Crush Debt this year
January Money Diet

Let’s Crush Debt This Year!

Dear friends,

If you’re carrying debt, you’re not alone. The average American now has about $12,687 in personal debt, not including home mortgages, according to the latest data from the Federal Reserve.

How will we ever accomplish the important things we want to do with our money, when we’re stuck paying for stuff we bought years ago — plus interest?

My Name is Eliza, and I Was a Chargeaholic

Eleven years ago when I first launched the January Money Diet, I had$12,000 of debt spread among four credit cards. Each month I’d pay more than the minimum balances, so I felt somewhat virtuous that I was working on the problem.

Yet each month, I seemed to find a reason to charge a few new things. After all, I was earning airline miles with every purchase on one card, and a whole 1% rebate on another! I also had an excellent credit score, which many financial experts said was very important. Of course, these justifications only fueled my self-deception. Meanwhile, the total amount I owed continued to creep up each month.

Finally, I could no longer stand the constant, sickening, dark cloud of debt. I decided to try Dave Ramsey’s Debt Snowball Plan.

Here’s how it works: You focus on aggressively paying down the debt with the lowest balance first, while making minimum payments on the other cards. It’s a psychological boost to pay off that first debt, which builds momentum.

Next, you move to aggressively paying off the card with the second-highest balance — which goes faster (like a snowball) because you have one less bill to pay. You get the idea.

Today I carry one credit card for emergencies. I make purchases with a debit card, which doesn’t allow me to spend money I don’t have.

A 2021 Challenge

Are you struggling with debt?

Could you divide your outstanding balances by 12, commit to paying 1/12 of the amount plus interest every month, and eliminate that debt altogether?

Could you put the card in a safety deposit box or under your mattress or somewhere where you won’t be tempted to use it at all in the next 12 months?

If you owe on more than one credit card, could you get the scissors and cut up one of two of those cards? That’s what I had to do; I destroyed the cards so I couldn’t use them any more, which forced me to be good.

If your balance is too high to completely pay it off in 12 months or if you owe money on several cards, could you commit to paying $200 a month or even $100 a month to eliminate a significant chunk of one of those balances?

I know that once I set a monthly goal for myself, I was better able to focus and commit to paying the monthly amount.

I dug out of debt, and so can you. Step by step, you can become debt free and enjoy financial freedom.

My hope is that at the end of this year, you’ll look back and think:

“2021 was the year I turned things around and greatly reduced my debt.”

People crush debt every year, and you can, too.

As a simple first step, could you take your credit cards out of your wallet and put them in a safe place for now? Physically removing the temptation is a big help to me, and it might work for you, too.

Let’s Do This!

Saving money during the January Money Diet and applying it toward debt can be a powerful first step.

Today’s challenge is to make a plan to get your balances paid off, and commit not to take on even one single dollar of new debt in 2021. If you’re so inclined, we’d love to hear about your plan to pay off debt in the Comments of this post or over in the Money Diet Community Facebook Group.

If you’re already debt-free, perhaps you will tell us how you achieved that victory and how it has affected your life. We all love hearing your stories.

No matter what your circumstances are, I promise you that people in worse financial shape have gotten out from the burden of debt and you can, too. So let’s agree to attack debt head-on this year.

Here’s to real, lasting financial freedom in the days ahead. Together, we can do this!

Best always,

Eliza Cross's signature

P.S. One of the reasons I love my local credit union is because they offer lower interest rates and fees for loans. If you’re interested in exploring options for refinancing or consolidating debt, you can find a credit union near you with this handy Credit Union Finder.

Eliza Cross is the author of 15 books, including recent titles like Bacon Beans and Beer and Small Bites. She blogs at ElizaCross.com and is the founder of the BENSA Bacon Lovers Society. Her articles have appeared in publications like Sunset, Parents and Writers' Digest. Eliza lives near Denver with her family.

3 Comments

  • Cameron Morgan

    Yay! I love the Dave Ramsey snowball method. Have used it and recommended it to many people. Thank you for sharing this fun (yes!) and effective approach.
    I would add that sometimes we buy things because we think everyone has them (Instant Pot? Vacation? That “reach” school?). Debt is often the result. I try to imagine what the world would look like day to day, if the only things we could see were the things that were owned. So you might see half a car driving down the street, or someone eating invisible food at a restaurant. Sort of an Emporer’s new clothes moment: the purchases made with debt, from an expensive purse, to trendy glasses, or a new sofa, turn invisible to everyone around you. They only appear when you pay them (and the debt) off.

  • Kimberly

    We are debt free but since becoming debt free have had health issues which stopped me from working. We will never go into debt again because we promised God that we wouldn’t. I am trying all ways to save money and really trying to find away to make some money to help with the needs. We garden, I cook from scratch and we don’t buy wants only needs for now. I know there has to be some way to make a living out there for me so I can start bringing in money for our household and make life easier on my husband. Just praying I will find a way and soon. God bless

  • Steve

    When I was in my early 20s I participated in the Crown Financial Ministries study (similar to Dave Ramsey) through church. It taught me how to manage money. At the time I had a student loan, a car loan, and owed my parents money for helping me get started out of college. Using the debt snowball, I paid everything off on a beginning teacher salary and was debt free by age 27. While it took discipline over several years, it was so worth it. Beyond two “speed bumps” several years ago, I’ve been debt free (other than my mortgage) since then.

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