A mountain of debt is unsettling at best. Rising food costs, gas prices, high rent, and overall inflation make climbing that mountain more daunting than ever. Before throwing your hands up in total despair, ensure you’ve exhausted all your options. It will take work and focus, like climbing a mountain, but the peak is within reach if you want it.
Fundamentals
The core reason debt accumulates is that the incoming finances don’t match outgoing expenses. There are a million reasons for this, but this is the primary fact. Like any monumental task, getting out of this pattern of behavior requires a new mindset. Decide, right now, that you will and must get out of debt. Your effort going forward, which requires expenditures, should support this mentality at all costs.
Next, create a basic budget that you’ll stick to no matter what. This is critical. If you’ve never made one, five essential steps will lead to success:
- Monthly Income. What are your consistent sources of income? Write them down.
- Track Spending. Over the course of a few months, track every dollar you spend. Many apps can help, but this takes discipline and consistency on your part. Track every penny.
- Prioritize. Rent/mortgage, food, gas, and recurring bills come first. Everything else is secondary. List all of these expenses next to your monthly income.
- Make the Budget. Does your monthly income cover your prioritized expenses? If so, everything left over is for frivolous expenditures.
- Refine. Never set and forget your budget. Continue to track your spending for the next few months and adjust. The first time around, it can be easy to overlook certain expenses. Remember, you’re building new habits. Awareness of your actual spending is vital. Keep your eyes peeled for unnecessary costs and adjust when you get out of line.
Staying On Track
Once you’ve adopted an unshakable mindset and crafted a budget you can live with; you’re not out of the weeds yet. Life has a funny way of throwing us off balance and back into old habits that put us in the situation we originally started. Here are some tips on maximizing your money to maintain a healthy budget and lifestyle.
Replace Your Entertainment
Often overlooked are paid streaming subscriptions. Add up all your subscriptions and turn off the auto-renew. You’ll be surprised how much you can save monthly. Your local library is filled with video rentals; often, they have streaming services as well and will satisfy your entertainment needs if you’re willing to dust off the library card.
Increase Your Worth
People often say, “ask for a raise” to make more money. Go to your boss and say you want a raise and see how fast you get laughed out of the office. Schedule a meeting with your boss and present the value you add to the company with objective data points and sprinkle in your plan to expand on that value. This will give you a fighting chance at getting a raise.
More than likely, it won’t be in the budget to give out a raise, no matter how great you are. Take an inventory of your skillset and explore how you can apply them to a side-hustle. There are many ways to work from home on nights and weekends; it’s a matter of finding your niche. If you want something higher-paying, go back to that library card and read. Instead of paying thousands of dollars on overpriced college courses, your local library has all the information you need to learn and build a new skill.
Stop Using Credit
Even if you have to hide your credit cards from yourself, do it! Spending more money on credit will only increase your minimum monthly payments and balloon your budget. These high-interest debt makers will not serve your end goal.
Move Past Ego
Very few people can afford to keep up with the Joneses in today’s inflationary environment. The only one driving your decisions to appear financially healthy is you. Anyone who looks down on you for not having the latest and greatest car, clothes, or gadgets isn’t paying your bills. Do you want those people in your life anyway?
Spending Freeze
Although you may have to muster all your discipline for this option, it can be highly effective. It’s not sustainable in the long haul, but it can be instituted for a month at a time. Set a rule to buy nothing but the absolute essentials for the month. All that extra cash can be spent to pay down more outstanding debt.
Consult a Professional
Debt can be complicated, especially when you’re trying to calculate how credit cards determine monthly payments. The moving parts of debt management can seem overwhelming, and despite your best efforts at creating a sustainable budget, the needle might not be moving to pay off your debt. Call an analyst at Advocate Debt Relief. You’ll be met with encouragement and solutions. You deserve a win; we can help you achieve one.
