Step 2: Stop Spending! Yes, Now! March 17, 2009

If you are finished with step one and have organized your income and bills then, you are now ready for step 2. Stop Spending & Investing. Stop wasting your money on all of the extra junk you buy right now. The sale items, the coffees, the vending machines, the fast food. Now is the time to cut that spending. Plus, I know right now is a great time to buy stock and if you are debt free you can invest as much as you want, but if you are reading this blog, then you need to stop.

This was a really hard step for us. I have been investing in stocks since I was 15. All of last year, we kept investing…and looking back I saw my money going nowhere. We decided that starting in January we were going to stop investing in the market. We took that money and applied it to our next debt that we are  paying off. That put an extra $50 bucks or so…in our pockets to pay on debt. Since then everything as been snowballing and we have been paying off debt faster than ever last year.

If this is too drastic or maybe it’s just crazy and you need that feeling that you are still saving for the future. This is what you can do, invest only what your company will match. So if you company match is up to 4% then save 4%, if they match up to 2% then that’s all you should be investing when you are trying to get out of debt.

Try it for 6 months and see if you can do. If you are not using the money for debts, then you can go back to investing. But if it works then you will be out of debt a whole lot faster.

Now get to it.