When we first started getting serious about money, budgeting and paying off debt, all the things we read got to be really overwhelming. The different books and articles we read would say things like, “Build up your savings.” “Get all your debts paid off.” “Don’t get behind on your bills!” “Don’t have a credit card.” It all felt so overwhelming that we weren’t really sure where to start. Even though we got the debt snowball rolling, and kept adding to our savings we weren’t really able to fully dedicate ourselves to our finances because we were getting pulled in so many directions without any real guidance or game plan. Enter Dave Ramsey’s Financial Peace University. We were given the answer to this question that had plagued us for a while and I want to lay it out for you if you’re asking yourself, “Should I save money or pay off debt?”
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In order to even know just how much you’re spending each month to pay off debt, it’s important that you sit down and make a solid budget if you haven’t already. I have an easy to follow budget available in my Fun Sized Budget Bundle as well as 17 other worksheets to help you start a savings and pay off debt. I also recommend taking advantage of some of my top budgeting posts:
Once you’ve taken a look at your budget, you’ll be able to easily see just how much you’re putting toward your debts, how much goes into savings and any extras you have. When looking for extra money in your budget be sure to pay attention to what you spend on the non-necessities of life. Things like daily coffee runs, alcohol, or takeout.
Now that you have an idea of just where your funds are going, let’s look at debt vs. savings.
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If you yourself are struggling to get out of debt and haven’t yet heard about the Snowball Method, you can read my post all about how we paid off $6,000 in just 6 months! If you are totally unsure of where to start I highly recommend following Dave Ramsey’s 7 Baby Steps as laid out in Financial Peace University. Another great idea is to check your FICO credit score to see where you stand credit wise.
Having debt is just a life sucking pain in the tush. Let’s get down to the basics of why is really stinks:
Dave Ramsey insists you treat your debt like a gazelle running away from a cheetah. That means run fast; duck and weave, do whatever you have to do to pay off debt and pay it off as soon as possible! There are also so many ways and methods out there that you can implement when it comes to tackling debt. Check my tutorial on how we paid off $6,000 in 6 months using the Snowball Method. There is another method called the Debt Avalanche that is similar to the Snowball Method but instead of paying your smallest debts first, you pay off the ones with the biggest interest.
How you choose to execute your debt payoff is up to you, but it is definitely going to require you getting a game plan in place. If you need a little extra guidance, I will give you some great steps to help you get started below.
As I said before, Tom and I opted to join Dave Ramsey’s Financial Peace University and are so excited to be in the final stages of our debt payoff with only $10,000 left to go before tackling our mortgage! I have created a playlist on my YouTube channel where you can easily follow along on this journey with us to learn exactly what we’re doing and can see just how quickly we can make this thing happen!
Building up a good savings is absolutely crucial. Having an emergency fund set aside is huge as well as saving for major purchases in your life through methods like Sinking Funds. Let’s look at exactly why being sure to save money is an awesome thing:
So, it’s pretty obvious to see, building a savings is far more beneficial to you than having debt. See 12 ways how you can save $1,000 fast. But, I’m sure you already knew that. This is why, despite the amounts of debt you might have, so many people continue working and striving to save money. It’s something we all need and definitely want for the future.
Now, obviously, I don’t know your unique financial situation, but if you are really struggling to pay off debt, let’s talk about why you might do well to consider putting your savings on hold.
This has been a question I have continually asked myself after getting a jumbled head from all the different financial tips I’ve read over the years. After sitting down at Dave Ramsey’s Financial Peace University, I was given my answer.
When you are first beginning to get out of debt, make your first priority building up a starter savings fund. Work to get $1,000 in the bank and don’t touch it unless an emergency presents itself!
Now that you have a savings net, start paying off those debts and do it with serious determination. Take advantage of my Fun Sized Budget Bundle to help you get started and keep going.
To be a part of a supportive financial community, join my Facebook group, Fun Sized Budgeters. It’s a place to interact and ask questions from others who may be facing similar struggles!
The benefits of building a $1,000 savings and then putting all your money toward your debt has tons of benefits to it:
Seriously throwing your money at debt while putting your savings on the back burner can just help dig you out of this situation that much sooner! Then you’ll have even more money to put into your savings!
Follow others who are paying off their major debts. Check for Instagram hashtags like #debtpayoff #gazelle #fpu. It can be super inspiring and motivating to see what others are doing to pay off their debts and can help encourage you to keep at it!
Invest in learning
This one took me way too long. I never had “enough money” to pay for Financial Peace University. It seemed like a hilarious joke. Every time I heard about the opportunity to invest in a class to help me get right with my finances I would roll my eyes and then head to the mall and buy a new pair of shoes. I wish I was joking or being sarcastic …but that’s actually probably how it went down.
If you are tired of living paycheck to paycheck, feeling consumed by debt or have a major shopping addiction (like yours truly once did) then investing in help should be a top priority. In fact, I haven’t once thought about the cost since we started. Money seems to be showing up more often, in fact.
Once I sat down to do our budget and stuck with it, I was able to see more money in places I wasn’t looking before. Then we decided to get serious about our final debts again and finding the money or making the money just got easier and easier. Check out my 87 Extreme Cheapskates Money Hacks That Are Pretty Normal for some easy ideas that can save you big time when it comes to your budget.
To get yourself started with paying off debt, I recommend these things in this order:
No matter what, just keep going. It will be discouraging at times but do your best to always look on the bright side. I promise normal people pay off huge amounts of debt every day and you can be one of them. It might mean some serious adjusting and changes. It will take discipline and determination, but you can totally do this!