Five Steps to Cut Debt

It's common sense that there are three things I need to do to cut my debt.
1. Stop making more debt
2. Pay down the debt I have faster
3. Cut my expenses
4. Make more money
Oops, I guess that's four things I need to do. For the most part, I have stopped making new debt. Except that my car needed serious repairs this month, which went on my Auto Repair Card, becuase I don't have any emergency cash. So, it seems to me that an emergency fund is really important to not making new debt. That is item number five.
5. Save up an emergency fund

What order to do these items in? It's pretty obvious #1 is key, so that is the first item on my list, but without emergency cash it will be hard. Cutting my expenses would be one way to keep more cash, so I am making that #2 on the list. Now my list looks like this
1. Stop making more debt
2. Cut my expenses
3. Save up an emergency fund
4. Pay down the debt I have faster
5. Make more money

The problem for me is that I want to be reducing my debt at the same time that I am saving for the emergency fund. And how much should I have in my emergency fund? At first I thought $1,000 would be enough, and it would be a great start. But with our older cars and our house payment as well as house maintenance, I would feel much more secure with a $2,500 fund. So, that will be my first savings goal. Now, how to do this without putting off my debt pay down for a year or two? I am going to look at our expenses to see where we can cut down. Any money I can cut out of my expenses I am going to (try) to put toward saving.
What do you think? Do you have an ef? Has it helped you stay out of new debt? How much is enough?

Drowning In Debt

The Mail Person is not my friend. All he or she seems to deposit in my mailbox are more bills. . Although I have a solid credit rating, the debt I have piled up is beginning to overwhelm me. It feels like a house of cards, which would only take a puff of air to send it all tumbling. How did I get in this mess? Need, want, a good income, no savings. Combine those things and the results are massive debt, monthly payments, still no savings, no safety net, and a feeling that I will be under this for years. Add in this economy, a cut in my hours, less income and a continuing need, and it is a recipe for disaster. Credit card companies, who have always gotten their payments on time, are rushing to raise my rates and my minimum payments, despite the fact that it makes it harder, not easier, to pay. They make more money as I make less.
I have looked at various ways to retire my debt or at least pare it down. I have ruled out the debt settlement companies. I have done some research, and it seems few people have had good results with them. The fees are high, and there are no guarantees they can help. In fact, some are outright frauds.
I looked at bankruptcy, but it just isn't right for me. The debt is in my name only, but I would still be dragging my husband into the mess, and I really don't want to do that.
Everyone has reasons for getting into debt. In my case, I don't have a lot to show for it. If I had bought "things" like jewelry, furniture or fancy cars, I would sell it all to pay down my debt. But mostly I used the money to get us over rough patches, like when my husband had a heart attack and we needed the money to pay bills, or when my daughter got in a car accident and needed surgery, but she had no medical insurance. Or, when my son's car got wrecked and he only had liability insurance, so I paid to fix the car. At first it seemed that I could handle another payment easily, and my plans were always to make more than the minimum and pay it off fast. But that just never seemed to happen. So, when I got an offer to consolidate the debt at a low payment and interest rate, I jumped at the chance. I paid off a bunch of cards with a $35,000 unsecured line of credit. Then, little by little, I ran up the other cards again. It didn't take long, just over 4 years, but now I am about $100,000 in debt.
Anyone who wants to say I am stupid is welcome to. I feel stupid. If you want to say I am a poor money manager, I would agree. However, once we get beyond that, what I would really like to do is talk about solutions.
I have been struggling with this for a while. As I said, I have looked at options, including bankruptcy, debt settlement, borrowing even more money. I'm not saying these options might not be right for some people out there, but I have decided they are not for me.
I sent for the system from the guy who says he can show you how to pay off your debt, with just the money you make. I looked it over and it made sense. You set aside an extra amount each month to pay down your debt, and then as each debt is paid you apply the payment to your next bill and so on. Probably everyone has heard of it in some form or other. Debt rolldown, debt snowball. I thought it was a great idea, except that there is no extra money. It all goes to debt and living expenses. I sent the package back so I wouldnt't have to pay for it, and went back to making my payments, sending a little extra to some of my creditors in the hopes of getting those big balances down. I continued to do this for the past year. The pressure has been mounting, and there seems to be no end in sight.
Then I got the "Aha" moment. I sat down and ran the numbers for the millionth time, but looked at things a little differently. And now, I have a plan. To have savings, and pay off all my debt in 3 years (except my house).
I would like to invite you along on this journey. Will it work? I hope so. I plan to share in this blog how it's going for me, and I hope some of you will share your stories. What have you done to eliminate debt? Is it working?