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Many people trying to get themselves out of debt, to save money and to spend less money.
The truth is, debt can occur for a number of different reasons, like overspending. When people try to get out of their debt it seems like that’s when life gets in the way and something comes up. But what if you could still manage your debt? In fact, a lot of people are getting out of debt all the time, and they can do it quickly too.
Now, no one is saying that you’re going to get things done in just a single day. Instead, you’re going to need to work on developing a lot of good habits, related to your motivation, your discipline and your follow through.
Spending better is going to make a big difference in how your money works for you. So let’s take a look at how to improve your spending.
1. Don’t Borrow Money
Getting out of debt and build your credit takes time, but you can speed up the process if you’re willing to make some changes. What that means is you can’t sign up for yet another credit card and you can’t keep spending on credit to get things you want. If you do these things you’ll be able to cut down on the debt you have because you’ll have more money to put toward that debt.
2. Understand Your Situation
If you want to get out of debt you have to know what you owe, but also who you owe it to and any interest you’re paying.
It can be difficult for those who do have a lot of debt to keep track of everything and to take a full financial tally.
One of the easiest ways to keep yourself from really focusing on the amount of debt you have is to hide behind the numbers. Not adding things up means you never know where you stand and that is a huge problem. Make sure you add up every type of debt you have from loans and credit cards to your home mortgage.
Now it’s time to look at the big question:
What do you owe?
3. Keep Track of What You Spend
It can be easy to find a way to solve the problem in a temporary sense, by transferring balances or getting a personal loan, but understanding how you got to where you are is crucial.
Keeping track of what you spend and where you spend it is going to be the first part of the process. Get a book, an app, a piece of paper or something that you can use to account for everything. Some people find it difficult to track all their spending so if that’s use then use a debit card and check your statement frequently to get an idea of what’s going on.
When you know where your money is going you get a whole lot closer to being able to keep yourself on track.
Now it’s time to look at the most important questions:
- What am I spending on interest?
- How much of my income goes to debt?
When you’ve got an answer to both of these it’s time to look at your income and your expenses to start figuring out what happens next.
4. Know Where You’re Financially Weak
What kind of things cause you to spend more money that you would like to stop? Talk with your partner or check out your bills to see where you’re spending a lot and then start looking for ways to cut those things down. Maybe you’re:
- Eating out too frequently
- Buying items you don’t even need
- Getting involved in impulse shopping
- Spending more than you should on sales
As you work through breaking the habits that you want to break you have to follow a simple two-step process.
- Think about what type of habit it is you want to avoid.
- Figure out how you’re going to cut out that habit and start a good habit.
- Stick to Your Budget
Okay, so first you’re going to have to create a budget, but that budget is going to make a difference in tracking your spending and income. You’ll be able to figure out where you’re at now so you can keep moving forward in a positive way.
The important thing is to determine if you have a surplus or a deficit at the end of the month. That means, whether you have money left over or you’re spending more than you make.
What you want to do is get as large of a surplus as you can and start paying down all of your debts. The best ways to do just that are here:
The first thing to do is to start making more money.
For those who make money on commission, you’d have to increase the number of sales that you have and you may need to work longer in order to get there. For those who have a salary wage, it’s not really possible to make more at that job (unless you’re offered paid overtime). That means you may need to get a second job instead. In fact, I was able to pick up a second job as a pizza delivery person for a short time to get a little extra money and get my own debt paid in just 18 months.
The second option is, you guessed it, spend less.
If you’re trying to spend less you have to go through the budget you already have and see where you’re spending, then start working on ways to cut down. Maybe cancel some subscriptions or services. Maybe you could cut back on some of your discretionary spending like going out to eat. It’s going to be entirely up to you how much money you’re able to save each month because you’re the one who’s going to be making the final decision on just what to cut.
If you’re really committed you’ll be able to cut back on more of those things and start saving even more. Even better, maybe you can cut back on the cost without sacrificing the service, you won’t know if you don’t ask.
6. Have a Plan
If you want to do anything you’re going to need a plan. You can’t just jump in and expect things to work, so look for ways to make it happen. You may have to cut into your savings a bit to start paying down some of the higher interest stuff. Also, you may have to use up some of your cash reserves so you can stop building up more and more interest.
So, what’s the best thing you can do to pay off your debt? Make a plan.
7. Cut Spending
Everyone has things that they want. It makes us normal. But unfortunately, too many people decide to buy the things that they want even when they don’t have the money to do so. People like to buy what they want at the moment they want it and even millionaires can have trouble with that. The best thing you can do is not buy something new unless you can afford to pay for it outright.
For those who can compromise it’s a good idea to spend what you have to get something a little less and then work your way to getting what you really want. You may even find that by the time you have the money you don’t want whatever it was anymore.
If you use cash you also have a higher likelihood of not spending as much. If a customer spends with cash they’re likely to spend a whole lot less than with credit. When it comes to vending machines and tickets people are likely to spend MUCH more when they use credit versus cash.
For those who decide to make all of their purchases on a credit card this could add up to around thousands a year just so you can get some points or cash back. And most people only get a couple of hundreds in those rewards. If you don’t spend that much in a year you may not get as much back, but you can definitely see where the problems lie. Spending with cash is going to save you a small fortune.
8. Start Spending Right
So, when you know what you shouldn’t be doing it’s time to start doing it right. You want to start making good habits a priority and that’s going to mean working on some of the bad things that you’re doing right now.
Learn What Triggers You
Are there certain places or certain people in your life that encourage you to spend more than you should? It might be a friend or family member you go shopping with who tends to talk about how you only live once.
Or maybe it’s a specific place you love to go to. No matter what it is, you want to avoid your triggers so that you’ll spend less. Look for ways to get the things you need (or spend time with those people) without that trigger.
Do Your Research
A lot of people like to impulse buy, even with larger items like a TV or even a washer and dryer. By doing your research you can make sure you get the best deal. By researching you slow down and make sure you actually need the item, and you get to compare the prices. That’s going to help you make a better choice.
Put Yourself on the Payroll
This point is all about making sure that you save money the right way. It’s not actually about making more money or getting a job.
What it means is making sure you put money into savings accounts, retirement accounts and more, before you start doing anything else with your money. In fact, you should follow this standard:
- Put money into a retirement account like an IRA or 401k.
- Pay for your insurance including life and disability insurance.
- Put money away in a health savings account.
- Put money into an emergency fund.
- Work on paying off debts and avoiding new debts.
The best thing you can do to make sure you’re getting all of this taken care of is have someone that you’re accountable to. An accountability partner is someone that you can trust to talk about your financial goals and plans with and they should be someone who can keep you from spending money when you shouldn’t.
Don’t Get Emotional
According to neuroscientists, it’s actually a hugely emotional issue to make many decisions.
People make the decisions they do base on things like love, envy, sadness, vanity, guilt or fear. You may make decisions based on a number of different feelings or emotions.
In general, when you make an emotional purchase or a decision to purchase something with your emotions it’s not something you actually need. You’ve decided you want it because of something else.
What an emotional decision means is that you made an impulse purchase. You’re not making a long-term or urgent decision about something that’s necessary for your family or your future. You may not even look at the price or at any of the research. Instead, you buy based on what you want in the moment.
For a lot of people, things that show up on their social media tend to be emotional purchases, like hair vitamins or waist slimmers. They’re things that someone buys because of the emotional impact that they make at the moment.