Buy Now! Pay Later! I can’t even count how often I’ve seen on TV… “No interest for 50 bazillion years!” (ok I may be exaggerating SLIGHTLY). It seems everywhere you turn someone wants you to get into debt. I can’t even go to Target without being asked if I want to “save” 10% by opening a Target card. I keep dreading the day I have to start saying no to an Albertson’s card. Debt is everywhere you turn, and is so easy to get caught in the trap of instant gratification. Not anymore! When you buy now and pay later, you usually don’t realize how MUCH you will end up paying later. Interest will eat away at you, and you may find yourself under a pile of credit cards with balances you can’t even possibly begin to imagine paying off.
We all know it’s important to get out of debt. But like losing weight- when you are faced with that dessert that you don’t think you’ll ever have the opportunity to eat again in your life, you cave! You figure- just this once. It won’t set me back too much. I will start tomorrow!
But do you? Are you telling yourself lies? We have found by tackling the excuses that hold us back from eliminating our debt, we can live a much fuller life. We can finally meet those goals that we’ve wanted to achieve for years! We can finally feel what it truly feels like to be free, unburdened, and optimistic about our future!
1) Know your Why!
The first step in not feeling deprived, or that you are missing out on life (FOMO) is to have a clear vision for what matters more! What matters more to you? A pair of shoes to add to your collection, or not having monthly payments weighing you down? What feels better? Does one more night out to dinner get in the way of home ownership? Are you trying to quit your job and start a business, or stay home with the kids? Some strategies to help you remember your why could include:
- Create a vision board to look at daily (include your BIG monetary goals and dreams.
- Create a personal motto or mission statement that reminds you of your priorities.
- Develop affirmations to keep yourself on track.
- Set goals with your spouse. When you both are on the same page, you can keep each other motivated.
2) Map out your strategy
There is more than one way to get out of debt, but there are three essentials.
- First, get clear and honest with yourself and know exactly how much debt you are facing. It’s so easy to hide, ignore, or lie to yourself about the exact total balance.
- Second, stop spending more than you earn, and
- Third, pay down your debt until it’s zero.
The best way to do it is to grab ALL of your credit cards and bills. Put a rubber band around the credit cards and hide them from yourself. Now put all of your bills in order of highest interest rate to lowest. Start a spreadsheet (either on the computer or on a piece of paper). The columns will go left to right highest interest rate to lowest. Put the balance that is currently on the card in the next row. Now what you will do every month is pay the MINIMUM monthly amounts on every other credit card and take every extra cent that you have in your budget for debt and put it toward the bill with the highest interest. Some people may want to start with the lowest amount owed so they can totally pay at least one off quickly. I say stop the interest now! You will feel good enough just watching those balances retreat into oblivion. Once that one is paid off you will have even more money from your budget to put towards the next highest interest rate, and then once that is paid off take the money and put it again towards the next until everything is gone!
Now that your debt has been eliminated, close the most recently opened accounts leaving only about 2 accounts. You don’t want to close the older accounts because your credit has been more established on those and they will help you keep a good credit rating. Toss the other credit cards (after you cut up the cards of the accounts you closed) back in your hiding place and don’t take them out.
Some other tactical strategies to getting out of debt include:
- Only keeping one credit card
- Consulting a debt consolidation company
- Avoid eating out
- Getting rid of clutter (cleaning and organizing your home actually makes it easier to not purchase junk you don’t need, and to find things you don’t need to repurchase)
- Examine your expenses- find places to cut!
- Check yourself on utlities (or overage charges)
3) Commit Daily
Once you set goals it’s very easy to get discouraged, distracted, or forgetful! Be ho nest with yourself each day. Start a journal to track your thoughts, excuses, and become aware of things that are taking you off course. When hit with temptation to spend on items that won’t contribute to your goals, ask yourself first why you are doing it! The sooner you can become aware of the excuses you make to “start tomorrow”, the sooner you can avoid them. Here are some things that might be getting in your way:
- Impatience! It takes a long time to recover from debt. You may be tempted to spend by telling yourself- This is taking too long. One weekend vacation is only going to set us back a little bit. This is a lie! One dinner out, and one vacation puts you a step behind, not a step forward.
- “I deserve it”! Do you? You know what you deserve? To finally meet your goals!
- “It’s not fair”. You know this one… my sister can buy that and she makes less money than we do! It’s not fair. I’m going to get my nails done too! The truth is, you have no clue what your sister is doing with her money, and even if you knew- it doesn’t matter. Her goals are not your goals.
- I spent too much money on this trip anyway, I might as well go all out. This is the ultimate in a diet mentality. You slip up a little, so might as well slip up a lot! But does that help you get closer to your goals! NO! You slipped up a little, now get back on the program and cut your losses!
4) Regroup & Recover
This path will not be linear, so cut yourself a little slack, and accept your imperfections. When you do spend too much, regroup, recover and MOVE ON! You can not let it discourage you. Go back to #1 and remember your Why!