Unless you want to get a csl plasma card to make extra money, it takes some serious life alterations to live debt free. Gone are the days of careless spending and ignoring saving for your future, and now come worrying about where your next dollar will go, giving yourself a cushion with an emergency fund in case of unexpected charges, and really making serious contributions for your 401k account so you have an income to live off when you do finally walk away from work. Ignore the gym membership that you will continue to pay, but stop going in a few months, and focus on a resolution that really means something; your finances, and really strive to become debt free this year and onward.
Free Up Extra Money Instead of Paying Interest
It’s nice that when you charge on your credit card you have a nice little grace period not having to pay the balance back until next month, interest free, but if you go past the due date paying less than the full statement balance, let alone something worse such as the minimum payment, you’ll get hit with interest, that depending on the credit card you have, could be upwards of 16% that can really start to add in serious money every month depending on your balance. If you are in credit card debt and have a balance carryover every month, getting out of debt will really free up extra money every month and be able to put towards better use instead of paying back what you spent at a high rate.
Really Take Advantage of Rewards
Once you are out of credit card debt it can be easy to fall back into your old behaviors by going on a spending spree again, but some discipline needs to set in and make sure that your positive financial behaviors will continue to trend in the right direction. The reason I say this is because using a credit card can actually make sense for the rewards you receive in return, such as points you can redeem for gift cards, or cash back, that is, if you can pay your full statement balance by the due date, otherwise the interest will far outweigh the rewards.
Start Tracking Spending
A good way to see exactly where every dollar is going is to pull last month’s credit or debit card statement and actually go line by line. Here you can see, without hiding, every purchase you made last month and see whether they were needed, or could have been avoided. By tracking spending hopefully, you can shed some light on your purchases and you will be a little smarter when it comes to your hard-earned money and save a little more. Just for fun, add up all of the purchases that you probably could have avoided last month and see what the add up to. It will probably scare you…
Reduce Unnecessary Purchases
Speaking of those unnecessary purchases, beyond monthly bills that you need to pay, when it comes to food, gas, and spending money, there is an amount that you can budget for yourself to stay within so you can continue to free up extra money, while still buying what you need. Instead of going on shopping sprees or buying a round of shots at the bar, you can hold onto that money and have the extra, say, $100, left at the end of the month.
Make Some Sacrifices
As you really start to reduce expenses so you can get out of debt, there may have to be some tough choices that you need to make to save even further. Take going out to eat for example. If you went grocery shopping and avoided picking up lunch, going out for dinner, and even grabbing coffee on the way to work, you could be saving hundreds of dollars each month by eating at home, and even brewing coffee to be ready for your travel mug by the time you’re ready to walk out the door for work. Another tough choice could be your cable bill. It may be time to cut the cord if you think about how many channels you actually watch, what you watch, and if everything you watch is either on your DVR or on a streaming service, then maybe it’s time to ditch cable.
Don’t Fall into Old Habits
Getting out of debt will not be easy, but as you continue to chip away at the balance, set your sights on the prize and it will be worth it!