Whether you have some student loans, have been unfortunately living on your credit cards, or have just made a mistake or two along the way, you deserve a debt free life. You’re just going to have to work for it. That’s ok, though- work means goals and goals feel great to get to. You can get motivated by this process and actually use it to start taking real control over your financial life.
Every process begins with step one, and we will start there too. Take deep breaths and tell yourself you can do this, because you can! A few small changes will make way for bigger ones and you’ll start to see your debt number shrink.
Budget, Budget, Budget
You knew this was coming. You need to have a budget, you need to read it and you need to stick to it. If this feels painful, remind yourself that it feels worse to overspend and end up in a bad position. It also feels worse to have the uncertainty looming over you of not having any idea what is going on with your finances.
Figure out all of your expenses for the month (break them down weekly if that works best for you) and subtract that from the total amount of money you bring home every month. This clearly shows you your ‘wiggle room’ or ‘fun money’ but it also shows you the potential you have to put funds away. You don’t have to always spend it all.
Calculate your debt so you know what that figure looks like. Knowledge is power and the first key to your financial freedom. How much of your ‘fun money’ can you spend to pay off your debt? Can you make other sacrifices in other areas of your budget to free up more funds? We will talk about tips for that a little later.
Conventional wisdom is to pay off the largest debt first so concentrate your money there as much as you can. How long will it take you to clear that debt? Now you have a goal and a date to motivate you. Once the first debt is done with, apply that money to the next largest debt and so on.
Cash Is King
It is often the best idea to make cash transactions when you are on a budget. There is nothing like a real time, physical representation of what you are spending to keep you focused on your goals. If you want, you can even use the envelope method of saving, where you set aside cash on a weekly basis in labeled envelopes to cover the cost of your bills and keep your spending money separately, also as cash.
Avoid the temptation to borrow from the envelopes, though! For some it is easier to open a separate checking account for only bill funds and transfer those monies on a weekly basis. You may not even want a debit card for that account. Understand your shortcomings and don’t berate yourself for them, just figure out a way to outsmart yourself for your financial protection.
Eliminate the Fluff
As you work your budget, you may find you’d rather spend an extra $20.00 a month on food than on streaming services for entertainment. You could get by with one instead of the three you have. Maybe you pay for lawn services even though you have a lawnmower. Why not get out and get some exercise and DIY to save some funds? The same goes for some luxuries like pedicures or some hair salon services. By doing these things yourself, you can build more room in your budget.
This is a good time to talk about coupons and discounts too. Talk to all of your service providers to be sure you have the best and most current deal they can offer. Be firm and ask for what you want. When it comes time for the grocery store, think about shopping at a discount or wholesale store and buying items you frequently use in bulk. Pick up the Sunday paper and plan your meals around what is on sale. You can save significantly by doing this.
Coupon are available for many goods and services on various online coupon websites. Frugaa.com is one of those sites and has grouped discounts and deals together to make finding them easier. Before you buy an item of clothing or a gift for someone, see if you can spend less with a discount code.
Saving As A Student
If you’re enrolled in a degree program, talk with your financial advisor to be sure you have availed yourself of all possible scholarships and grants to help pay for your education. A professional can help steer you in the right direction.
Try to buy your books used whenever possible or shop online to see if there is a better deal to be had than in your university’s bookstore. See if you can befriend anyone who is in a class you know you’ll be taking next year and offer to buy their books from them.
More DIY, In The Kitchen
Grabbing food on the go is a great way to watch funds stream out of your wallet and into someone else’s. It is fun and entertaining to go out to eat, but your budget may not allow many splurges like this if you goal is to be debt free. Once you are, you’ll have more extra spending money than ever before, so this is’t a life sentence, just a temporary tweak.
Slow cookers are a huge asset to apartment dwellers or people who don’t fancy cooking. You can load economical food choices like rice, beans and cheaper cuts of meat into the slow cooker and let it do the work for you.
If you want to simulate the experience of going out with friends, try a night of co-cooking once a week. You and your friends can each bring a dish to pass or bring ingredients to the host’s home and everyone can cook together before sharing the benefits of companionship and a great meal.
If you can employ these ideas and get excited enough about them to believe in them, they will work for you. If you have a little money stashed, call your creditors and try to negotiate the debt. If you can do this with even your first, biggest debt, you’ll be well on your way to ridding yourself of the rest. The plan works, so just work the plan and stay positive about the steps you are taking to master your financial future.