A quick google search will show you that nearly 80% of Americans have some type of debt. Many of us are living paycheck to paycheck. We want to pay off our debt and get ahead, but it’s so tough to do on a limited income. It is really easy to tell someone to just save more and spend less, but doing that can seem darn impossible when there seems to be more month than money.
Here I’ve gathered some (hopefully) helpful and practical tips for paying down debt and staying on track. Much like weight loss, financial fitness won’t happen overnight. It is a process and something that needs to be worked at with purpose. Stay the course, celebrate the wins, and enjoy the successes that YOU made happen.
Where to start?
You’ll never get the boat bailed out if it continues to take on water. It’s time to curb the spending, put the credit cards away (or cut them up…), make a realistic budget you can stick to, and really focus on living within your means. There are plenty of free tools to help you make a monthly budget. For many, this is the hardest part; changing a behavior can be really trying. Be tough and stick to it. Nothing worth having is ever easy, right?
Just a reminder that these sacrifices are short term and are necessary to achieve the long term goal. It can be tough when your friends invite you out or when you have to limit the amount on a gift purchase. Tell yourself how much better off you will be by staying the course. It can be easy to give up when things are tough, but you have a dream to achieve! Stick to it!
You are going to need an emergency fund, typically funded at about $1,000. Think of this as a shield to protect you against the unexpected expenses that happen from time to time. Keep it in a separate account, if you can, as to not be tempted to use the word emergency too loosely. So when the car needs repaired or there is a trip to the doctor or vet, your shield is there to absorb the hit and you can keep on moving in the debt-free direction.
You will also need to devise your plan of action. You need to know all you owe in order to make a plan. Once a year you can get a free credit report from each of the three agencies at www.annualcreditreport.com . There are a several methods of approach for attacking your debt. Two well-known methods are the debt snowball and the debt avalanche. The best way is the one you are going to stick with. Pick one debt and chip away at it until it is gone. Focusing on a tangible goal will help to produce real ideas on how to get there.
Living paycheck to paycheck, it can be difficult to come up with the money to get the ball rolling. You probably have the money hanging around your house already in the form of items you no longer use. Depending on your situation, it may be helpful to eliminate a car payment. Buying a used car and not having the monthly payment hanging over my head was one of the best decisions I made in my quest to eliminate debt. It freed up a lot of money each month.
Check Facebook for local garage sale groups (or do the traditional sale at your house), check out apps like offerup and letgo, too, that can have you selling items you no longer use. Also, there are shops that will buy gently used clothing and children/baby items. The money you get from these items will add up quickly, and you may appreciate the extra space, too.
Besides actually getting an hourly job, there are a lot of side gigs you can do to boost the monthly income. Consider driving for uber, shopping for groceries with Shipt, teaching English online, etc. There are so many apps now that will connect you with people who need a skilled task done. How much you work and when you work are up to you.
Perhaps most important is to track your progress and celebrate the wins. You have a plan and it is very important that you know where you are and what the next step is. Congratulate yourself when you achieve a goal. YOU did that! When you see your effort pay off and can let yourself enjoy it, you are more likely to keep at it. Major wins are comprised of many smaller achieved goals. Don’t give up!