We all make bad decisions from time to time. Ours involves debt.
We were between a rock and a hard place last year when it came to a vehicle for my husband. His 2001 Pontiac Grand Prix with over 250k miles finally bit the dust. Since my husband drives quite a bit (around 200 miles each week), he needed something reliable. We settled on a pre-owned 2014 Ford Fusion with low miles. Unfortunately we didn’t have $15,000 sitting in the bank, so we had to take out a loan. We have great credit, so luckily our interest rate was very low, but we made it a goal to have the car paid off as soon as possible.
So how did we manage to pay off $15,000 last year?
We cut back. A lot. For starters, we cut our cable. We still have the cheapest plan available on Netflix, at around $9/month. We also pay $100/year for Amazon prime, so we have access to stream Amazon movies, music, and TV shows. We also cut back our cell phone plans. I started cooking a lot more at home. My husband started taking his lunches to work more often. We cut back on restaurants and entertainment. Our heat is set to 65 in the winter and A/C is set to 78 in the summer. We don’t waste water by running the dishwasher with half a load of dishes. We plan our errands so we don’t waste gas driving around. I order necessities like toilet paper, coffee, and trash bags from Amazon prime since they are always cheaper than at the store.
We did all of these things, but the best thing we did was start a budget. We track every single penny. I know exactly how much we spent on gas in July and how much was spent on food in August. I used a loan calculator to determine how much we would need to pay (including interest) to get the car paid off in a year. We cut every expense we could to contribute to our car payoff fund, and I’m so excited to say it has been worth it!
Our next step is to pay off a few lingering debts – our 0% interest credit card, for instance (it starts accruing interest this summer). Once that is complete, we will begin putting everything we can into our student loan debt. I know we have a tough road ahead of us, but I can’t wait to finally be debt-free 🙂