If you have debt besides your mortgage, you’re not alone; in fact, you’re an average American. According to USA Today, the average American is swimming in debt with approximately “$16,88 in credit card debt, $29,539 in auto loans and $50,626 in student loans.”
However, you don’t have to live your life in debt. You can start making long-term changes today that will not only get you out of debt but keep you out of debt for the rest of your life.
Finding Hope
Being in debt can be draining and demotivating. Sometimes people stay in debt just because they don’t have the energy, or the hope, to fight their way out. If you’re in this dark place, find hope. Listen to Dave Ramsey. Watch YouTube videos about people who have crawled their way out of debt. Read personal finance blogs, and make small changes to your finances. When you gain momentum, make bigger changes.
Finding and Removing Spending Triggers
For every personal behavior that you don’t like, there is a trigger (or two, or three). If you want to quit spending money mindlessly and use that money to help you get out of debt, you must identify your spending triggers.
Maybe you like to treat yourself to a meal out every few days because you want a reward for working hard at your job or because you’re exhausted at the end of the workday. If your reason for eating out is the former, find a different way to reward yourself such as watching your favorite TV show, taking a walk on the beach, whatever it is that helps you recharge. If it’s the latter, find another way to get food on the table that doesn’t require your energy at the end of the day—have a meal that you put in the slow cooker at the beginning of the day so it’s all ready when you come home from work, or keep some easy frozen, convenience meals in the freezers for days when you feel exhausted.
Avoiding the Sale Draw
I get it. When money is tight (and even when it’s not), a sale can be a siren call for many. If you see a great sale, you might buy more than you need because, hello, when can you get things at a price this low again?! There is a feeling of urgency when you see a great sale, almost a panic that you have to get to the store and get the great item that is on sale before it’s gone.
Here’s the thing—if you don’t have the money to buy the item, it’s not a sale, bargain or no bargain. I once read in a magazine about a woman who was so obsessed with Gymboree clothes that she bought loads every time there was a sale, which was often. She and her husband were facing $20,000 in debt because of her addiction. Her garage was full of Gymboree clothes in tubs with the tags still on. No matter what the rock bottom price was on these clothes, she spent more than she had—not a bargain.
If you’re tempted by sales, unsubscribe from the stores’ e-mails. Call a friend when you want to spend money, and find an accountability partner. I don’t have trouble shopping sales, but still, my husband’s e-mail is the one that receives confirmation when something is bought on Amazon, so by default, he sees everything I buy there. If you have trouble over-shopping, this might be one way to build in accountability.
Budgeting Every Dollar
To be successful with your money, you have to have a plan, and a budget is that plan. I kept paper and pencil budgets for years, but as our finances got more complicated, I switched to You Need a Budget. Of course, there are plenty of other budgeting apps out there like Dave Ramsey’s Every Dollar or Pear Budget to name a few; you can find the one that best meets your needs.
At the beginning of the month, put all of the money in its budgeted categories. During the month, if you overspend in one category, you’ll need to compensate by taking money from another category so that you don’t overspend. If you’ve never budgeted before, keeping and maintaining a budget can be challenging, but after a few months, you’ll have the hang of it and have better control of your money.
Tracking Spending
Tracking your spending can be tedious, but it’s also the only clear way to see where your money is going every day, every week, and every month. If you can, track your spending for three or four months, but at a minimum, one month. You may be surprised to find out where your money is going. I have discovered, thanks to budgeting and tracking, that we spend about $50 more a month on gas than I have budgeted.
Because I am tracking regularly, I can see what parts of my budget need to be tweaked so I can have a budget that works for our family. I was also shocked to see how much one of my children’s extracurriculars was costing each month! Tracking can help you find areas where you may be spending money in ways that you don’t want to so you can make changes and have your spending more in line with your goals.
Finding Frugal Friends
When my husband and I were first married, we had friends who loved to go out. They would think nothing of going out to a restaurant and dropping $60 or more on a meal for two. We went out with them a few times, but in the end, we just couldn’t keep up with their spending habits. If you want to make long-term changes to your finances, you need to find financially like-minded friends.
Learn Not to Worry about the Joneses
You may feel pressure to keep up with your coworkers and neighbors, but everyone’s situation is different. Your coworker with the expensive suits may have more money because he and his wife work while just one spouse works in your family. Besides, remember that things aren’t always what they seem. That neighbor who is having her kitchen renovated and whose husband drives the fancy sports car—they may be deep in debt. You just don’t know. It doesn’t matter what others are doing; pay attention to your life and your finances.
As Dave Ramsey says, “Be weird.” We drive a car that is 14 years old and has almost 200,000 miles on it because we don’t want to go in debt for a car. Is it embarrassing? Yes, sometimes, but I love not having to pay a car payment.
Think About Your Finances Like your Health
If you eat whatever rich, gooey, fattening food you want whenever you want, you’re going to be overweight. Not only will you be overweight, but you’ll likely be unhealthy. The same is true with your finances. Keep spending without thinking about the money you don’t have to fund your lifestyle, and you’ll stay not only broke, but in debt. The time has come when you have to ask yourself if you want to keep doing what you’ve been doing and continue to be financially sick, or if you want to make the change to fiscal health.
Getting out of debt requires a fundamental behavioral and emotional shift. But if you embrace the habits that you learned to get out of debt once you don’t owe anyone anything, you’ll build true wealth and change your life. The importance is to keep those habits, even when you don’t have to because you no longer have debt.
