in #DASTRUSUP, Family Values ·
Having a family is an amazing part of life, but the expenses and debt that comes with it; not so much. When it was just us two, my husband and I had the financial freedom to buy what we wanted and when we wanted. We had planned on starting a family someday, but never really thought about how that would affect our lifestyle money-wise. Once our daughter was born, we realized that we needed to make some changes to give her the best life possible; that meant getting our finances in order. Read on for some helpful tips on how to reduce family debt.
*This is a sponsored post, but the experiences and opinions are my own.*
Family Expenses
Before having a family, my husband and I weren’t exactly the most responsible spenders. We had several credit cards, a timeshare, and little to no savings. All that being said, we were still happy and not stressed financially. Both of us had full time jobs, a house, and vehicles so we were set; or at least that’s what we thought. With a baby on the way, we had to make some big lifestyle changes that lead us toward becoming debt free.
We had cut our income in half when I became a stay at home mom. Plus we added baby care essentials (i.e. diapers, food, health insurance, etc.) to our monthly budget. We were drowning in credit card debt. If your in the same situation, check out these tips to reduce family debt before you get into a position where you need professional help.
Helpful Budgeting Tips
*Please note that I am not a financial advisor.
The best thing you can do and start immediately is create a monthly budget. Organize your existing bills: home, insurance, vehicle, streaming services, etc., food, recreational and other expenses onto some sort of paper or spreadsheet. It makes it easier to figure out how much money you actually need on a monthly basis compared to how much you spend on unnecessary luxuries. Use it to figure out how much you are willing to spend/save each month after paying all of your essential bills. Creating a visible budget helps you to prioritize the things you need and things may need to be paused or cut from your monthly spending. Learn about some helpful Tips to Help You Stick to Your Budget here.
Once you know where you stand on a monthly basis you’re ready to start reducing debt. You can do this a number of ways like cutting back on entertainment, dining, apps or streaming services you rarely use, paying off credit cards, and planning ahead. Check out some different strategies below to stay on top of and reduce your debt.
Strategies to Reduce Debt
*Please note that I am not a financial advisor.
- Dave Ramsey’s, The Envelope System
- This method is great for those who have nailed down their monthly budget and just need help managing it to pay of debt. Essentially, you take out your cash and distribute it into various envelopes dedicated to each category of your budget. For example, you might have one for monthly groceries, electricity, car payment, school / kids clubs or family entertainment. Once the cash from the envelope is spent for the month, that’s it! No more worries about over drafting or spending money allocated to essential bills. See how blogger Morgan Cameron uses this system to pay off debt here.
- The Debt Snowball Method
- If credit cards are consuming your income and you want to pay them off, this strategy can help. The idea is to pay off the smallest debt first and move on to next. To do this, you would allocate some extra funds toward that small debt, pay it off, and then add that money you’re saving toward the next smallest debt or credit card balance, each time reducing a little debt and increasing payments toward another. Read more about the pros / cons of this method and if it’s the right fit for you here.
- Debt Consolidation
- Another option for those, like us, who have come to be overwhelmed with debt, is to find a way to consolidate or clump your small debts together into one big debt. This way you will have one interest rate and one payment to make rather than managing lots of smaller payments. You can try to transfer your balance to one card, ask your local bank for help, or even take out a loan to pay off the debt and then pay off the loan. Keep in mind, it may be harder to do this if you don’t have good credit.
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Take a Step Toward Financial Freedom
We are getting close to becoming debt free and it is the greatest feeling to know that it’s only going to provide more financial freedom for our family in the future. Whatever your debt journey is, I hope these tips and strategies will help you to reduce your family debt like they’ve helped me.
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