Recovering from debt can be a great learning and self-discovery experience. Smart financial decisions must be made, bad habits need to be broken and debt relief programs need to be followed so you can consistently chip away at the sum that you owe.
While most people have the impression that debt relief requires big sacrifices, it’s really more about cutting down on unnecessary expenses and sticking to practical decisions that you’ve already made. By staying away from things you don’t need, you can conserve valuable dollars that can be used to pay off debts faster than expected.
Below are seven things that you can cut down on or give up entirely while you’re trying to claw your way back to good financial health:
1. Dining out: Eating out may not feel like a luxury because food is a basic human need. However, if you calculate the amount you’ve spent on going out to eat in a year, you’ll see how it can add up to significant totals. Dining out makes you spend not just on the food, but on gas and wear on your vehicle as well.
The occasional dinner in your favorite restaurant is fine, but don’t make it a frequent part of your routine. Limit restaurant meals to special occasions such as anniversaries and birthdays to save on hundreds or thousands of dollars per year. Remember that eating at home not only saves you money, but it also helps you eat healthier.
2. Gym memberships: Gym membership and personal trainer fees may not seem like luxuries because they help keep you in shape, but it’s smarter to de-prioritize these expenses when you’re trying to recover from debt.
Instead of running on a treadmill, consider jogging in the park for the time being. Instead of doing yoga or cross fit with a personal instructor, you can exercise at home with YouTube video guides temporarily. You can always go back to the premium stuff after you’re done reducing your debt. As of now, you can stay just as fit with good, old-fashioned exercise routines and self-help videos.
3. Shopping: When you’re in debt, shopping should be considered a potentially hazardous activity. Think of malls, marketplaces and online stores as areas where financial traps could spring at any time. Retailers will use all sorts of creative methods such as sales, zero interest installment offers and free trials to plant the seeds of want in your mind. If you don’t turn away and get a grip, you might end up spending money on things you don’t really need.
If you have to do some necessary shopping, keep in mind that necessities are your priority and everything that you can survive without is a luxury. Stick to buying goods that aren’t premium but are still big on quality. If you need to make furniture or appliance purchases, make second hand stores your first option. While it may not sound appealing at first, you might be surprised at what you can find in the refurbished and used sections.
4. Gifts: If you’re known as someone who’s thoughtful and generous, cutting down or stopping your gift-giving activities might seem drastic. However, you need to keep in mind that you need to help yourself first before you start helping others. You can get back to your generous ways when you’re financially stable, but while you’re paying off some debts, focus on treating yourself to greater financial freedom.
If you can’t avoid fiving gifts, limit it to special occasions such as birthdays, Thanksgiving and Christmas. When you do buy people gifts, limit it to close friends and family. Keep the gifts simple and inexpensive — after all, it’s the thought that really counts. If your family and friends really care about you, they’ll understand that you can’t afford to give away too much right now.
5. Travel and Holidays: Everyone needs a little time away from work to spend quality moments alone or with loved ones. It helps us unwind and renews our motivation to work hard. When you’re stressed, it’s easy to talk yourself into going for a vacation in another country or at least a stay in a fancy hotel. However, these aren’t the best things to spend your money on when you’re trying to pay off significant debt.
While you’re in the process of financial recovery, cancel trips abroad or even to places where you’ll spend substantial sums of money. Instead, think of places near you that might be able to give you the kind of peace and quiet that’s necessary for relaxation. Spending quality time with your loved ones doesn’t have to come with a hefty price tag. It can happen right at home, in your local park, a zoo, or a simple dinner. You just need to be creative in coming up with ways to reduce your stress levels until you can afford the higher-end stuff again.
6. Car: While owning and driving a car is part of the American way, you can save a lot on your transportation costs by making smarter decisions with your automobile. For one, you can choose not to get and drive a car if you live in a city where public transport is good enough to get you where you need to be. Taking the train or the bus is a great option and it contributes to the green movement by taking one car off the road.
If you live in a city where a car is a necessity and you really need to get one, chose an automobile based on function and not on style. Don’t get an SUV when you only need a small sedan. Stay away from high end brands for now and turn your attention to lower cost Japanese and Korean models. Manufacturers like Toyota, Nissan, Hyundai and Kia offer great features and functionality on their vehicles at prices that are often lower than their US and European counterparts. They also tend to have greater fuel efficiency, which helps you travel more miles for less gas.
7. Cable TV: There are certain household bills that can’t be avoided entirely. Electricity, water and gas are all essential to keeping us alive and well in our residences. Internet subscriptions may not be necessary, but some of us use the web to get work done. If you’re going to cut one of your bills while recovering from debt, it might as well be your cable subscription.
While cable TV is certainly great to have, it’s not essential to survival and it has no application to productivity for most of us. If you need entertainment, your internet connection and YouTube will have to suffice for now. If you live in a house with kids who really can’t quit TV, at least downgrade your subscription to a cheaper one that retains the channels that your kids like.
Debt recovery isn’t the easiest road to travel, but it’s necessary for your own future. Living a Spartan life for a while isn’t a picnic, but it will help you and your family wise up with your finances. Keep expenditures to a minimum and work hard to make more. These are the keys to nursing your finances back to good health.
About Carson Derrow
