I am passionate about getting out of debt because it changed my life. It isn’t easy. It isn’t even fun sometimes, but the freedom you feel from living within your means will completely change you and you will never go back. When I talk to people about their financial situations, it is clear that in some cases, a change in income needs to be made. Aside from the obvious budget re-alignments, and more self-control, sometimes, we simply need to figure out a way to make more money or we won’t get ahead. Here are a few things that can help you get out of debt.
Cut back on groceries
Grocery budget is one of the first to modify, because it isn’t a “fixed” cost. Find meals that can go a long way on a small amount of money. Take advantage of deals, coupons, discounts. Depending on the size of your family, it may even be cheaper to eat out a couple of meals a week. I know that I can’t grocery shop and make a meal and feed my family for less than a 5$ pizza from Little Caesars. So, once in a while, we do that. Especially at the end of the month, or right before payday. Be savvy and discover what works for your family.
Work from Home
There are so many side jobs or even full time jobs that are home-based. This can give you more flexibility, and save on gas (no commuting!)
Use the Debt Snowball method
This is an incredible method that can work for anyone! It also works quickly, and keeps up the momentum of getting out of debt. This works by organizing your debts from the lowest balance you have to the highest balance (regardless of the interest rate they have) and you work hard to pay off the debt for the first item on your list. To understand the full process and how it works read Pay off Your Debt With a Debt Snowball.
Most of you have had a credit card offer mailed to you offering to “transfer balances” for a low interest rate. Thisis the good kind of junk mail and can really help you get your debt under control. The problem with debt is that you accrue interest. This can keep you in debt forever, unless you make bigger payments, or stop the interest from accruing. Some cards have offers to transfer balances from other cards to their card for a 0% interest rate (or low, like 3%) for a certain amount of time. When we were trying to pay off credit cards, we transferred balances from one card to the next, keeping 0% interest rates. This made our payments go to the entire principle amount and we paid them off MUCH faster than we would have at a standard 12% interest rate. Be careful to read the terms and conditions of these offers. Often, there are transfer fees (which can still be worth it, depending on your account balance and what would be saved from the interest) and other terms you will want to be aware of. Something many people don’t know, is that if you are also using your card, and accruing interest on purchases, you actually only pay off the 0% first, which means you accrue interest on the purchases the whole time. In a nutshell, to save the most money, transfer balances to a card that you don’t plan to use for purchases, and pay the most you can while the rate lasts. Don’t be late making a payment or you forfeit your low rate.
To make sure you are organized and get control of your finances, it is important to budget. Knowing where your money is going every month is half the battle. Most people that have money trouble truly don’t have a great grasp on what it takes for them to live and where their extra money is going each month. Years ago, we had the same problem and didn’t feel that we were spending much extra. After going through our monthly expenses, we realized that we were each eating out for lunch 4+ times each week. Even if we only spent 5$ (which we didn’t always) times that by 2 of us, that is 40$ each week (almost $200+) just on lunches. That was more than half of our food budget each month, at the time. If you know your budget and stick to it, this will help you to get out of debt, and stay out of debt! For great ideas on budgeting ideas, click How to Budget When You Don’t Make Enough Money.
Make homemade products
Save money by making things at home out of household products. You can make your own household cleaners, lotions, laundry detergents, hair products, and more. You will be amazed at how much money you can save every month, simply by making your own stuff that calls for supplies you most likely have around the house anyway (many products require common items like baking soda, vinegar, oil, soap, etc.)
When something in your house breaks or starts to wear down, try to get creative with how you can replace that item. If your bathroom rug unravels ask yourself, “Do I really need another one?” You can always put a towel down instead or find some other item that would work. When you start to do this with scrub brushes, paper towels, tin foil, and other common household items you will be able to cut back a lot, save money, and live a more simplistic lifestyle.
Have you ever heard of a financial fast? This might sound hard at first, but if you can master this you will feel so rewarded you will want to go… shopping! Just kidding, don’t do that! But really, it is very rewarding to exercise your self-control. If you normally buy extra things you want through the month, or take full advantage of Amazon Prime like we do at our house, just don’t spend any money for a month. Obviously you need to buy food and pay rent, etc., but cut out restaurants, extras, clothes you think you need and more. The trick is just to only take care of your essential needs and don’t buy anything else. It takes some diligence and resistance to fight the urge to buy things, but the more you turn down the items you really don’t need, the easier it gets! You will be amazed that it is possible for your bank account to almost stay the same. It is a great feeling and after you do it once, you will want to do it again.
Sell Your Stuff
To make money, try to sell items that you can find for free. Online there are advertisements where people are getting rid of things, as long as you come pick up the item yourself. You can find these on local classifieds, Craigslist, social media groups, the newspaper, or even just driving by peoples’ houses where they have items on their lawn with a “free” sign. You can also contact people you know that are moving and see if they have items they are getting rid of. Collect those items, and then turn around and sell them! You will make 100% profit.
How many times have you purchased something, and then you see it go on sale for even less money the next time you are there? To get the most bang for your buck, pay attention to sales, discounts and store promotions.
Make More Money that You Spend
There is a pretty hilarious segment on Saturday Night Live spoofing this idea, but it is true. And unfortunately, it has to be said. Figure out how much money you have to live on, and live on less than that. There are many circumstances that don’t make this always possible. Medical emergencies, unexpected car repairs and so many more. The key is to make the “unexpected” expenses “expected.” Be sure to budget for birthdays, holidays and even car repairs. Unfortunately, you may realize as you go over your income and your expenses that you simply do not make enough money to meet your monthly needs. This is the time to make fundamental life changes. Maybe a job or career change, living in a different place, or taking on side jobs to make extra money. This can be a sobering reality, but a reality nonetheless. Take the challenge and change your circumstances.
Take Advantage of Free Activies
Research the museums, festivals, and activities in your community that are free to attend. This will make the burden of saving or a financial fast much more bearable. There are so many activities in the community that are usually free, that you should have no problem still living as you save. There is no question that it is hard and that it takes self-control and discipline that may not be fun. But if you put your best foot forward and make the necessary changes, you will live in financial freedom instead of bondage.