A 12 Step Program for Debt Junkies

Reading the news on Friday I found myself shaking my head at the fact that because

eurozone leaders agreed to allow rescue funds to be used to stabilize the regions’s banks

the stock markets rose over 200 points on this sugar high.  It still baffles Tightened 100 dollar roll. me how people think that going deeper into debt is a good way to try and save an economy that’s having debt trouble.

With all the money trouble the Western World is in right now it only makes sense that in order to protect yourself you – the private citizen – have to do the smart thing:  get out of debt!  Now!

Ahh, but it’s so much easier said than done isn’t it?  Getting out of debt requires hard work, sacrifice, and living an – dare I say it? – austere lifestyle.  For those of you already out of debt and living this way:  Congratulations!  You have a wonderful skill that will serve you well for the rest of your life.  For those who don’t… well, now’s the time to get started on a new lifestyle.  I did the Dave Ramsey get out of debt plan and it works, but it ain’t easy.

The Twelve Steps

Here’s a 12 Step Program for debt junkies:

1.  Make a spending plan, sometimes known as a budget.  Write down everything you owe, how much you spend in utilities and food, fuel, etc, and then figure out how much you make in the course of a month.

When I went through my debt reduction plan this was easily the most important thing I did.  It’s a real eye opener if you haven’t done one before, I can assure you.

2.  Stop spending more than you make.  This might sound overly simplistic, but it can be very difficult – especially if you feel you “deserve” expensive toys, expensive vacations and electronic gadgets and pricey voice and data plans.

3.  Live beneath your means.  This is a tough one for a lot of people with a steady line of credit.  If you make $2000 a month pay off all your bills, put some in savings and if you’re debt free feel free to take yourself out to dinner.

If you’re not debt free put every available penny on your debt until it’s gone.

4.  Put $1,000 aside for emergencies so you don’t have to use a credit card or borrow in case something happens.

5.  Stay focused on paying your debt down.  Don’t get sidetracked buying toys or items you don’t need.

6.  If you have expensive vehicle payments sell them!  Get yourself a beater and drive it until the wheels fall off.  My last truck was a 1996 Dodge Ram with 264,000 miles on it.  I paid a thousand bucks cash for it and currently have it up for sale to help pay for the new (used) truck I just bought (paid for with cash.)

7.  Use the envelope method to budget your money.  Take some envelopes and label them like this:  groceries, gifts, gas, propane, electric, or whatever it is you can pay cash for.  Populate it with money when you get paid and when you go to buy groceries, for example, take the money out of that envelope.  When the money is gone, you don’t buy any more groceries.  Spend it wisely!

8.  Get a second job, if possible.  Deliver papers, work at McDonald’s, whatever it takes to do to make extra income.  Apply all this to the debt.

9.  Get your spouse on board with you.  If you both aren’t on the same page with this it will be much harder to pay off your debt.  Unlike prepping, where you can still do a few things without your significant other’s blessing, working off debt has to be a team effort.

10.  Want it.  In order for this to work you’ve got to want  it.  The more you want it the harder you’ll work towards it and the faster you’ll pay it off.

11.  Cut up your credit cards.  It’s like a heroin addict who keeps a a little  on hand “just in case.”  If it’s there you’ll find a reason to use it.  The $1000 you saved in step 4 is so you won’t have to use a credit card if things get dicey.

12.  Start now!  Don’t wait for things to get better, or until your income tax check comes in, or you get that big promotion at work, or the moon turns to cheese.  Start planning now.  Go back to step 1 and start a spending plan.  This bit of planning can take anywhere from a night to a week or two depending on your financial state, but get started.

I’ve left a lot of detail about executing these individual steps out, but in the coming weeks I plan to take each of the topics and devote a post to it, so that you can how I went about becoming debt free.

If the TSHTF you can go about your business knowing you’ve got no debt and a nice savings account to rely on if necessary.  Paying off all my credit cards and other debt was one of the single most satisfying moments of my life.

Are you debt free?

-Jarhead Survivor

13 comments… add one
  • millenniumfly July 1, 2012, 10:27 pm

    You could get really “crazy” and implement some of the suggestions from http://www.earlyretirementextreme.com. They were too much for me but I’m sure some people would find these suggestions useful.

  • Michael July 1, 2012, 11:51 pm

    “It still baffles me how people think that going deeper into debt is a good way to try and save an economy that’s having debt trouble.”

    It makes sense to some degree, just like it would make sense for someone making minimum wage and in debt to spend a little cash & go to trade school to make a better wage. But, we’re way past that now. There’s no ability to pay that money back.

