Five-Step Plan for Saving Money and Paying Off Debt That Works!

Debit. It's all the rage these days. I know this subject well. I was responsible for putting myself through college. I graduated with a lot of debt. I racked up more because it took awhile to get a very entry-level job in my field thanks to the economy (which looks ducky compared to the economy today) which made for some lean times.

I paid off most of my pre-marriage debt. With the exception of our mortgage, that is the only debt Husband and I have.

I’m so successful at living a big life on a little budget and paying off bills that I developed a very popular course on saving money and reducing debt when I worked at an e-Learning company.

My Five Step Plan for Saving Money and Paying Off Debt



1. Spend less than you earn. It’s important to start using cash or debit card for all purchases while you’re trying to pay off debt. Why incur more debt using credit cards while you’re trying to pay off credit cards? It's a vicious cycle won’t end. Some great resources for living better on less are right here in the  Condo Blues saving money archive , The Dollar Stretcher , The Tightwad Gazette, and The Millionaire Next Door. Many of these tips are green!

2. I made a list of all of my expenses. Then I looked for places where I could trim my experiences and set my priorities. In order to get off plastic money, I found that it was best for me to have a variety of ways to do the same thing just like Green Arrow’s quiver of trick arrows. Most of the time Green Arrow uses a regular arrow to fight bad guys. When a regular arrow won’t do, he’s got a bunch of special trick arrows that help him get the job done.

Green Arrow's boxing glove arrow is my favorite because it makes me laugh. 

Wouldn’t a fist would be better than an arrow for knocking someone out?

And just like Green Arrow, sometimes people may think your money saving tricks are a little crazy (my sister-in-law thinks I'm crazy for cleaning my house with vinegar. I think she's crazy for using chlorine beach. ) However, if it saves you money go for it! If you meet your financial goal, you can always switch to the more conventional way. Yep, that means I now I buy some of my green cleaners instead of making all of them. However I am always on the lookout for new brands that work for less money because I like to have as many green options, er, trick arrows  in my quiver, as I can.

3. In the areas where I saved money, I used those pennies to paying extra on my bills even if it was a dollar or two. This part is important. If you only pay the minimum payment on your bills, you aren’t paying down very much of the actual debt. Most of your payment is paying off the interest on the debt. Don’t believe me? I didn’t think so either until I used out Bankrate's credit card minimum payment calculator and saw how much money I was paying in interest and freaked out a little. That was my turning point. I decided to use my debit card to make purchases instead of my credit card.

Photos courtesy of Sea of Green’s Hoosier Journal of Inanity

4. Once I paid off one bill put that extra payment toward paying off another bill, even if it was only a couple of extra dollars. It may not always be easy, and trust me, some of our relatives and the bank just don’t understand why we didn’t buy a bigger house when we could. The loan officer mentioned that we qualified for a bigger loan and could buy a bigger house at least four times when we were signing our paperwork. The thing is, we don’t need a McMansion for two people no matter how many people swear we do "to be happy." Having a small home frees up more money for travel. Traveling makes me happy, not cleaning a huge house!

5. Build in some low cost fun into your budget. There are plenty of frugal luxuries sitting under your nose! You don’t have to spend tons of money to have fun unlike what Morgan Spurlock’s 30 Days Minimum Wage episode would like you to believe. In fact, they got quite a bit wrong in that episode about Columbus. There are a lot of services in Columbus to help low income families, including medical, which they didn't bother exploring or showing. They did get one thing right. Blue Nile has excellent Ethiopian food!

Recently Husband, Blitzkrieg, and I went to Ohio State’s one-day renaissance festival and had a great time for the price of parking. It’s important to take a break and have some frugal fun. You’re trying to pay down bills and save money not live a life of deprivation.

With some clever reuse, smart shopping, and new financial habits you CAN pay off big debts. It won’t happen overnight but it will happen. I cannot tell you the satisfaction that comes when we buy something big like my HE washing machine or buy Christmas presents for our ever-growing family and paying for it in cash.

What are your thoughts? Do you have any tips to share?


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