Hey, frugal friends! As I wrote on Fruclassity on Monday, I’ve got a serious itch to dump the remainder of our consumer debt this year and to lower our mortgage as well. Not sure what’s prompting it, but the urge has been going strong for three straight weeks now. The conspiracy theorist in me tells me it’s because America is headed for a nasty financial meltdown, but I’ll spare you from that rant for now. 🙂
Meltdown or no meltdown, it’s always good to get out of debt and to take advantage of those times when your motivation is strongest. So, in that vein, here are some rock solid tips for dumping debt if you’re really serious about becoming debt free.
How to Dump Debt if You’re Serious About Becoming Debt Free
Do the Challenge Everything Budget
My blogging pal J$ uses this budget and has experienced major league success in cutting his family’s expenses. I’ll let you head over to his site to get the details, but suffice to say that the Challenge Everything budget is a rockstar way to cut expenses so that you have more money to put toward debt payoff. If you’re really serious about paying off debt this year, you’ve got to make cutting expenses a top priority. Forgive my bluntness, but it’s a huge waste of your life and your time to pay for cable TV when you could be using that money to get out of debt and work toward financial independence.
Have a “Crisis Mindset” About Your Debt
If you’re really serious about paying off debt, you’ve got to have a crisis mindset when you look at your debt numbers. You’ve got to start viewing that debt as the ultimate enemy. And in reality, it is an enemy. Debt is an enemy to everything we hold dear: time, peace, freedom, and fun.
- Debt forces you to work extra hours than you’d need to work if you didn’t have debt, therefore robbing you of your time.
- Debt robs you of peace as you ponder the slavery you’ve put yourself in to credit card companies and banks.
- Debt takes away your freedom via time and money and leaves you with less options in life
- Debt takes away your fun on many levels. Don’t allow it to do that any longer
When you acquire a crisis mindset about your debt and start viewing it as something you’e got to get out of your life ASAP, like a woodtick that’s bored its head into your arm or that boss that makes your life a living hell every day, you increase your drive and momentum as you work to rid yourself of the crisis that’s holding you back in so many ways: DEBT.
Don’t Be Tempted by Immediate Gratification Expenditures
It’s easy to be tempted to spend when you see a great outfit online, a great pub deal through a coupon company or that new car on TV. Don’t fall for the trap. View these spending temptations as mini-enemies working for your main enemy; your debt. You deserve better than a new shiny something or a dinner out: you deserve debt freedom!
For more information on how to break the temptation to spend on immediate gratification stuff, read this article on “How We Broke the New and Shiny Cycle.”
Have an “Every Extra Dime Toward Debt” Mentality
And I mean EVERY extra dime. No dollar amount is too small to put toward your debt. Each dime and nickel will eventually add up to dollars, and then ten dollars and then a hundred dollars and then a thousand. Like the magic of nickel and diming yourself into credit card debt, that same rule of compound interest will help you nickel and dime your way out of debt.
Recommended Reading: Money Love: A Guide to Changing the Way That You Think About Money
Find “Extra Money”
Extra money for debt can take on many forms. Here are some ideas:
- All bonuses, tax returns, side hustle and overtime monies go toward debt
- All money saved when you buy an item on sale goes toward debt
- All money saved when you were going to spend money but didn’t goes toward debt. For instance, if you were going to order takeout for dinner but then decided to eat at home, the money you would have spent goes toward debt. Or if you were going to buy a pair of shoes that you found on clearance but decided not to, put the money you would’ve spent on the shoes toward debt
- All money earned by going through each drawer and closet to find stuff to sell on Craigslist goes toward debt
- All money earned by cutting expenses using the Challenge Everything budget goes toward debt
If you truly want to dump your debt this year, you’ve got to have that crisis mindset, and to utilize the momentum that comes with the crisis mindset to spend a whole lot less and earn a whole lot more to put toward your debt balances this year. Downsize your housing, your car or whatever other thing in your life that’s holding you back and keeping you from a life of debt freedom. Treat your debt as the ultimate enemy this year and you will indeed succeed at becoming debt free.