Back in Black - Fast Fixes to Free Yourself From Debt

Debt rarely comes out of nowhere. It’s a steady buildup over many years. Sometimes, it does feel like you’ve gotten in over your head “all of the sudden” though. When it seems hopeless, here are some fast fixes to free yourself from the chains of debt forever.

Change Your Relationship With Money

Money management is 90 percent psychological. If you have an unhealthy relationship with money, and how you view finances, you’ll end up in over your head with no way out. Change the way you think about money.

For example, you need to come to grips with the fact that there is no free lunch, that “buy now, pay later” is usually a bad idea. If you don’t have the cash to purchase something, you shouldn’t be purchasing anything.

Why are you in debt right now? That’s probably the hardest question you’ll have to answer before you can get out of debt. Take some time to introspect and think about why you like spending money.

Then, start prioritizing your values in life, and your expenses.

Related: Track all your money with a free Personal Capital account

Prioritize Your Expenses

What are the top 5 most important things in your life? Orient your new budget around those things. This is really hard for a lot of people to do, but it’s necessary to get out of debt. You need a guide, a reference, to look to for inspiration when you’re feeling weak.

Focusing on your most important values in life helps you curb unnecessary expenses because your focus will be on only the things that matter – and at least one of those things should be future financial goals, which requires savings.

Related: Wants versus needs

Make A Budget

Make a budget to see how much extra money you have left over at the end of the month. It can be as simple as adding up your income and expenses and subtracting your expenses from your income.

If your expenses exceed your income, it’s time to start cutting expenses.

Related: A simple online budget calculator

Use The 10 x 10 Method

Shave $10 from 10 different discretionary spending areas. This is a way to make spending cuts feel painless.

For example, if you spend $35 a week on Starbucks, cut $10 from your coffee “budget.” Do this for all of your other discretionary expenses (things that aren’t basic living expenses like rent or mortgage payments and utilities).

When making cuts to your grocery bill, focus on replacing expensive packaged or processed foods with cheap natural and fresh foods. For example, expensive cereal and bags of chips can be replaced with fresh or frozen fruit and dried beans (which are easy to make and very filling, not to mention nutritious).

You’ll be surprised by how cheap real food is compared to junk food.

If you can cut $10 from 10 areas of your life, you’ll end up with $100 extra dollars. That’s enough to start paying off some debts and get a savings started. You can also start investing with one of these discount brokerages.

Spend Cash, Not Plastic

Research shows that when people shop with credit cards, they tend to spend more money than if they spend cash. Most people make impulse purchases when they use credit cards because they feel like they’re using “play” money. If you do make impulse purchases, try this impulse purchase savings plan!

Since the bill doesn’t come for 30 days, the “expense” isn’t really real to them. People who live on a cash-only basis, however, spend 20 percent over their previous spending habits without feeling deprived. Cash creates a heightened sense of awareness about how much money you’re spending.

Do You Know Your Credit Score?

Even if you don’t plan on getting a loan, a good credit score can affect your ability to get a job, a place to live, and will save you money whenever you need to borrow. If you don’t know your credit score, you can get yours free at Credit Sesame. It’s 100% free with no credit card required to signup. I’ve been using it for years to monitor my credit score.

Check Your Score Now

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One Comment

  1. Spending cash not plastic is a great strategy! I managed to cut back on my spending by doing just that. It just feels like your spending fake money when you use a credit card.