Debt Can Be Crushing
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Restructure Your Situation
Everyone knows someone who was once in a rough place or is still in a rough place. Whether it's you, or family, or a friend who needs help finding a way out, there is hope.
If you've tried every gimmick in the book to help you get on track, but you just can't seem to make it work, then it may be time to think about restructuring your situation.
Build From The Ground Up
It's hard to find ways to cut expenses, especially when you feel like you've already cut so much out. Sometimes it's easier to just start by planning everything from the ground up. To do this let's start with a list of necessities:
- Shelter
- Food
It's a simple list, but it's the truth. However, if you're in this situation there is one more item to add to the list:
Debt
If your debts are extraordinary, you may want to consider a credit proposal, or bankruptcy. However, these two should only be used as a last resort if you feel that you cannot handle your debts, as they will leave a mark on your credit report for many years.
Otherwise, let's continue with your plan of action:
Find Shelter Close To Work
Whether you're looking for a job, or already have a job, there is one clear method to reduce debt: eliminate transportation. I've always been a conservative person, but when I was younger I first spent $150 a month on bus fare, and almost 3 hours a day going to and from work. As I grew older I decided that my time was more valuable, so I bought a car and spent almost $600 a month on it between payments, gas and insurance. Now, I live a 10 minute walk away from work and I walk to work every day. Not only is it comfortable, convenient and great for my health, but I also have an extra $600 a month to spend on myself.
The point of the story is, you can take out two birds with one stone by choosing the right shelter. Eliminate your transportation costs, and at the same time find a more modest place to live. This will have an immediate impact on your mental and physical health, and help you get out of debt incredibly quickly.
What's On The Menu?
One other necessity in life is food. We have to eat to live, and you've probably heard it before but don't eat out. It's great to go out and eat but when you're in debt you'll feel a tear in your heart when the bill comes. The reason we sometimes feel the urge to eat out is the lack of variety in the food we have available at home. Those of us that have been through "poor droughts" feel it worse while we stuff our faces daily with a cup of Ramen noodles.
The trick is that you don't have to eat like you're poor at home, in fact your food budget should be healthy because it will stop you from spending for food outside! The best way to do this is to simply and strictly buy the products that are on sale, and don't be afraid to try the off-brand stuff, you might actually like it! By doing this, sometimes you'll find your meals for the week are made up of pastrami sandwiches, linguini and Italian sausage, and cereal. Other times your meals of the week will be a baked potato, portobella mushroom soup, and chicken wings.
By doing this, your food budget will be consistent, varied and it will stop the urge from eating out!
What About My Debts?
There are a few ways you can handle your debt, and some ways work better than others depending on your mental health. The best way to handle your debt is to consider two things:
- What are the interest rates on my debts?
- What is the amount owing on those debts?
One strategy is to tackle the highest interest rate debts, the other is to tackle the smallest debts and eliminate them one at a time. The best strategy is actually something in between. For example, if you can completely pay off one debt, even if it's not the highest interest rate, it would be better to pay it off and have one less payment to worry about. If you can't pay any debt off completely, focus on the one with the highest interest so that your next bill accrues less interest. Most importantly, don't wait for the due date. If you have the money to pay your debt, pay it right away. That ensures you will accumulate less interest and that you stay within your means.
The best part about getting rid of debt is that with every payment, you will have a little more cash flow, and feel a little less stress.
What About Everything Else I Pay For?
Do you really need it? You've survived before without that $60 / month cellphone plan, and that $14 / month netflix subscription. Depending on how bad your debt is, you might want to consider starting completely fresh, and adding services you can afford one at a time.
Have you experienced hard times yourself? Do you know someone who could use some help? Leave a comment and share and let's help each other as a community.