The past two years have been a harrowing experience of digging myself out of debt. I know I am clearly not the only person going through this in America - not even close. I realize now that I was trying to get out of debt AND maintain the "lifestyle" I enjoyed when I was tossing around credit cards like they meant free money and then scraping to pay off the minimum payment each month. Add that to my student loans and a couple personal loans in the thousands - and my debt had spiraled completely out of control. However, I just didn't get how it was affecting the quality of my life. Sure, money cannot buy happiness, but being severely in debt so much that it consumes you can bring absolute misery, anxiety...you name it and it's negative, I've probably felt it over money or debt. Or both.
So, I sat down and wondered why, after two years on a debt consolidation plan (these plans are not for everyone, nor am I suggesting them, but it worked for me as I am extremely scatterbrained and had 11 credit cards with all different balances and due dates). The debt consolidation plan coordinates all of that into a lump sum payment, closes the accounts, and negotiates on your behalf to rid you of all interest rates. The negative: your credit takes a BIG hit when you first enter a plan. It's like saying - "I give up, I can't handle my finances, so I need someone to do it for me." But after two years of paying on time every month, I've gained back the points I lost upon consolidation -- and I've gained a few as my debt to income ratio has significantly decreased.
Despite the above, I was still living paycheck to paycheck with absolutely no savings, and I just got sick of it. I had to change it, whatever it took. So I sat down and made a list of things that were directly affecting my monthly budget and found that I was making some grave mistakes or
not doing something that would speed up the process and change my financial future, both long and short term.
So, hopefully these little tips will help someone; you may have heard some, or even all. Some I've gotten from friends and family, others have been lightbulb moments, and others have come from money saving tips websites, etc. But these slight changes have made me realize how much the little things count, because in just two months I am in a much, much better place.
1) Don't believe the hype. The mascara that will give you fake-looking eyelashes, the creams that will halt aging, the miracle lotion that will magically erase cellulite, the salon hair products; I could go on and on. I have saved a bundle the past few months buying cheap, drugstore lotions, makeup, shampoo, etc. My skin feels just as smooth, my hair is just as soft and healthy feeling. Marketing is America's most evil monster. It truly makes people believe they need things that they absolutely do not and never would need.
2) Big savings doesn't mean you buy it unless you need it (like bo-go groceries, those are great). This was a biggie for me, especially with clothes, shoes, and perfume - my three most powerful vices. I would see these things at 50% off, 75% off, etc and justification would set in, even though I had no particular need for any item like that at the time. However, in my head it was stupid to pass up such a "great deal." Even discounted, these things should still be looked at with the age-old mantra - "if you can't afford it in cash right then and there, you can't afford it at all."
3) Stay away from temptation. Target was a BAD place for me to be, but it used to be where I got all of my prescriptions filled. I transferred them over to Walgreens and have a much easier time resisting the urge to buy toothpaste rather than the urge to resist clothes, shoes, accessories, house wares, whatever. Everyone has their "Target." Whatever your Target is, stay far, far away from it.
4) Don't use your debit card and carry $20 (or $50, or even $100) bills with you. This may seem odd but has proven to have several benefits for me. For one, I don't like to break large bills. It makes me think about what I'm buying a little more carefully. Two, I actually watch the money disappear as I spend it, whereas I barely think as you swipe a card. When I see I'm down to my last allotted 40 bucks or whatever, I really look at what I absolutely must have to
survive - and definitely not what I want. This is kind of a version of the "envelope method" that's so popular (google it if you aren't familiar, it works very well for some - Financial Peace University), but that wasn't for me. Another bonus - it's completely impossible to overdraft your account if you do this. I now only leave enough money in my account to cover bills with a safety overage just in case.
5)The old "freeze your assets" thing really works. How could it not? When I finally paid off enough of one of my credits cards to have available funds for emergencies (albeit a low limit, but I need something as backup/emergencies, etc), it does indeed now live in a ziplock bag in my freezer. It would have to
thaw out before I could actually use it. This gives me a lot of time to think about what I'm using it for. And while some may think this wouldn't work to ease temptation because of the popularity of online shopping, if you put the card at the bottom of the icemaker and cover it with ice, the numbers become iced over and impossible to read. It takes a long time for a card to thaw. By then, you probably don't even want (or have forgotten about) whatever it was you'd have bought if the card been in your wallet.
6) Simple living. There are a lot of gorgeous communities and apartment complexes around where I live. I chose instead to live in a place that some (judgmental) people may deem undesirable, but I've made the inside of the place adorable and cozy for next to nothing thanks to hand me downs, garage sales, and thrift stores, and places like Big Lots. I have found my neighbors to be quite pleasant despite their socioeconomic class that is looked down upon by so many people I know. I had to change to the mindset of "who do I have to impress?" I'm single and I live alone with a cat. I love my place and I love coming home to it because I made it mine, not because I pay $1200 a month in rent for a fancy, cookie cutter apartment when I can pay half that for the same size place and add my own eccentric flair to it.
