How to Get Out of Debt This Year as a Couple
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One of the top three financial goals people have is getting out of debt, but few actually knock it out. Today we're diving into key money systems couples have used to become debt-free!
Best Strategies for Couples to Dump Debt Faster
How are you doing?! I hope you’re having a wonderful week.
We're back. New Year, a new season of the podcast.
I want to start off by saying thank you. Your support has been incredible and because of it, we’re here for season 10!
When I started the site Couple Money and even the podcast a few years, my goal was pretty simple.
Help couples not only get their finances in a good spot but find a way for money to be a way to work together instead of being a source of stress.
Whether you’re paying down debt, saving for a dream, or going down the path of financial independence, the main focus is doing it as a team.
We’ll definitely be covering that this season again, but there’s another issue I’ve been seeing that has added a layer of unnecessary stress when it comes to finances.
As I look at my newsfeed on my phone or catch some stories that get picked up, I just see this trend of HUGE stories.
Debt-free stories where the couples have paid massive amounts of debt – six-figures- in a crazy short amount of time.
Couples who have saved 60%, 70% of their income in a year.
These are incredible stories and I’ve found them at times to be motivating and challenging us to look at how we spend money.
I've even had a few of them on the podcast.
However, when these are the stories that get picked up again, and again, you kind of get a bit fatigued and when the headlines only tell part of the story – like the fact they were making incredible amounts of money, then you can feel discouraged.
Add on that many of these stories don’t talk about that key step – aligning your goals and getting on the same page.
If you’re not there, then you almost can feel like throwing up your arms and just giving up.
I don’t want to give up. I would love for you to tackle those big goals, but more importantly, I want you two to feel comfortable and excited about the plan you two carved out for yourselves.
By acknowledging while there are certain financial principles that are incredibly helpful, we all have different approaches to how we tackle our goals.
Today we’re going to do that with one of the most common goals families have with their finances – paying off their debts.
Today I want to share some guests we’ve had on the show who have become debt-free, but had different amounts and time tables.
In this episode we’re looking at:
- The step by step process of how to set up a system to pay off your debt faster
- Some of the most common hangups couples have with becoming debt-free
- Tools and apps to make it easier
Let’s get started!
If you're looking for some more inspiration, tactics, and encouragement about becoming debt-free together, please check out my interview with Chris Browning.
Resources to Pay Your Debts Off Faster
If you two are ready to pay off your debt, here are some handy resources to check out:
- Best Budget and Money Apps: Personal Capital, Tiller, Mint, Zeta
- Free 5 Days to $5K Course
- Jumpstart Your Marriage and Your Money
- Total Money Makeover
- Free Debt Snowball Template
- What’s Your One Page Financial Plan?
- Debt Discipline
- Debt Free Divas
- Well Kept Wallet
- Trim: You can free up money in your budget by having Trim cancel your unnecessary subscriptions and negotiate your bills.
- How to Sync Up with Money Dates
Thank You to Our Sponsor Coastal!
Support for this podcast comes from Coastal Credit Union. If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today!
We've been Coastal members for a few years have been happy with their services.
They want to help you achieve your biggest goals faster and as a team!
Dealing with Debt in your Marriage
And we have a six figure income, but we had no money. We had no cash and we had maxed out at the time five credit cards.
We had over one hundred nine thousand dollars worth of debt is really kind of our rock bottom moment and realized that we really needed to make a change where we just could not continue on the path we were with the money we were spending on the marriage.Brian, Debt Disciple
Make It Easy to See Your Numbers
One challenge that many couples have with figuring out how much debt they have is that it’s spread across several accounts.
One or both of you may have credit cards, a car loan, and maybe a student loan. So you two may be looking at six or more accounts.
That’s why you can have a healthy income, like Brian mentioned with their six-figure income, and yet carry a substantial amount of debt.
The solution here is make it easy to see your numbers.
And for the goal of paying off debt, there are two numbers you need to keep an eye on – your debt and your monthly cash flow.
Your Debt Total
Between the two of you, how many credit cards, car loan, student loans, and maybe a mortgage do you currently have? What are the interest rates?
Your Monthly Cashflow
With your monthly cash flow, we’re trying to figure out how much ‘free money’ you currently have so you can use that to pay off the debt.
You can always dig through your bills or take time to login into all of your accounts to get the data you need.
However, there is a way to streamline the process so the two of you can get an accurate snapshot and have an easy and quick way to track your progress – use an app.
- Personal Capital
Once you have the hard numbers in front of both of you, it’s time to start talking.
How to Optimize Your Budget (without Starting a Fight!)
You might be thinking, ‘okay, there has to be one big thing that’s eating up our budget.’ And there might be.
How to Decide Which Debts to Pay Off First
So now that your number how much debt you have and how much you can put towards paying them off, it’s time to move into the do stage.
Two of the most popular ones that have helped others speed up their debt-free plans are the debt snowball and debt avalanche.
Here’s where they are the same:
- List all of your non-mortgage debts from small balance to largest
- Pay the minimum payment on every debt
- Use that money to pay down the one
- When that is paid off, roll over that money into the next debt (old amount +minimum)
- Repeat and keeping rolling over your payments until all your debts are gone
Why this works:
Many people have discovered that this method was the easiest to maintain because they only have to focus on one debt at a time.
With the intense focus, it made them want to pay off the debt faster.
Here is where they are different:
- Debt Snowball: Dave Ramsey is most associated with the debt snowball as a part of his system to help people gain financial peace. With the debt snowball, you’re attacking your debt based on their balance.
- Debt Avalanche: For some people speed matters. The debt avalanche can be the best route for that because you’re knocking out your debts based on interest rates.
Make Your Debt Payments Automatic
One of the biggest reasons why automating your finances makes sense is that most couples I know live full (and sometimes hectic) lives and their payments already scheduled lets them focus on more important things.
We have had times where work or family has kept us busy, but because our payments were already scheduled, our cash flow didn't suffer and we avoided getting it with late fees.
Your Debt-Free Plan
And if you want to discuss this more – ask questions, swap ideas, and maybe get a debt-free strategy set up – don’t forget to join us in the Thriving Families group on Facebook.
Our goal is to help one another out. Hope to see you there!
Support the Podcast!
Thank you so much for listening to the podcast!
- Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
- Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your review on Apple or Stitcher.
- Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!
Like the music in this episode? Our theme song is by Gentle Regime. Additional music by Lee Rosevere.