Living Debt-Free

One of the worst feelings in the world is waking up at 2am worried about how you are going to pay your bills. Usually the feeling of panic sets in about the week after your last paycheck has arrived, been spent on rent, groceries, utilities, gas for the car, and suddenly you realize there’s not going to be enough money left over to pay that credit card bill.
I’ve been there. Midnight money worries are the worst thing to wake you out of your sleep.
Thankfully, I figured out a simple system for getting myself out of debt. First, I take a sheet of paper and draw a line vertically down the middle. On the left side of the page is my first of the month bills (bills that show up around the first 5 days of the month); on the right side of the page is my 15th of the month bills (any bill that shows up after the 15th but before the 1st of the next month).
I note on each side of the page the date my paycheck will arrive. Then under each date (1st of Month, or 15th of Month) I write out all the dollar amounts for the bills to be paid by that particular paycheck.
I’ve heard bankers say that you should pay yourself first, but when I was in debt with credit cards or car payments, I found that to be rather silly advice. Why? Because the debt I was carrying on credit cards, or for my car, represented money that I had spent out of future paychecks and those monies needed to be paid back before I could think about setting it aside into savings.
When I first started this method of paying my bills, I was heavily in debt on credit cards, and was leasing a car. I could see that my paycheck at minimum wage wasn’t going to go very far. So, I got a second job, and then added in doing odd jobs like house-cleaning. I used all the extra money from the second job and the odd jobs to pay off my credit cards as fast as possible and used my regular paycheck to pay the monthly bills. I paid off the credit card with the smallest amount of debt first, then took that payment and added it to the payment of the next largest credit card and paid it off next. And kept doing that until all of my credit cards were paid off.
Then, I ‘unleased’ my car by buying it through my bank. I told the loan officer at the bank how much money I could afford monthly and let them set the number of months to pay if off. As soon as the loan went through, and the car was ‘unleased’, I started paying the car loan off as fast as possible with the extra cash from my second job and odd jobs. In addition, I made some sort of payment on the car loan every two weeks – because that way the interest that was accumulating on the car loan only accumulated for two weeks instead of four weeks. By paying two times every month on that car loan, I was able to pay it off in about 18 months. THEN I was completely debt free.
I kept my second job for a while after getting debt free just to stuff some emergency funds in my bank, and about the time that the emergency fund grew larger than a few of my first-job paychecks the money-worry dreams, and waking up at 2am worrying about how to pay my bills, stopped.
Now, that all sounds so simple, doesn’t it? Simple? – yes. Easy? – not so much.
I learned an old-fashioned trait that my grandparents used to know – how to be frugal with my money. For example: I shared a cheap apartment with a friend to cut back on the number and amount of my bills; we each paid half of each utility bill. I remember being really torqued out of shape one time when the phone bill was higher than normal and realized that it was ME calling long-distance to relatives that drove up the cost of the bill! So, I learned to use email and not use the phone quite so much. {To this day I do not have an expensive cell phone; I don’t do text because it costs money –email and snail mail are so much cheaper!}
I learned that I couldn’t buy everything that my eye fell on at the store. I learned that my list of ‘wants’ was endlessly more than my paycheck could handle. I learned how to discipline myself about how to spend money and when to spend money.
The up-side of this tale is that when I teach this method to my students. I can show them how, with discipline and a clear idea of what they are accomplishing, they can live debt-free watching their savings grow month-after-month and year-after-year, too.

Robin S. McCutcheon holds a PhD in Economics and teaches economics courses at Marshall University. Her skills at money and budgeting have come solely through the University of Hard-Knocks. Using a system of managing and budgeting money she developed for herself, she teaches her Principles of Microeconomics students how to live a debt-free life.