About 10 years ago, I read a book that changed my whole life. That simple little personal finance book made me rethink everything I knew about money. We were inspired to pay off our student loans and car debt. Hacking away at nearly $70,000 in debt was no easy task. In fact, it took us nearly 7 years to get out from under it.
We’re living debt-free now (with the exception of our giant mortgage), and it is one of the best feelings in the world.
But with no pay raise in 6 years, rising fuel and grocery expenses and a mortgage payment that eats up nearly half our income, it often feels like the wolf is at the door. Without a good plan for emergencies, it would be all too easy to fall back into the bad habit of borrowing money to pay for things.
My experience has made me determined to break the cycle of debt. I don’t want to go back to those borrowing ways, so I’m taking some steps to make sure it doesn’t happen.
I’m working on my budget. I have been tracking our expenses and income and am constantly fine-tuning our budget to make the most of what we have.
I’m planning ahead. A good emergency fund can help insulate you from unexpected repairs or illnesses. While it really stinks to have to use money from your emergency fund, it is so much better than pulling out that little piece of plastic and getting yourself into debt. Our emergency fund took a big hit last year, but we’re slowly building it back up. We’re also trying to plan ahead for replacement purchases and general maintenance. Every little bit we can save toward these things can help keep us out of debt.
I’m talking some sense into myself. I’m working to develop strategies to stop emotional spending, and I’m learning to balance emotion with reason when it comes to my finances. I’m getting better at determining the difference between needs and wants.
I’m developing self-sufficiency. I’m learning how to do more things myself. From fixing our toilet to cooking a meal from scratch, the frugal skills I’ve developed help me save money and avoid debt. In addition to saving money, I’ve gained confidence, which is a great enemy of debt!
I have learned that the little things you do every day with your money often add up to big things. This debt-free living thing is a marathon, not a sprint, and I’m training every day.
Now it’s your turn: How are you breaking the cycle of debt?
This post is part of Women’s Money Week 2012. For more posts about debt, read Debt Roundup.