  • Anonymous July 1, 2012, 11:52 pm

    The wife started listening to Dave Ramsey on the way home from work each day and finally got me on board. I worked every available bit of overtime my company offered and the wife wormed full time while attending some classes. It took about three and a half years but last November we finally paid off the last credit card (we paid off about $70,000 in total between credit cards, loans and vehicles). We still owe her student loans but decided that putting together a larger emergency fund due to the currently shaky economic conditions took precedence over paying down that bill – the minimum payment is small enough if it comes to that, and we also had work to do to the house that we could no longer put off doing. Working our way out from under our pile of debt wasn’t easy, and it required going without a lot, but there is no feeling like knowing you are debt free. Dave Ramsey’s plan isn’t complicated, but it does require dedication. There’s no magic bullet to getting out of debt – it takes work, more work than a lot of people are willing to put in IMO.

    • 1982MSGT July 2, 2012, 4:52 pm

      Anonymous –
      Great for you and your wife/family. Keep focused. Any debt incurred should be paid off within one or two months. My wife and I did the same as you. It is SO NICE not to have any debt – just utilities and a little extras now.

      Here is the challenge: DON’T GIVE UP. Stick to your goal.

  • TOR July 2, 2012, 2:44 am

    The spouse one could arguably be higher. If you think that establishing a budget, living below your means and such work without the spouse on board another thing is coming to you.

    Yes, we are debt free.

  • Tim July 2, 2012, 8:35 am

    Set up automatic debit payments for recurring bills, so you never “see” this money or have the opportunity to waste it on unnecessary stuff.

  • Jason July 2, 2012, 12:27 pm

    Excellent article Jarhead!

    To expand on point #2 – my job is sort of commissioned & my ex wife would start spending money based upon ANTICIPATED income. If one of the consultant gigs fell apart or was reduced, it was devastating. It’s called “betting on the come”.

    I had no checks & balances in place – I made the money & she handled all of the finances which, was a big, big mistake. Teamwork is essential to success.

    Disposable income – that which is left over after obligations are paid. It is not to be treated as “free, spend as you want” money. Use it to pay off debt & invest in retirement. It doesn’t matter if it is only $50 per month ($600 per year) it all adds up AND you create a good habit.

    Lastly, quit thinking like the typical American, spending fool.

    “A sensible man watches for problems ahead and prepares to meet them. The simpleton never looks, and suffers the consequences.”
    Proverbs 27:12

    Remember, the one who dies with the most toys has the biggest graveside yard sale.

  • JL July 2, 2012, 2:44 pm

    We paid our debt off a few years ago, while doing so there was no extra. So we did have to buy a car on credit but had a 2 year loan and it will be paid off in 3 months. I have a credit card I pay off every month and a mortgage. If SHTF they can have the house. We rent ot out and are evicting out tenants due to non paynent of rent. So it puts a strain on us now but I hope to go ba k to work soon, the little one is 3 so it is time.

  • Anonymous July 2, 2012, 7:47 pm

    Stealing an article straight from Dave Ramsey is beneath you Jarhead.

    • Jarhead Survivor July 2, 2012, 8:15 pm

      I did use Dave’s plan to get out of debt, but I did not pull this article straight from a Dave Ramsey post – at least not that I’m aware of. If he wrote one like this please send me a link to it and I will post it here.

      If he did write an article like this I’m sure his is much better since he developed the fundamentals of the plan and thus his understands the plan better in its entirety.

      Again, please send a link if there is a post like this.


      • Anonymous July 2, 2012, 8:48 pm

        I saw your “shout out” to Dave as soon as I posted. Tried to delete. My apologizes for the insult.

  • Joe July 3, 2012, 4:26 pm

    Excellent advice, Jarhead.

    Would you take that message to Washington for us? I’d vote for you. ;)


  • Cliffystones July 4, 2012, 12:13 pm

    When you call the shots on your finances, there is also a great feeling of satisfaction. I was fortunate to experience this in my early 20s.

    Due to the bank’s error, I became one month behind in my car payment. I went in to the bank to get it cleared up. I hadn’t actually missed a payment, but the coupon book was screwed up by them. I expected them to “reset” the payments and make me up to date for their mistake. But the clerk, and then the branch manager (who never attempted to personally speak with me) both insisted that the full payment was due. So I asked the clerk what the balance on the loan was. The I calmly went over to the forms, got a withdrawal slip, and filled it out to withdraw that amount from my savings. I handed it to the clerk and told him something like “Now you can go tell your a-hole boss he just lost money, and a customer!”

    I suppose they figured they his this kid over a barrell, wrong!


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