My Top 4 Tips for Paying off Debt post is one of my most popular posts to date. I wrote this over two years ago, so I wanted to update it and add in another tip. Trying to save money? Pay off debts? Allocate money to college? It can be overwhelming to start or know what to do. If that is you, these tips are for you. If I had to tell someone where to start if they wanted to have a great budget and/or use their money wisely, these would be the things I would tell them to start with.
We had $118,000 in debt when we first married. $110,000 was our mortgage loan. $8,000 was my car. We paid off that debt in 33 months (on 1 2/3 teacher salaries…we only had my income for 2/3 of that time). While most consider a mortgage “good debt”, it’s still debt, and any debt is not good. Interest is accruing and it can really keep you from thriving financially, or simply even living when you’re retired. If you’re reading this, I’m assuming you have some kind of debt, whether it’s student loans, car loans, credit card debt, a mortgage, etc. Or maybe it’s all of the above.
Whatever debt has accrued in your life, getting rid of it is important. Have you ever sat down and calculated how much money is wasted on debt? It’s sickening. What’s even worse is how much of that debt money could have gone to investments and EARNED more money. Regardless, if I had to sit down and tell you the top 5 things we did to pay off our $118,000 in debt, this would be it…
- Shop at Walmart (assuming you have one nearby) – They are just plain cheaper! I have been trying to find a more economical store for the last 4 years and this one still beats other stores in majority. I’ve done my research and on a daily basis, they have better prices. Plus they price match, so if another store has an item on sale or cheaper, Walmart will price match it. Now with that said, I do believe there are other stores that have better sale prices. Which leads me to my next point…
- Look at other stores’ sales – I used to manually go through the circular ads that came in the newspaper and circle all the sales and determine which store had the best price. I feel like this is a story I’m going to tell my grandchildren and they are going to say, “wow that is crazy…times have really changed.” Well, even in the last couple of years, technology has really made this much more convenient. I use the app called Favado. It’s the coolest app ever. You simply select all the stores in your area and you then can compare prices to see where best to shop (or price match at Walmart). You can even make a list of all the items on sale, so that if you do price match, you just pull it up to show clerk. Walmart does have the Savings Catcher app, but I’m not convinced it catches everything (I still use it though just in case). Below is a picture of what comes up when I search for red grapes. This tells me I want to get grapes at Sprouts since they’re only $0.88/lb.
You can also click on a store and see all the items on sale there too. When I clicked on Kroger, these are the sales that popped up (this is just a screen shot…there are more). This is particularly great if you only shop at 1-2 stores and you want to quickly see what’s on sale.
- Use Zaycon Fresh for meats – We have been getting chicken and ground beef (they have more meats) for a couple years now and it’s amazing. Not only is the meat healthier (farm fresh, grass fed, no hormones, etc), it’s cheaper too. Oh and did I mentioned it’s delivered straight to your trunk at pick up. You don’t even have to go in to a store to pick it up. Order online, pick up at location nearby! Time and money saved. You can read all the details here – how much it is and how I store it (you have to buy it in bulk).
- Shop Costco or Sam’s carefully– I love these stores and yes, we do shop at Costco, but ONLY for their items on sale that week. And we still make sure it’s a better deal than elsewhere. Even if you have a big family this is often not the best place to go for everything. This may take some time and math skills to know what’s a good deal, but it’s worth it. It’s so hard to leave that store under $100. It’s those dang samples I kind of want to be one of those employees that checks your receipt as you exit so I can see how much people are spending. I swear some of those baskets have to be filled with $300-400 worth of products (that would be our month’s budget).
- Plan your meals – I do weekly planning. I’m way too fickle to plan longer than that. I simply plan meals based off what we want that week (and looking at our calendar). I use Pinterest for most of my meal planning, although I just came across this blog and her meal plans look pretty good! Might have to let her plan some of my weeks soon. I use this template to write out my meals and grocery list.
