The only place where an increase in spending can be called debt reduction is Washington. Don’t think this is the cliché saying “you have to spend money to make money.” You need to make changes. Whether your debt is from frivolous spending when you were younger, business deals that went sour, a project that bit you, or mistakes last year, it is still debt. Your debt is affecting your life and future by damaging your credit score and determining how you spend your money on a monthly basis. How do you get rid of that debt cloud?
- Realize that you will have to make sacrifices – This isn’t a board game. You can’t get mad and flip the board. There are no restarts. You have to deal with what you have. Be willing to make changes. Your current lifestyle has either gotten you to this point or is keeping you at this point. Either way, it isn’t working. You can’t repeatedly do the same thing and expect it to turn out differently. It isn’t too late, but it won’t be a luxurious ride.
- Prioritize – What are the most important things in your life? These things shouldn’t include things like wireless internet, Starbucks, or cheesecake (despite how amazing it is). The most important things in your life should address Abraham Maslow’s first two levels of a human’s hierarchy of needs: physiological and safety. Your physiological needs are the basic human needs like hunger and thirst. Your safety needs are things like shelter and healthcare. None of these things should be lavishly filled. Going to Starbucks is not filling your physiological need for thirst and going out to eat is not filling your need for food. Be conservative. As already mentioned, you will have to cut back on your unnecessary expenses. Perhaps that means buying the generic version of something or buying more cheap foods like spaghetti. If you can afford to go without it and still maintain your job (don’t cut your water supply off or anything because you’ll probably get fired for poor hygiene), do it.
- Garage Sale! – Everyone has junk in their house. Well, you might consider it junk; other people might buy that pile of “junk” in your garage for the right price. Not only will you create some extra space in your house, you will make some extra cash (for your bills). However, you might have to sell some things that you don’t consider junk. If you’ve got four televisions, you might need to sell two or three of them. You don’t need a 50 inch flat screen. You can watch TV on a 27” box TV. It isn’t as much fun, but it doesn’t use as much electricity. Plus, you still see whatever you wanted to watch. Live modestly during these times.
- Another Job? – Will a part-time job help you speed up the process? Are six months of working Saturdays worth being free of debt? Is a part-time job necessary to avoid bankruptcy? Do you have any skills that would earn you some extra money?
- Talk to Creditors with a Plan – Most creditors don’t want to have to write you off as bad debt. Many times, to avoid this, they’ll work with you on your payments or interest rates (unless they are a credit card company). Some will even eliminate the interest for you to ensure that they don’t lose money on the deal. Creditors will be more willing to work with you if you have a plan to pay off your debt. Pleading and begging in many cases won’t help you much because people frequently try to pull that move on them. Have a plan to get out of debt and discuss the options with them in a calm manner. Tell them several things you are doing in hopes of paying back your creditors.
Hopefully, you can use these tips to get out from under that debt cloud. If you do get out from that debt cloud, make adjustments so you don’t end up there again. You can do this. It will just take some sacrifices on your part. Good luck!