When I came to terms with the $40,000 in credit card debt I had amassed, I knew I had to do something before it completely wiped out my finances. I took a multi-pronged approach to tackle my debt by canceling old subscriptions, reducing what I spent on necessities, identified ways to control spending, as well as a host of other money-saving and debt busting moves.
I can’t emphasize enough how important it was for me to control spending when tackling my debt. One of the first things I did was review the flow of money in and out of my bank account over a period of 12 months to understand where my money was going. It was an eye-opening exercise that helped me tremendously. It’s something everyone should consider doing periodically. So where was my money going?
Control spending: Eating out
I ate out a lot. But I couldn’t really blame myself given the crazy overtime hours I was putting in at work. As it turned out, I was spending nearly $500 a month on fast food and dine-in restaurants. That’s $6,000 a year! That $5 here and $10 there can really add up to something substantial. Once I realized the financial impact of eating conveniently, I turned to home cooking. It wasn’t easy at first, but free cooking resources and recipes online helped a ton. It also reduced the burden I was putting on my finances as home-cooked meals are typically cheaper than eating out.
Impulse buying
This was particularly difficult because you know, who doesn’t want new things! I loved making new purchases because I enjoyed having the latest and greatest. But guess what? I got bored of those new things quickly and ended up buying more things to satisfy the never-ending want inside of me. Impulse buying was my worst enemy and something I needed to control if I was ever going to get out of debt.
One thing that helped me in this area was remembering something my dad always told me as a kid. There are a lot of things in this world that we want, but far fewer things that we actually need. Before making big purchases, he’d always ask me if this was something I really needed or simply wanted. My mom had great advice as well. She would tell me to think about it for a day or two and see if my want was really justified.
I also asked myself this question when making “want” purchases; “will this purchase help me pay down my debt?” The answer was no every time. It was important for me to understand that I couldn’t get myself out of the hole I dug by continuing to dig deeper. I had to make a change, and I did. Cracking down on impulse buying helped me free up income to pay down my debt that otherwise would have been spent on something that would simply add to or delay the pay-off of debt.
Keeping up with the Joneses
Many people try and put up a façade in order to appear as successful as those around them. They do so by imitating the spending habits of their neighbors or associates. Don’t do it. For all you know, they are doing the same thing and probably stretching themselves thin financially. Don’t worry about them. If you’re in debt or struggling financially, you’re in no place to be putting up facades.
Take it from me. I bought a relatively nice car, wore designer clothes, went out on the town every Friday and Saturday night, bought things I didn’t have the cash for. And what did I have to show for it? A mountain of debt so massive that it almost crushed me. The sad thing is that someone at work approached me and called out my lifestyle and mentioned they aspired to be able to live like me someday. I was not only tricking myself but the people around me as well.
I made a commitment to live within my means and not compare my lifestyle to that of those around me. It took a lot of adjusting, but I was able to scale down my lifestyle. The peace of mind it brought me greatly outweighed any sacrifices I had to make.
In conclusion, if you’re looking to free up income to pay down your debt, you have to control spending. You can do so by eating out less, avoiding impulse purchases, and not falling for the temptation to keep up with the Joneses.