- Go with a list – This goes with planning your meals. Categorizing your list is truly a game changer. When I tried it, I thought that was too Type A, but it saves so much time in the store! Try it out. I promise you’ll love it. Going with a list keeps you focused and saves money.
- Buy store brands. Don’t be a brand snob (I can say this because I used to be one). There are a few items I still get brand names, but most items are store brand. Make sure to look at all the prices though. Sometimes a brand name may be cheaper. Speaking of, did you know that Costco batteries are made by the same big brand name company that also sells batteries in Costco? You’re literally getting the same battery, just cheaper. Sometimes it’s cheaper for stores to get companies to make their store brand instead.
- Use Coupons…kind of – I hate couponing. And I don’t really see the benefit of doing it for myself. Not worth the time at this stage in my life. If you enjoy that and know how, by all means, go for it. We just don’t do this personally for groceries. Be picky though. Many couponers actually spend more because they’re “getting a deal.” Just because it’s on sale does not mean you need it. Side Note: I think you can save a ton on coupons, but it really is an art if you’re going to save big, and I just don’t have the time to allocate to that right now.
- Don’t go with kids (if you have to, I have 4 tips) – For the last year I’ve been going on Mondays and taking the kids. But it ends up being an extremely stressful situation, so recently I told Ryan I need to find a day to go where I can leave them home. If I do have to take them, I have found the following things to help (along with the categorized grocery list):
- Go at lunch time and let them eat their lunch in the cart (this one works wonders for us).
- Let them play on phone or iPad (this is last resort for me). I know, I’m a terrible, but seriously. Our iPad doesn’t work outside of our home, so my 4 year old gets to use my phone.
- Give them a sucker. Yep, mom of the year here. I keep a bag of suckers in my car so when I need to go shopping, I can grab a couple to take inside in case of emergency (let’s just say there is always an “emergency”).
- Let them help gather groceries. Yes, we all know how this really works out, but if you happen to have that sweet little child that likes to please, go for it.
- Make a budget for the month – With 4 people in our family, we budget about $400-450 a month. But when we were paying off our house and it was just the two of us, we budgeted $240 a month. Aim to spend 5-10% of your household income on food (that’s dining out, groceries, etc…)…closer to 5% if you’re paying off debt. Like Dave Ramsey says, “Rice and beans, beans and rice.” An important component of this tip is to write down what you spend after EACH grocery trip next to your budget (I’ll share an example below in the fourth tip). Budgeting your groceries keeps you on track. Know your current budget before each trip.
This is the template I use to grocery shop. I probably could make it pretty, but I find it super useful! You can print it off HERE.
2. DINE OUT ON A BUDGET – We eat out a lot. This may not be a steep category for you, but this is something we have to be mindful of due to how much we like to go out. This includes any and all eating out at restaurants (fast food, fine dining, coffee, kids’ lunch, etc). We rarely pay full price for a meal. We budget about $200 a month for this (we used to budget $100 when it was just us). I have to say this is something we’ve increased because we like it (in addition to more mouths to feed now). Our typical eating out schedule is Friday nights and Sunday lunch after church. We’ll sometimes go out once during the weekdays and the kids and I eat out (for lunch usually) once or twice a week, plus any coffee runs I
have want to have. Here are several things we do to stay on budget.
- Look at the bottom of your restaurant receipts – Often times, they have free items if you complete a survey. I promise it’s not bad. It’s either an automated phone call or online. Takes maybe two minutes!
- Sign up to your favorite restaurants email list – They send you coupons and discounts, specifically for your birthday or anniversary. Papas Steakhouse (extremely nice restaurant in Dallas), sends you $25 gift card for your birthday/anniversary, so even if you want to splurge on a date night, you still can get discounts. And last night we went to a nice pizza place for Ryan’s birthday because they sent him a FREE large one topping pizza. We added a couple more toppings and all 4 of us shared the pizza (it’s huge). We dined out for a few dollars + tip.
