When you’re in a cycle, all you have to do is change one thing to get out of the cycle.
My dad was a banker and both my parents taught me how to live without debt. Then came dental school and everything changed. Debt is frustrating but normal. However, who wants to be normal when “normal” is broke?
Congratulations that you’re taking a good look at your situation. These tips will keep you ahead of the game. It’s also wise to know what doesn’t work so you can change it.
When significant debt happened to me, the first thing I did was ask around. I took a good look at what I could do to make a conscious change. I had always kept control of my checkbook, but now that there are two or more people on the same budget, I have to communicate. It isn’t easy when you have differing opinions on how the money will be spent.
Being scared to death that I would not have enough food on the table for my children was a perfect motivator. Now the concern is that I will have plenty to support us in retirement. Don’t get me wrong. I don’t think you should live your life in fear, but a reasonable amount of angst certainly keeps you moving in the right direction.
One of the places to look is at your level of contentment. We live in a culture that crams stuff down our throats all the time. It can affect you significantly, making you think that you need more than you do. When you consider the “needs” versus “wants,” it opens up your field of view.
Money is very clear-cut. There are no good excuses, just facts. You either have enough money, or you don’t.
Here are some things you can keep your contentment levels high without going into unnecessary debt. To stop the debt cycle, choose at least one and begin taking charge today.
- Stop going places where you are tempted to spend money. As you wander through the mall without a specific plan, you’re setting yourself up for failure. Don’t put yourself in a dangerous situation when it comes to your behavior with money.
- When you have to go to the store, make a list of only the things you need. If you cannot control your debit card or checkbook, take just enough cash with you to make your purchase. If you can walk in and walk out again without buying a bunch of extra stuff that isn’t on your list, it’s a victory!
- Record EVERYTHING you earn and spend. Some great apps help you do this, but you have to be sure to enter EVERYTHING. Recording everything is a habit that will serve you for the rest of your life. I even have a place in our budget for “play money” where we don’t have to tell anyone what we spend it on.
- Share your budget with your friends. Your friends can help by finding cheap or free activities to do together. That way if you decline because of cost, your friends will know that you’re money-conscious, not rude. If you’re having a hard time, allow someone to hold you accountable or share your victories.
- Before you spend any money, ask yourself how this item is going to impact your life. Practice waiting a few days before you make a large purchase. You may find that it’s not as important as you thought it was while you were inside the store.
- Be honest with yourself and your family. Just because your child asks you for something does not mean it’s your job to give it to them. I say “yes” to everything my children ask for AND then follow it up with, “How are you going to earn money to get it?” If it’s not in the family budget, it’s not in the budget, period. It could be something they want enough to earn money to pay for it.
- Pay for high-priority items first. If you have a house/rent payment, pay it early. Then start paying off your highest interest debt. Continue down the line of expenses until your income equals your outgo, which includes savings. The last item on the hierarchy of survival is “rescue.” When you make your money work for you, you won’t need rescuing.
- Think BIG savings. Add at least 20-50% of your income to your savings account every pay period. If you have a windfall, add it to your savings. Having extra savings will allow you to splurge and enjoy the fruits of your labors.
- Save now for retirement so you will have a comfortable nest-egg.
- Find ways to cut costs like preparing your meals at home, buying quality foods in bulk, wearing a sweater instead of turning up the heat, using coupons and DIY projects.
- Avoid credit card debt like crazy! The interest on credit cards is insane for an excellent reason; someone else is making money off of you. Make it a habit of paying off the balance on your credit card every month.
Your level of contentment is always going to be different than someone else’s, so write down your personal needs and wants. Then make the budget work for you. If you need more, ask yourself what you will do to create more. There are plenty of options, but going into debt only puts you on a dangerous cliff that causes fear and stress.