should you have in your emergency fund? Conventional wisdom says anywhere from 3 months to a year’s worth of expenses. But I know that can seem like a ridiculously impossible sum in many cases, so I think the answer is…whatever you can come up with, for starters. Even $50 is better than nothing. $500 is better than that. $1,000 is great. $10,000 is awesome. Don’t let big numbers stop you.

Start setting aside money for emergencies today, and then actually use it instead of debt if you have a real emergency. It will be hard to tap into, because it was hard to create, but don’t sabotage yourself by going back to the old standby of debt instead. Debt is not your friend, and you ARE still making progress if you use your emergency fund. Just make rebuilding it your #1 priority.

3. Things you forget to plan for are not emergencies.

Speaking of emergency funds, if you don’t want yours to constantly be empty, you need to define an emergency. It’s your life, so you get to decide what you want to call an emergency. (Keep in mind that the more things you consider an emergency, the bigger you fund needs to be.) But decide ahead of time.

For me, I decided that I would only use that money for job loss and large medical bills that were not covered by insurance. That was it. So if anything else happened and I didn’t have the money and couldn’t find a way to get it for free, I didn’t do it.

Because I was only spending money I already had.

This change basically boiled down to realizing that things I forgot to plan for were not emergencies. Instead, they were things I hadn’t budgeted for.

Yes, that brings me to budgeting.

4. Planning your spending is really important when paying off your debt.

plan your spending

When I was in the process of paying off debt, I would “budget” by making a list of all my expenses and subtracting them from my income to make sure I would be able to pay for everything. This is a good first start, but in my case it wasn’t really budgeting. Why?

Because at the end of the month, I would just see that I’d gone over, and tell myself that the reason was because it was an unusual month. It wasn’t until I realized that EVERY month is an usual month that things began to change.

From then on, if something came up that I hadn’t planned for, I added it to my budget in case it or something similar happened again. And I went through my past spending to see what “unusual” expenses had come up in the past. For me, I often forgot to plan for things like car tags, Christmas, birthdays, and repairs.

So I reminded myself that many of those things happen every year, and that everything mechanical WILL eventually break down. Then I added them to my budget. I divided the total estimated expenses by 12, and started setting aside that amount each month. If it turned out I hadn’t saved enough, I increased the amount going forward.

The lesson I learned is that adjusting your budget over time is key. No one gets it “right” the first time, and things change over time anyway. The key is to pay attention, which brings me to the point that made the biggest difference.

5. You have to pay attention to your spending.

setting up a solid budget

Tracking my spending was SO IMPORTANT, it deserves all caps. Why? Because I was spending on things that didn’t really matter to me, but I didn’t realize it.

Early on, I read a book called Your Money or Your Life. While the book itself had some dated sections even back when I read it, it helped me so much because it inspired me to start tracking my spending. Right away. I didn’t wait for the start of a new month so I could be “accurate” and I didn’t wait until the end of the month to “see how I did”.

I was actually on vacation at the time, and didn’t even have a notebook. So I stared by turning over the receipt of the very next thing I bought. I wrote down what I bought and how much it was. Then I stuck it in my purse. I did that for everything I bought that day. At the end of the day, I pulled the the receipts out, looked at each one, and thought about how I felt.

I started changing my spending the very next day. But that time, I thought about how I felt before I made the purchase. And many times, I changed my mind. I decided I didn’t want or need to buy it after all.

This was an easy way to stop spending on the things that didn’t matter to me, and to spend less money in the process.

Having more money available, of course, helped make it easier to save and to reduce debt. If there’s one thing I’ve learned for sure, it’s that paying off debt isn’t like dieting. Instead, it’s about changing your life so that you can get more of what matters to you with money you already have, and less of what doesn’t.

Something to Keep in Mind

Remember, you are not alone in your desire to get out of debt. Share your experiences, help others, and accept help in return. Everyone will be better off for it.

If you’re feeling a bit lost and not sure where to start with paying off your debt, grab the free cheat sheet, it will give you a step-by-step game plan.

4 thoughts on “What I Wish I’d Known Sooner When Paying Off Debt”

  1. None of this works for me, my husband refuses to get on board, he spends what he wants and will not cut back therefore I go at all of it by myself and it’s very hard to pay off debt when only one person is trying. Not only that he blames me for having the debt to start with, says I am always shopping which is not true, I go grocery shopping twice a month and that’s it…he eats lunch out every day, sometimes eats fast food twice a day, gets a haircut something like twice a month and he barely has any hair, always wants to eat out on the weekends when I could stay home and eat a tv dinner…but it’s all my fault. And the goal that we’re trying to get to is move out of this junky rental house into our own, and I’m all alone on this journey…

    1. I’m so sorry you’re going through that Roni. I can imagine how hard it is not having your spouse on board. Does he have the same financial goals as you? Is there something he really wants to reach? Maybe there’s a way to talk to him about his goals and work on a plan together. But, he needs to stop playing the blame game first. That needs to be addressed. Feel free to send me an email and I’m happy to help.

    2. That is a super hard situation to be in. It IS very hard to get out of debt when only one person is trying, and it’s even harder when the other person is actively sabotaging your efforts like you describe. It’s NOT all your fault. I highly recommend couples counseling to discuss how he is treating you, and if he won’t go with you go on your own. (You may be able to find free or sliding scale counseling.) You may also want to take a look at the book by Patricia Evans to see if anything she describes rings true for you.

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

It's time to Get Rid

of your debt

Grab the guide to get started

11 Categories

You Need in your budget

FIND OUT WHAT YOU'RE MISSING

It's time to get rid

of your debt

Grab the guide to get started!