Debt is one of the easiest things to get into but very difficult to get out of. If it were easy, everyone would be doing it. According to Nerdwallet.com “the average household has $129, 579 in debt, $15, 533 in credit card debt.” If you are one of the households included in the above statistic, then please continue to read.
The first thing to do to successfully get out of debt is to completely change your mindset. Debt should be seen as something that is unnecessary, restricting, and burdening. In turn, money should be seen as a tool important for building continued wealth. The power and emotions that have been assigned to money need to be removed and replaced with positive thoughts and a commitment to getting out of debt.
If you are unsure if your debt is a problem in your home there are several signs that may be an indication of a debt and/or overspending problem. Some signs include:
- Living paycheck to paycheck
- Not opening or avoiding to open credit card statements or bill payment notices
- Carrying balances but continuing to make big purchases
- Only paying or being able to pay the minimum balance
- If you and your significant other argue or fight over money
- Relying on credit cards for emergencies
- Relying on Credit cards to make monthly essential payments such as utilities
- Making or continuing to make big purchases but only making the minimum payment
- Hiding purchases from significant other
- Low Credit Score and the inability to develop credit or better credit
If one or more of the items listed above are a challenge in your household then you should be or planning to be getting out of debt. There is no magical formula for getting out of debt. In order to get out of debt you have to spend less and make more.
To spend less, its suggested that you track your spending. This should be simple, especially if you, like me, make all purchases with your debt card. If that is not the case, and you still believe in making cash purchases then be sure to write down every purchase made. Next at the end of the month or between pay periods you should analyze your spending habits to see where spending can be cut. Some places where spending can be cut include:
- Beauty or upkeep: Reducing the amount of times you go to the salon or barber shop, reducing the amount of beauty supplies shampoo, cologne, perfume, or make up
- Subscriptions: Cable, Hulu and Netflix (do you really need both), newspapers, monthly application subscriptions, magazine
- Eating out: reducing the number of times you eat out from 5 to three could potentially save $10 or more per week.
- Coffee trips/ runs
If you are serious about getting out of debt you could reduce the budget for non essential items to zero to make a drastic monthly reduction on your credit card balances or other debts. I have several previous post on how I’ve cut my expenses.
Once you’ve committed to spending less and have found money in your budget, that money with increased income should provide an accelerated debt repayment plan. If you are struggling with how or where to begin to search for an increased income some ideas are below:
- Your current employer: If there is a special skill that you have or a skill that your coworkers are weak(er) in than you then you could optimize that into a money producing opportunity. For example, I have a coworker that works in IT. He charges $50/hr for removing virus and restoring computers. I myself, charge $10/note that I write for coworkers to stay current (or get caught up) on documentation which is very important in Social work. Another option is to ask for a rise but doing both could drastically increase your income!
- Online: There is an abundance of opportunities for making money online. Blogging, making a Youtube channel, becoming a virtual assistant, or hosting a website are a few online opportunities for increasing your income. There are also companies that allow part time work from home. Selling items online could also be an option via Ebay, Amazon, Craigslist, or Facebook groups
- Newpapers or job boards: Obviously newspapers or job boards provides listing of part time work that you may be willing to work.
- Friends or family: Offering to assist friend or family with small “odds and ends” jobs could potentially earn you additional income and could blossom into an ongoing side hustle.
Check out how much I’ve made from a variety of side hustles.
Once you’ve discovered how to cut spending and possibly make more money then there is nothing more to do but to make a plan, put it into action, and stick to it. You should set realistic expectations for yourself by determining how much debt you would like to have paid and by what date. You should determine what you are not willing to sacrifice but will limit. Additionally, you should stop or avoid using your credit cards and avoid getting into any new debt. Check out my very own progress since taking these very same steps here.
If you need an accountability partner, feel free to contact me!
Did I miss anything?