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How to get out of debt.

The squeeze is on and more and more moms are feeling the need to stay home to raise their families but due to their increasing financial burdens, this just isn’t possible. People often ask me “What is the best way to get out of debt?”. The simple truth is there is no one best way. What you need is a combination of strategies designed to give the best chance of changing your spending habits and focusing upon getting out from under the crushing debt pressure so many families are feeling today.

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Track Spending; Create a Budget; Set Goals.

First off – Download my FREE EBOOK – How to eliminate debt today.  For SpenAnon members you will find a copy in the Freebies Vault.

 

It goes without saying that you can’t just jump in feet first without knowing where you stand. The first thing that is required is an understanding of where you spend your money.

Nothing fancy here. Get a note book and write down all of your expenditure as it happens over three or four weeks and then analyse that OR, for a faster approach, take three to four months of bank statements and breakdown the spend shown there (most online accounts have a handy tool now that allows you to do this with the click of a button). Make sure to account for credit card and cash spends too.

You need a full picture.

Creating a budget may sound like a daunting task but nothing is further from the truth. Statistics (alright – old stats) showed that at one time 95% of families didn’t have a budget (Saving money – Mike Yorkie). That can’t be true today – can it?

If you have your analysis of what you spend and you know how much comes in (that’s normally the easy part right – we all know how much we make a month), then it’s a matter of prioritizing the fixed expenditure – things like the Mortgage, etc and allocating amounts or “allowances” for the variable amounts, such as groceries, clothes, etc.

Again – this doesn’t have to be a fancy online budgeting tool (although there are enough of them out there to choose from). It also doesn’t have to be a technical Excel spreadsheet – my preferred method. A simple lined book with columns, a calculator and a pen will suffice. Simply show your monthly income at the top and your budgeted spend in each category underneath and make sure the end balance is positive! For example:-

budget sample – month by month:

Income Budget Actual

Salary $2500.00

Expenditure

Mortgage $780.00

Insurance $118.00

Credit min $300.00

Groceries $800.00

Gas $100.00

Utilities $250.00

Debt pay down $150.00

Balance $ 2.00

Looks easy enough right?

The trick is to actually allocate realistic amounts of spendable income. If you have a family of 6, is $700 a month on groceries really feasible? Think it through. A budget you can’t stick to is worse than no budget at all. There are a few options to keep you on track here such as “Spending Envelopes” or “The Cash Jar system” made famous by Gail Vaz-Oxlade (remember Til debt Do Us Part?). Gail also wrote “Debt Free forever – check it out here.

Now – we set our Goals! What are these exactly? Well that depends on you and your specific circumstances. Do you want to pay off student debt? Do you want to clear just your credit cards? Are you planning to be debt free in 12 months or less?

Be specific in your goals. Having goals and benchmarks – sometimes with little rewards attached, are what motivates us to get going and keep going.

Time to Ditch if you wanna Get Rich.

There are many things in our lives today that we don’t really need. When looking at the budget it is time to draw a line through what you want and focus on what you need. You will never – I repeat never, get out of debt if you have to have the full, premium package Sports channel or Designer Leather shoes from Italy. It’s what we call champagne tastes on a beer budget. Get real, OK?

The first thing we did was to ditch Cable TV and the cell phones. I can hear the gasps of horror from here. Yes – we actually took away our teenage daughter’s cell phone (along with our own). My baby girl decided she had to have it back and so she got herself a job that paid enough to have her own (very limited) lifeline to the outside world. This served two purposes: it freed up over $280 a month in our variable outgoings (we still had the landline and Messenger and Facebook so we weren’t completely incommunicado) and my baby girl got her first taste of being independent; making her own money and choosing how to spend it.

Next we went down to a one vehicle household. Now that might be completely not do-able for you but I would urge you to take a look at it. It’s a little inconvenient to start but I soon got used to being chauffeured to work and picked up on route back. We saved on Insurance and gas but we expended additional time. Great trade off for me as Hubby was trying to recuperate from ill health so we could be flexible. Do you have access to a bike – ask your friends. Are you close enough to cycle to work? What are the bus routes like? How long would that add to your journey and what would the costs be? do you live close to another colleague – can you car pool?

Above all else – STOP USING CREDIT RIGHT NOW!

 

Look at making additional income.

The internet is absolutely bursting at the seams with information on How to make an extra $1000 in a month or Side Hustles That Actually Work and How To Make Money Online – Fast. For those newbies out there, a Side Hustle or something you do on the side (outside of your day job) and there are NO fast, easy ways to do this. Everything takes time and effort. If you really want to know what is the best way to get out of debt then don’t read these articles. Seriously. 99% of them are trying to sell you something. What you can do is take a part-time job to supplement your income and START looking at ways to make money online.