- Know restaurants weekly deals – Many times restaurants have deals during the week (i.e. kids eat free, half price appetizers, etc…) to bring customers in the restaurant. We love Cristina’s Mexican Restaurant. They have $8.99 fajitas on Wednesdays, so we’ll go and share that. Then we get to splurge on chips and queso or their apple pie! Dickey’s BBQ kids eat free on Sundays. At Denny’s, kids eat free from 4-10pm everyday.
- Drink water when you dine out – It’s healthier and $2-3 per person adds up fast!
- Share a dessert – We used to not order dessert when we were first married, but if we do, we split it! Again, healthier and dessert is really expensive!
- Don’t drink alcohol when you eat out – Luckily, we are not big drinkers, so this one is easy for us and saves us a TON! If you must have a drink, find out where the deals are.
- Limit your restaurant visits to places that require a tip – For example, when we order pizza, we always go get it. Usually one of us is already out and about, so we’ll just grab it on the way home. Did you know pizza places charge $2-3 for delivery, plus a tip? That’s $5-10 more just to have it brought to you. Or we like to frequent places where there is no wait service.
- Use a cash system – We don’t do this, but if you have bad self control or don’t check your budget, set aside cash and when you’re out, you’re done eating out that month.
- Buy and use an Entertainment Passbook – They cost around $25 at the most (we usually buy when on sale for $10) and they have TONS of coupons/discounts for your area. One trip to a restaurant pays for the book. We used this book for almost every meal out back in the day and we got to visit some really fancy places!
- Groupon – This is probably one of the biggest ways we save money. We’re always on the lookout for Groupons for places near us! They’re simply coupon deals to different places. For example, purchase a $30 Groupon to a restaurant for $15.
3. EVALUATE YOUR CAR SITUATION – Let me say that this tip is really, really important! I promise! I have SO much to say about this topic, so if you want better information, click on the link to get more details. We follow Dave Ramsey’s financial advice, so these tips are from his teachings.
- You need to get rid of your car payment. I know you can’t do this tomorrow, but this is something you must eliminate quickly, whether you pay it off soon or trade it in.I’ll start with a quote from Ramsey. “Taking on a car payment is one of the dumbest things people can do to destroy their chances of building wealth.” <– He said it, not me.
The best way I can explain why you should get rid of you car payment is this: If you have a $378 car payment (which is normal) your entire life (also normal), you just gave up $4,447,084 in investments! Is a car really worth that much money! Here’s what Dave says – “If you invested $378 per month from age 25 to age 65 (a normal working lifetime), in the average mutual fund averaging 12% (the 70 year stock market average), you would have $4,447,084.01 at age 65. Hope you like the car!”
- How do you get a car without a payment? Basically, pay cash for a junk car, save, then trade it in for a slightly better car, save, then repeat until you have the car of your dreams. This video does a great job explaining smart car payments (which is NONE)! If this is just not a realistic scenario for you, do A LOT of searching for a car and always buy used, but not having a car payment is very feasible and I know many people who do this.
Speaking of cars, this is what my husband saved for and it brings him lots of joy. He has a more economical car for his everyday driving and traveling to games, but he snagged this before we had kids…because he knew it was a long shot once we started a family. And he was right. There is no way we would have spent money on this post kids. We used the same method of buying cars mentioned above to purchase this one.
4. TAKE A GOOD LOOK AT YOUR MONTHLY BILLS – In addition to saving money on big things in your budget like food and car, there are other areas you can mostly likely save. Hopefully you have a written out budget (see the next step), but once you do, you can go through each line item (see how we do our’s HERE) and determine where you can save money.
My husband switches electricity companies almost monthly in order to get the cheapest rate possible. Our electric bill last August (the hottest month for us in Texas) was $190 and that was the highest bill for electricity last year. Last month in March, it was a whopping $11.82, but our A/C doesn’t run in March…that was just for our regular usage of other things. For the record, if I was in charge of paying bills, I wouldn’t probably do this because I’m too lazy to switch around, but if he’s willing to do it, then I’m all good.
