Debt is a scary thing. It’s something that no one likes to talk about, but that most people have. Many people simply get used to having debt, like it’s something you can’t change anyway, so you just learn to just live with it. Well I am here to tell you that debt is not like herpes – you can cure it, and it’s nothing to be embarrassed about if you’re ready to finally take control of your money. Here’s how it’s done:
Stop bleeding out money!
If your expenses are more than your income, your finances are bleeding out – dying a slow death that you will have an incredibly hard time recovering from. You may not realize it until there’s an emergency that you can’t take care of (and now you’re riding your bike from high school to work). The best thing that you can do is to stop this bleeding immediately if you want to start to truly heal your money issues. Realizing that your “wants” are very different from your “needs” will help you with this process.
Write out your costs/expenses
Fixed Overhead: These are the bills you get consistently every month like your mortgage (or rent), electric bill, cell phone, car payments, insurance payments, and your minimum debt payments.
Variable Costs: These are things that you constantly buy, but on an inconsistent basis so that the costs vary depending on how frequently you do it. I’m talking about things like Starbucks, going to the movies and buying food at restaurants.
This list will help you to put things into perspective regarding how much you spend on your “needs” and how much goes to your wants. It will also clarify what expenses are out of hand and need to be addressed before you end up living back with your parents.
Simplify your life
This is the rule I live by the most. I cut out all of the things that I didn’t absolutely need – like my magazine subscriptions, my cable, and my home phone. I’m saving tons of money every month and I don’t miss any of it. What are you paying for that you don’t really use or could live comfortably without?
If you have an expensive car that guzzles gas – ask yourself if you could sell it or find someone to take over your lease. This way you can get a more economical car that will mean lower gas, insurance, and lease payments which will save more money than you can imagine in the long run.
If you don’t want to cut things out of your life completely, find cheaper substitutes or ways to make it yourself. For example, start brewing your own coffee at home in the morning to save money and not have to deal with the snotty Starbucks worker who always spells your name wrong. You can also learn how to make a lot of your own natural beauty products, or find the drugstore equivalent to the expensive beauty products you may be currently using because you think you’re all fancy and stuff.
Manage your Debt
- Pay off your highest interest debt first: Continue making minimum payments on your low-interest loans and making the biggest payments that you can afford on your high-interest debt.
- You only need one card: Keep the card with the best interest rate and rewards and cut up the others while you pay them off.
- Automate payments: Make your monthly fixed bills automatically paid from your bank account so that you never have to pay interest. Just be sure to keep enough money in the account to cover these costs. Knowing its automatic and that your electric could be turned off if you buy those shoes could very well keep your spending in check.
Increase your Income
Sure, you could increase your income so you don’t have to manage your expenses so much, but why not do both? You’ll get out of debt and into saving money way faster, and you also set yourself up for a snowball effect of financial growth.
- Figure out the best way to ask for a raise
- Work all the overtime hours and holidays that you can
- Get a second job (here are some good ideas)
- Not giving you a raise? F– them! Find a different job that pays better
- Selling all the stuff you really don’t need on eBay & Craigslist
- If you work on commission, take seminars/workshops that will help you be better at your job.
These may all seem like common sense solutions, but if that’s the case how are so many of us still in debt? It’s pretty much all just a matter of being more conscious of your where your money is going, and living a more simple, frugal lifestyle. It’s easy to let things get out of hand with your money when you get wrapped up in daily life, but small shifts can really lead to amazing results (like not being poor).
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