In the early days I looked at doing online surveys – a side hustle that the internet assured me would bring in an easy $1k in one month. Well – 4 hours later I was up to $6.75. What I realized is that most online surveys are looking to pitch something and also they look at specific demographics so, if you have no fancy car, no full time job and no access to hundreds of gadgets – your opinion doesn’t count because you are not likely to ever be in their target market.

I’m currently into month 2 of trying to make additional income through blogging, which I’m assured is do-able (and I believe that) but it’s certainly not easy and it’s not free. I’m fortunate in that my part-time job pays enough to cover all the bills but there’s no room for niceties and we actually no longer have any debt.

I signed up (at great expense) to look at email marketing through sales funnels in the next month and then I will foray into online stores and drop shipping. More blogs about these as we progress but believe me when I say – if I can do it and be successful then ANYONE can. I’m not kidding.

Selling things on online sites like EBay is another way to go – that takes us down the path of Minimalism, which I won’t go into here.

Further reading:- Becoming Minimalist – Do I have to get rid of everything?

Money saving hacks.

OK – what are these exactly? Let me know what I’m signing up for first – right?

The very first thing to look at is where most of your budget goes (in the variable department) and look at ways of cutting the expenditure here. Trust me when I say small changes add up to Big savings. I’m going to bet that you spend more in the stores on groceries and other household products than in any other category. Am I right?

I can tell you from firsthand experience that many things you buy out of convenience can be made very simply at home with very few ingredients. Have you ever baked your own bread? There’s nothing in the world like it. Have you tried making jam? It’s the best. What about ditching that expensive face cream for plain old coconut oil? Don’t cry – it actually works and your friends will remark on the health of your skin. Honestly.

I will give you a small sample list here of the things you may not think of,that you can make today to keep those pennies in your wallet.

1. Bread – oh and jam. While we are at it – why not condiments like ketchup too?
2. Bath and beauty products:- shampoo, conditioner, face cream. Simply Google Homemade products and just see what pops up. I do not recommend homemade deodorant! I have an entire Pinterest board of these things!
3. Laundry detergent and Dryer Balls. These two items alone saved me almost $100 a month.
4. Personal gifts – Christmas and Birthdays always leave you financially drained so look at ways to make personal gifts. It means so much more to the recipient and it costs so much less (except in the time department).
5. Garden – set up some pots and start with easy things like strawberries and tomatoes. Start small, dream big.

Associated Post: 10 Things to Stop Buying and Start Making!

Reduce, reuse and recycle… and while we are at it: up cycle too. Stop buying disposable products and start looking for reusable ones such as:-

1. Use rags or washable cloths instead of paper towel
2. Try stainless steel straws instead of plastic.
3. Buy reusable water bottles instead of bottled water
4. Instead of dryer sheets use Dryer balls.
5. Ditch the scented paraffin candles or plug in air fresheners and instead diffuse some essential oils

Not only will you be saving yourself money but you will be lessening your footprint and doing something small towards saving the Planet. Don’t even get me started on the state of the Oceans right now.

Further reading: Plastic Pollution Solutions

Meal planning and Meal Prepping – everybody’s doing this now. Sit with the family and plan your meals for a week or month. Build the grocery list and then take an entire day to chop, blanch, bag, freeze, prepare everything you need in advance to be able to save time (and when buying in bulk – save money). You will be able to have healthy, affordable home cooked food. It’s not as hard as it sounds and believe me when I say the pay off is huge. We were always a family that grabbed take out because it was getting late, we didn’t know what to have for dinner, there was nothing “good” in the fridge. Do you really need me to tell you how much this last little trick will help?

Further Reading: How to spend less on food when the prices KEEP RISING! 

 AND ….Save Time and money with Meal Planning

 

DIY – give it a try.

Do you pay someone to cut your lawn or wash your windows? What about changing the oil in the car? Do you hire a handy man every time you want tiles put in or a shelf put up? That’s the lifestyle of someone with disposable income whose time is worth more than the money they spend freeing themselves up. When you become debt free and are set up as an entrepreneur then you can go back to this but for now – this is your job so do it.

I hear you say – but I’m not qualified. Well my Hubby was a Chef and I am in Financial administration but between us we have moved the laundry room, plumbed in dishwashers, reno’d the bathroom (including the plumbing!), Painted the exterior of the house, replaced a deck (you see where I’m going with this?) There’s nothing you can’t Google or You Tube although I absolutely will not touch, or recommend you touch, Electricity or Gas. Leave that to the professionals eh? Other than that – how do you know you can’t do it if you don’t even try?

If all else fails – seek professional help.

Debt consolidations can be a good thing and speaking to a professional credit adviser / debt consultant never hurts.

Do not go to your bank or any other lender to discuss solutions to your debt problem – they are there to sell you more products.

Remember the Golden Rule.

NEVER TAKE A CONSOLIDATION LOAN AND THEN RACK UP MORE DEBT ON THE LOAN / CARD YOU JUST CLEARED.

 

I hope I’ve given you food for thought and information that will help you in your quest to becoming debt free.

Good luck.

XO

Anna