Maybe you can save money on entertainment (i.e. cable). For the last two years, we’ve had cable since we used the promotion offered at that time. Well, that offer has expired and our bill was going to go up about $50. So, we decided to cut our cable again. Luckily we were able to hang on to the recording capabilities so we’re able to record anything on regular channels still. We have Netflix and Sling TV (haven’t tried Sling yet though), so we do have options for more TV if we want. I have some friends who cut their cable and opt for Netflix and Hulu for TV. That is a great way to save money on bills.
Just simply go down the categories in your budget and see where you can save. If you’re not sure what is too much, check out these budget percentages as a guideline. Which leads us to the next, most important, money saving tip if you’re going to pay off debt, or even just live prudently.
5. MAKE A BUDGET – This is what I get asked about the most. And luckily, this is something you can do today!!! It won’t be perfect the first time and you’ll always revisit ways to make it better. I saved this for last because it is the foundation to paying off all your debts and living like no one else! I have to say, my husband is the brains behind the budget. He came up with this awesome acronym for the word B-U-D-G-E-T. Can you blame him, he’s a teacher!
- B – Borrowing is BAD! Proverbs 22:7 states, “The rich rule over the poor and the borrower is slave to the lender.” Do not borrow your way out of debt. It doesn’t work. Get rid of your credit cards! Use cash or a debit card. Did you know 60% of Americans do NOT pay their credit card amount on time?
- U – Unity! Your spouse must be on board for this to work! Finances are the #1 thing couples fight over and 57% end up in divorce over it. Marriages have better success with honest communication. Pray and work together for maximum wisdom!
- D – Discipline! Every month have a finance meeting and put everything on paper before you make purchases. Hold yourself accountable to the written plan. You will want to give up, but give it 90 days to form a habit!
- G – Giving! No matter the hardships you face, continue to tithe (giving at least 10% to your church). God will bless you and your family. He is the creator of money. Trust that he will provide. This will probably be the hardest thing to do when on a tight budget.
- E – Education! Seek wise counsel. Dave Ramsey’s “The Total Money Makeover” provides a simple plan to pay off debt. It’s the best $10 investment we’ve ever made! Also, read what Scripture says about money. It will provide a peace of mind when things get tough.
- T – Time! The bigger the debt, the longer it will take to get out of debt. Stick to the plan and remember there is light at the end of the tunnel! I cannot explain to you the freedom we felt October 2009 when we wrote that last check for the house! I’m living my dream now of being a full-time mom to my two boys! It’s also allowed me to take a risk and start a business and grow my blog.
Where to Start? As I mentioned above, look at these recommended percentages to know how much you should be allocating to different areas of your budget. I also explained how we spend our money and categorize it in this post here (this is my #1 budgeting tip). I think it’s important to be realistic with what you spend your money on and not “starve” yourself by cutting everything out of your budget all at once.
Before I started doing the budget (husband did it for the first few years of marriage) and we went to an Excel format, we WROTE OUR BUDGET DOWN. With pen and paper. It was pretty old school, but if it works…! The hardest part of writing it down was adding up each expense. That’s why I switched over to Excel so the math is done for me. I’ve been asked a lot about online services that help you record your budget, but this method just works so well for us and saves us from putting more personal, and very important, information online. BUT, if having a service helps you budget, do it. I think a lot of banks even offer those services for you. Mint.com is an example of a service that helps with budgeting. Dave Ramsey has great tools as well. I always recommend going to his website for budgeting help.
This is an example of our old budget when we used to write it down. This method worked when paying off our house so it’s definitely an effective way to budget.
This is a typed version of our budget with detailed notes: Budget Sheet with notes
I want to end with Dave Ramsey’s famous one liner: “Live like no one else now, so you can live like no one else later!”
Will people think you’re crazy for living a more frugal lifestyle? Possibly even make fun of you? Probably. But that is a very good sign you are on the right track! I hope these tips help you financially. Have you ever paid off a debt? What are some of the ways you saved money?