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When you’re trying to learn how to get out of debt, you might find yourself in a ridiculous circle.  You pay down your balance.  But then you suddenly need to pay a surprise bill.  You don’t have money to cover the bill, so you put it on the card.  Now the card balance is nearly as bad as it was before.  So you go back to paying the balance down again.

Frustrating.

Especially when you’ve been trying so hard.  You didn’t go out to happy hour with your buddies.  You cancelled your cable service.  Now it feels like all that sacrifice has gone to waste.

Most Americans are in the same boat as you.  We’ve all heard the stats.  The average American owes $15,000 just in credit card debt.

How to Get Out of Debt- Break Up Your Paycheck. Humans are lazy! Use that to your advantage, and pay off debt more quickly.

It’s a pretty common problem that lacks an easy solution.  Otherwise, everyone would be out of debt tomorrow.

Getting out of debt isn’t going to be easy.  But there are definitely some steps you can take to simplify the process a bit.

Our own family has a big goal to pay off debt this year.  It’s our #yearofno.  But that hashtag motto isn’t the only tool we’re using to wage war against credit cards that have taken over too much of our lives.

I’m going to share another way we’re gaining ground in our debt battle with you today.

Here’s how to get out of debt by breaking up your paycheck.

Step One: Your regular checking account

Here comes the b-word, and I hope you expected to see it here: budget.  If you scoff at budgeting, then you might as well cozy up to your credit card and give it a name.  Because you will be life long buddies.

If you would rather break up with that card, then get serious about making a plan for your money.

If you already have a budget plan in place, skip down to Step Two.  Otherwise, read on.

I like to use a spreadsheet.  Both because I’m a control freak, and because it gives me a clearer idea of what’s happening with my money.  I can plan for those months with extra paychecks.  I have flexibility in crazy months like May (with all its extra birthdays, projects, and celebrations).

Here’s what my spreadsheet looks like:

You can view and print it here.

I like to set it up like this, because I can play with the numbers on the bottom part of the chart.  Those numbers are more flexible.  At a glance, I know how much we can afford to spend on gifts.  Or if we’ll need to scale back on groceries for a pay period to cover other costs.

If you aren’t a nerd like I am, there’s plenty of programs that will do the work for you.  I personally have used Mint.com.  I like their trend charts that let me compare my spending now to a year ago.  I can even compare my spending with others in my area.  I love that it’s free.

I’ve also heard amazing things about YouNeedABudget.com.  Be aware that this option has a fee.  But they teach you how to live on last month’s money while you build up this month’s income.  (Intriguing, right??)  I have not tried this method yet.  If you have, let us know what you think of it.

Step two: The other accounts

That checking account covers our day to day bills as we go through life.  But we never deposit our entire paycheck into that account.  There are irregular bills and expenses that we need to cover.  And it’s important to do that in the laziest way possible.

I’m serious.  Human beings are a lot like water.  At our most basic, we’re likely to follow the path of least resistance.  If you know this about yourself, you can use it to your advantage.

If money is in your checking account, and you have a debit card on hand, it’s going to be tough to resist that impulse buy.  Don’t just leave the money there with good intentions to use it to pay off debt or bills “later”.

Here’s how I use my laziness to my advantage.

The following items are automatically withdrawn from our paycheck (or checking account) on a regular basis.  I never pay much attention to it.  (Aside from an occasional check up.)

Retirement

Everyone preaches that you should save for retirement, and starting yesterday is best.  But you’ve never had the extra money to do it.

Unless you’ve already cut all your frivolous spending and still have no money left each month, you need to set this up now.  Start with just 1% of your paycheck if you’re nervous about it.  I comes out of your pretax paycheck, so you won’t be missing the entire 1%.  And if your employee offers a match, that’s money you need to take advantage of.

FSA

If you have a family, you probably have medical bills each year.  If you know your average medical spending per year, have that money funneled into a special tax free account called a Flexible Spending Account.  Most companies will handle this for you, so ask about it at work.

We never meet the full percentage for deducting our medical bills from our taxes at the end of the year.  With an FSA, there’s no minimum requirement.  So an FSA is our best opportunity for saving tax dollars on medical expenses.

An added benefit is knowing that money is available when we have to go to the emergency room.  There’s always enough to worry about at that time without adding in money troubles.

Be sure to underestimate this amount the first time you set it up.  The money in there is “use it or lose it”.  Meaning that if you don’t spend the whole amount by the end of your company’s fiscal year, the IRS keeps it.  No one wants that!

The Debt Account

Once we decided to make debt payment a priority, we opened a separate checking account.  I made sure that this account wasn’t linked to our usual spending accounts.  We chose to use an online bank called Ally.  We like it because they don’t have fees, and it’s easy to set up.

And also because we have no other accounts there at all.  This debt money is completely separate from our usual spending dollars, both physically and in our minds.  We also opted not to get a debit card to make it even tougher to access this money.

To do this, Hubby filed some direct deposit paperwork at his office.  Now 15% of each paycheck automatically deposits into this new checking account.  Each pay period, I pay our credit card bills from this amount.  I pay the minimum on a couple of cards, and throw everything else at the one main card that we want to pay off this year.

We didn’t change the amount of money he is paid.

We didn’t change the amount we are paying toward our debt.

We simply played a little mental game that requires us to go through a few extra steps to get to this money.  By separating out this cash, it’s no longer part of our daily budget.  That makes the temptation to spend it on other things minimal.

Use your laziness to your advantage!

Other accounts

Having an account to pay off debt was great.  But I noticed that at certain times of the year, we were still adding to the credit card debt.  When we needed to fill our big propane tank, it came with a big bill.  We weren’t always prepared to pay for that.

We already had a savings and checking account with Capital One 360.  (Not to be confused with the credit cards, this online bank used to be called ING.) We love Capital One 360 because you can open several savings accounts to use for different goals.

So we opened an account that I called “Heat Bill”. I set up an automatic withdrawal from our checking account that will deposit into this account every month.

It’s a line item in our budget, but it comes out automatically like our Netflix bill.  So I don’t have to think about it or ponder on whether we can actually afford to save this month.  It’s lazy-proof.

Other accounts that we currently have, or plan to have with future pay raises:

“Extra” paychecks

Hubby receives biweekly paychecks.  So twice a year, we have a month with an “extra” paycheck.

Many people talk about this paycheck like it’s free and clear money.  But that’s not entirely the case.  You’ll still need groceries, gas for the car, and other purchases that don’t stop coming just because it’s “extra paycheck time.”

That’s why I like to use my spreadsheet above.  It doesn’t go by the month, so I can easily locate the check that’s best for skipping our typical bill payments.

I use this “extra money” to pay our car insurance and life insurance bills.  We prefer to pay these bills in one lump sum rather than monthly.  We get discounts for paying this way, and I love not having to come up with the money for them every month.  Any time I can cut a monthly bill, I do it.

Break up your paychecks and take the lazy way out!

Figuring out how to get out of debt is tough.  Take advantage of our tendency to be lazy by setting yourself up for success.  Choose the method above that is giving you the most trouble, and set it up today.

What a sigh of relief you’ll heave when a bill comes in and you have money at the ready to pay.  No more relying on credit cards for you!

Join the conversation on Facebook and let us know which of these tips you will begin with!  And which tips are you already using successfully?