In my cupboard is a coffee mug with the inscription, “Budgets are for Wimps.”

I laughed when a friend gave it to me as a gift, but it was a sad but true story of how I was living my life – a great job with great income, but a mountain of credit card debt, not to mention student loans, and no real understanding of how much that debt was costing me. Nor was I really completely aware of how much it even cost me to live each month.

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My “wake-up” call was not a pretty serious crisis – It came the day I maxed out the last of my 5 credit cards on a huge car repair that the mechanic said was really only a temporary fix. My car was dying, and there was no way to replace it. Every car dealer in town could see that my debt was huge – it was all right there when they pulled my credit report.

Sadly, I had to go to my parents for the money to buy a car, with the promise that it would be paid back as soon as I got out of debt. That was so embarrassing, I decided then and there that I could and would get out of debt.

The process was steady and slow, but there was a lot of learning going on as this happened. On my journey, I discovered all of the ways that debt can be paid off, so you now get the benefit of that learning.

First Step – Get a D—— Budget!

Budgets are not for wimps. They are for people who have decided to get strong and take control. But you cannot even develop a budget until you know where your money is going each month.

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So, the first step is to get an app for your phone or tablet that will let you enter every expense as you pay for it. Your phone is with you all day, so it will be less likely that you will forget to enter an item.

1. After your month is up, categorize all of your “outgo.” Necessary expenses include, mortgage/rent, utilities, gas and groceries, personal items, insurance, and a car payment. They should also include payments on loans and credit cards. Important, but not necessary, is your next category. Shoes might be important; some new clothes might be important. These only become necessary when you absolutely must have them to go to work without holes in your shoes or chew marks from that new puppy you had to have!

The third category of your budget comprises expenses that are not essential or that could at least be reduced significantly. Eating out is an example of this. Buying Apple Watch is an example of this. Moving a piano is kind of an example of this (depends whether you’ll need to pay for back treatment afterwards, or not).

2. Now you list your after-tax income and subtract from it all of that month’s worth of expenses. If you have money left over, you are in great shape. If you are in the hole, you are in bad shape.

3. List the places where you can save money, and lower the amount you will be spending on them from now on. You can go without those new Nikes and buy a cheaper shoe for a while (second-hand stuff can be great too).

4. Develop a budget with your new lower figures, making sure that you have leftover money – this is your debt paying fund.

Make a Contract with Yourself

Put it in writing and sign it. There is something about doing this that really controls you. The contract states that you will stay with your budget until your debt is paid off. The appendix to the contract is our budget. You’ll be adding more soon.

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Give a copy of that contract to a significant person in your life. Now that someone else knows what you have committed to, you will feel even more obligated to abide by the terms. Plus, that person can be your cheerleader.

The Envelope System

If you lack self-control, use the envelope system. When you receive your paycheck, take out the amount in cash that you have budgeted for groceries, personal items, and miscellaneous items, etc. – all of those areas that you cut in your budget. Put the amounts in separate envelopes and become a “cash cow.” Your credit and debit cards don’t go shopping or out to eat with you – only your envelopes get that pleasure now.

Tackling the Debt

Now that you have your debt-paying fund, it’s time to tackle how you will pay down these credit cards. The easiest way is this:

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1. Make a list of all of the credit cards, based upon balances, the lowest balance at the top.

2. All credit card companies will get the minimum payment except for #1 on your list. All of your debt-paying fund will be added to your minimum payment for #1 and sent off every month. Once that card is paid off, you give it to your trusted friend to hold and you start on #2 on our list, applying all of the money from #1 plus the regular #2 monthly payment. “Lather, rinse and repeat” you way down the list.

When You Expenses and Debt Exceed Your Income

If you have finished your budget and discover that your outgo is more that “in-go” you will have to look for other options, and here they are:

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1. Get a part-time job, and use the income for only two purposes – to make up the shortfall in your budget and to make a larger payment to #1 card on your list.

2. Cash out savings and investments to pay off debt. This is an option if you have plenty of earning years left and will be able to replace that money over time. Remember this: a savings account pays less than 1% right now; even a CD does not pay you in interest anywhere near what you are paying in interest to credit companies. In the long run you are saving money.

A $5,000 credit card debt, if you make only minimum payments, will take you 226 months to pay off – that’s 22 years, and the interest you will have paid will be well over $700. Pay off as much debt as you can, and consolidate former payments to dump on one that is left, and so on. Once you are debt free, you start replenishing what you liquidated.

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3. Borrow against your life insurance policy, if it has a cash value. You will need to pay this back, but the interest will be nothing compared to those credit cards. And if you die before it is paid back? The remainder is taken off the amount that your heirs get.

4. Borrow against your 401K. Again the interest rates are far lower. But there are drawbacks. You have to pay it back in 5 years. If you don’t, whatever is left of the balance is counted as an “early distribution” and you will pay regular income tax as well as a 10% penalty for taking a distribution before age 59 ½

5. If you own your own home and are not “underwater” in your mortgage, you can get a home equity loan (HEL). The interest rates will be lower than the credit card rates. The danger here is that you revert back to your old habits. Again, give those cards to a trusted friend.

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6. Get a loan from a family member. This is always risky business, but if you set up a payment plan in writing and sign it, you and that family member will both feel better about it. Pay off the debt, and begin payments to that family member, at the much lower interest rate you have agreed upon, immediately.

7. If your debt comes from a business you own, you may want to think about a small business loan that will give you more favorable interest rates and spread those payments out over a longer period of time.

8. Call your creditors and negotiate. If you tell them that you will be declaring bankruptcy if you cannot negotiate payments at a lower rate, they should be willing to work with you. Some will even give you very large reduction in the total amount owed if you will pay it all off now. If you get offers like this, do whatever you need to do to get that money. What a huge savings in the long run. Now, it will show up on your credit report, but the goal right now is to get the debt paid.

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9. Final Solution – Bankruptcy. Sometimes this is the best way out. Discuss with a bankruptcy attorney the two options (Chapter 7 or Chapter 13), and take the option s/he recommends. This stays on your credit report for 10 years, but you will be sleeping at night during that 10 years provided you are “cured” of your old habits.

And the Permanent Solution

The average American has $15,000 in credit card debt, along with other debts, such as car payments and student loans. This is a huge burden, especially when you consider that it will take 40 years of minimum payments to pay off the $15,000!

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Don’t let this be you once you get your debt paid off. Prevention involves living below your means – it’s that simple. The vast majority of people who are millionaires today state that they got there in part by living below their means – and they still do it.