How To Save Money And Get Out Of Debt
June 4, 2008 – 3:58 pmThe strategy for getting out of debt is simple. Earn more money or spend less of it. Ideally you should do both. Where people fall down is putting the strategy into practice and sticking with it until they reach their debt free goal.
You’re probably saying, gee thanks for nothing, tell me something I didn’t know. The problem with this and any strategy is having the discipline and patience to follow the it through to the end.
The majority of people with debt had to probably work at acquiring it. They may have spent impulsively or lived beyond their means for many years before the debt started to really bite. Then once they realize the size of the problem they suddenly want to get out of debt fast.
If it took years to get into debt, why do you think it will take minutes to get out of debt. It just won’t happen. Getting out of debt is about chipping away at the mountain that you have created until it eventually crumbles.
And this is a valid analogy for your debt problems. Even if it may look hopeless, by persevering with the strategy you will build momentum. And momentum will increase until the debt mountain crumbles. Get to the point where you are not only paying the monthly interest on your debt but part of the capital that you owe. This will increase the rate at which the debt reduces at a faster rate.
So, how do you make more money ? That’s a good question that millions of people ponder everyday. You could get a second job. If you already work a lot of hours per week this may not be a good idea. It’s your call. don’t work to hard that your health is at risk. That would be counter productive.
If you can make money from something you enjoy, like a hobby, then this is probably manageable as a second job. However, working a normal job and then working in a bar is probably not a good idea of a second job (unless making cocktails is a hobby).
Or you might consider having a home clear out and selling all the stuff you no longer need. Have a garage sale or stick the items on Ebay. You might not make a fortune but it can certainly help towards your debt problem.
With this said, making more money is probably harder to work out than figuring how to spend less of your income.
Many people in debt don’t have a budget. They have no idea how much they have to spend each month and no idea what they spend their money or credit on. This is the first step to reducing your spending and getting out of debt.
Establishing how much you have to spend each month should be easy. It’s your monthly paycheck plus any other sidelines that you have going. Remember to allow for tax if your employer is not already taking this out or you may get another unwanted debt at the end of the financial year.
Now establish how much you spend. Be strict about it. Even the tiniest amounts should be recorded. The aim is to establish essential and non essential items. Essential items are needed to survive, so your shelter and food are essential. You have to find the money for these items each month. Non essential items are not needed to survive and can be reduced.
With this said, could you live in cheaper accommodation ? Or do you not use the space you currently have well? If you own the accommodation, could you take on a lodger ? In terms of food costs, do you waste any of the food you buy each month. Maybe you could cut down on the food you are wasting.
Non essential items are things like entertainment. There are all sorts of things that can fit into this category that you can think about cutting down on. For instance, one vacation a year rather than two or three. You certainly need rest and relaxation from time to time but are you over doing it.
Tags: Debt Consolidation
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