Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt. — HENRIK IBSEN, A Doll’s House
Racking up debt may feel like a cakewalk. You continue borrowing hordes of dollars without batting an eye.
But, once the honeymoon is over and the harsh reality starts to trickle in, you realize the financial blunders you’ve made up until now.
The fact holds true in most of the bad debt cases and that’s why Americans have more than $1 trillion in credit card debt today.
Its touted as the highest amount of indebtedness post the conclusion of the Great Recession of 2007.
Still, all’s not lost yet. There are several ways to pay off your outstanding loan balances, regain control over your finances, and save money for retirement.
For that to happen, you’ll have to scale back your overspending spree, stick to a practical budget, and start making smart investments like the Individual Retirement Account (IRA), 401(K), or Health Savings Account (HSA).
If you’re serious about eliminating your debt and want to lead a debt free life, keep reading below.
5 Ways to Slash Your Expenses & Save More
All the expenses, be it big or small, add up.
For instance, unnecessary phone plans or late-payment interest charges are like white elephants for your paycheck. They eat up your dollars.
So, by plugging these loopholes in your monthly expenditure, you can easily eliminate debt and live debt free:
Plan a suitable budget and track your spending
As already mentioned, it is very important to stick to a practical budget if you want to become debt free.
To plan a suitable budget, first jot down your total income and write down your expenses as per categories. Make 2 broad divisions – fixed and variable expenses.
You can’t trim your fixed expenses but you can reduce your variable expenses. Allot a fixed amount against each item. It’ll help you not to spend more.
Then, subtract your expenses from your income and see how much amount you’re able to save. If you want to save more, revisit your budget again.
Make sure you keep a category of how much you’re actually spending on each item; it will help you track your spending.
At the beginning of every month, analyze your previous month’s budget and if required, make changes in your budget.
After a few months, you’ll be able to plan the most suitable and practical budget.
Stop having restaurant meals
If you eat out a couple of times in a week, then those costs would quickly erode your budget and derail your plan to pay off your debts as well as save money.
The solution to such a problem is to carry homemade food to work or college. Doing so regularly will help you to stick to your budget and keep you motivated to pursue making the debt repayments.
In addition, avoid buying bottled water; keep your own water and refill it whenever you get a healthy option, such as an office or a nice restaurant.
Start hosting backyard sale for used items
Another smart way to free up precious cash is to sell your old, used household items by hosting a backyard sale or reaching out to one in your locality.
Just go through your house like an FBI agent investigating a crime scene, and list all the products that you don’t use anymore.
You could thank yourself later, as selling off unused items will make your home clutter-free while providing you with a financial windfall. Contribute those windfalls towards your debt payments and get rid of your outstanding loan balances faster.
Start earning more every month
All your cost cutting tactics become more effective when you get a fat paycheck.
Obviously, you’d have to curtail your expenses if credit card debt elimination and paying off other debts is your primary financial goal.
However, increased income can help you a bit to repay your debts fast.
How can you do that?
You can take up a side gig after your regular work hours or ask for extra projects from your current employer in return for some extra pay.
If you think that your salary is much less as compared to the market and the job you do, you can also negotiate to ask for a raise.
Build a fund to tackle emergency situations
You may think that when you’re trying to repay your credit card and other debts, why will you deposit an amount to build an emergency fund?
But, it’s necessary.
You never know when an emergency situation can push you again into debt. So, you should save for emergencies.
It may not be possible for you to deposit a big amount every month when you’re struggling to repay debt. But, every cent counts. Deposit a small amount to your emergency fund for the time being.
After you become debt free, deposit a significant amount to your emergency fund account. It will help you tackle emergency situations without falling into debt.
It is not easy to eliminate your debts; but, it’s possible. All you need is motivation and little patience. You have to stick to your debt repayment plan till you repay the last cent.
And once you’re debt free, start planning to build a secure financial future.
Author Bio: I’m a freelance journalist living in Oakland. I work for Oak View Law Group, a leading consumer and bankruptcy law firm based in CA and operational across US. I’m a numbers geek who loves helping others to find the right balance between frugal finances and living life fully.