It is never fun to be so burdened with debt that you cannot do the things you want to do. Debt has been known to ruin relationships and thwart even the best laid plans. Fortunately, debt does not have to be a way of life. With the right tools and a bit of self-discipline, it is possible to get out of debt and set yourself up to not get back in later on.
Maintaining control over one’s finances starts with a budget. Hopefully you already have one in place. If not, create one. There is plenty of helpful information online explaining how to do it. Assuming you do have a budget in place, remember that it is the key to getting out of debt. Stick to your budget as you eliminate debt and afterward.
Here are some useful budgeting tips to help you conquer your debt problem:
Make a Debt Snowball
For a lot of people, the big question is where to start. Financial expert and media personality Dave Ramsey suggests something known as the snowball method for reducing debt.
Imagine standing at the top of a mountain covered with freshly fallen snow. You reach down, pick up some snow, and make a snowball. Then you roll it down the side of the mountain. What happens? It gets bigger as it goes. Ramsey suggests eliminating your debt this way.
Get all your debts together so you can see them in one place. Then choose the smallest debt and commit to paying it off first with any extra funds you have. Keep making regular payments on your other debts as well. When that first debt is paid off, move to the second. All that money you were spending on the first debt can now go toward paying the second. Then move on to the third, the fourth, and so on. You will gain momentum with every settled debt.
Make Your Coffee at Home
This next tip may seem insignificant, but it is not. How much do you pay for that morning coffee you buy at the coffee shop on the way to work? A couple of dollars? It turns out you can make your own coffee at home for less than a quarter per cup. Let’s just say $.20 for some easy math. For every dollar you spend at the coffee shop, you could brew five cups of coffee at home.
Let us do some more math. Let’s say you spend three dollars on a café latte six days a week (you skip Sundays). That means you are buying coffee 313 days per year at a total cost of $939. Brew your coffee at home and you will spend just $62.60. You will have more than $875 left over to pay down some debt.
Other Helpful Tips
The first two tips were chosen because they demonstrate very obvious ways to tackle debt issues. Here are some more, less obvious ways:
- Avoid eating out
- Sell your expensive car and buy a used one
- Look for free entertainment options
- Shop with a grocery list and menu
- Go with a prepaid cell phone
- Cut the cable or satellite TV.
With the exception of the snowball method of paying off debt, all these tips have one thing in common: they save you money. Remember that debt is the result of spending money. In order to get out of debt, you have to stop spending. The more you can save by reducing your spending, the more money you will have to put toward reducing your debt. It is really that simple.