7) Splurging is necessary for saving. That may sound like an oxymoron, but there is a good way to splurge and a bad way to splurge. As human beings, we are social creatures. If I turned into a hermit during my entire three year get-out-of debt plan, I'd have gone mental. Actually, I did do that for a stretch, and I did indeed go a bit mental. You still need a social life, human interaction. I pay a lot of attention to Groupon and other like coupon services, however I only choose the food/drinks/entertainment/activities category so I'm not tempted to get a 50% off facial or some other such silliness. This is the one and only time when a "deal" is worth it. I only eat out with friends if I can do so at a discounted rate. I have also found that a night in with girlfriends is so much more enjoyable than going out (especially skipping the getting ready part, ugh); just the other evening I enjoyed a bottle of wine, a tofu stir-fry I made for about 5 bucks, and a Law and Order marathon with a girlfriend who is as big as L&O freak as me.
8) A continuation of the above. Find people who like to do the same things you like, or like to do, that are cheap or free. I've found that these people are usually in financial duress as well, or just don't have the need for all the flashiness & materialism. I have a friend who adores the Sunday Farmer's Market, totally free, and often you can get healthy NEEDS for a much lower price than you would think at an outdoor market. You can also politely haggle while staying respectful. These are families who support themselves by selling their wares, so you don't want to dismiss their hard work, but a simple "oh, I only have $4.00!" when looking at a $5.00 purchase has worked for me a few times. It adds up. At this point in my debt journey, I cannot keep up with people who are financially secure and able to afford shopping sprees and fancy dinners. Further, I am starting to see that as stupid and unnecessary -- where it used to be what I wanted - and also a big part of what got me into this pickle to begin with.
9) Skip the movie theatres completely. I realize it is much better it is to watch something on such a big screen, and even I can justify why it's so important to watch a film like Inception in an Imax theatre. However, movies are stupid expensive and the time in which it takes them to get to PPV via your cable provider is so short now! My PPV even has movies still in the theatres for one dollar more than the regular ones. So, at most I pay $4.99 for a movie. They cost anywhere between $0.99 through $3.99 depending on how old/new/popular it is, etc. It's almost 2012; we all have large flat screen HD TV's now, no matter how poor you are. That's certainly good enough to watch a film. While PPV should be avoided in excess as it does add up, it sure beats a $15.00 movie with a $5.00 soda and God knows how much popcorn costs now...movie theatres treat everyone as though they are tourists at a theme park. Stay away.
10) Junk mail is not always junk. For me, it's been grocery store flyers I don't toss out in the gigantic trash can by the mailbox area anymore. In fact, I design my grocery list (also, stick to your grocery lists!) around whichever flyer has the best deals. I hate to say it, because I love Publix (who doesn't), but it's just way too expensive, even with their oft- bo-go's. I couldn't believe how much cheaper Albertson's was for the same stuff. At Publix, you really are paying for the "
shopping to be a pleasure." It's the same concept as being a sucker for packaging; just a small example; Burt's Bees lip balm was a specific necessity. Mostly because I though the product had cute packaging. Now I just buy whatever is cheapest. No difference. Publix is the Burt's Bees' of grocery stores.
11) Read more. This may sound like it has nothing to do with saving money aside from just keeping you home, but if you're like me, you always have to be doing something. For me, idle hands simply means I am asleep - or watching TV. Reading cuts down a whole bunch on TV- watching, which is full of tempting ads, and ad agencies know exactly who to target for what during what show. Again, marketing firms have learned to read our minds and thus control them. That may sound a bit crazy and big brother, but I can't say I've never bolted to Macy's after seeing a commercial for one of their big sales. Plus, obviously reading is better for you anyway. However, books are expensive (for the most part). I'm lucky in that I have a best friend who is also an avid reader and the queen of hand-me-down books. So I always have a book of merit or two at my side. Borrowing books from friends and family is the best way to go, of course. I also often re-read books I purchased myself that I really liked the first go-around. Not only is it free, I feel like I'm getting more out of the money I spent on the book, no matter how long ago I purchased it.
12) Motivation is key to saving and/or getting out of debt. For me, this comes in a few forms. Due to my debt consolidation plan, I have a visual graph of how much debt I've paid down and how many more months until ALL of my credit card debt will be eradicated. I look at it every day. Not only is it kind of awe-inspiring to see it - because I never thought I'd get this far, of course it makes me
not want to, as they say, take two steps forward only to take three steps back. Also, I look at what I will be able to do in a year when this debt monkey is finally off my back. I will never be incredibly wealthy or anything like that, but that's not what I want (anymore, anyway). I just want to be comfortable and live simply. But yet, I need to promise myself a reward once I reach a major milestone in the disposable income category; I need a tangible goal to work towards. Traveling to me is the ultimate reward. As soon as it is fiscally responsible on all counts, I plan to venture to places I've always wanted to go but have never been able due to lack of funds. The romance of the Greek Isles, the mystery of the dirty streets and beautiful beaches of Thailand, the rich history of India. These are all things I do not want to go to my grave without having experienced.
13) This is the last tip I've been using and probably the most important. I stopped beating myself up over my past mistakes and stopped regretting. It does no good. In fact, it does harm. I no longer listen to certain people in my life who still like to throw what they perceive to be my mistakes (mistakes made years ago) in my face. My life has been a little crazy in the long run, but at the end of the day, I'm a lucky girl who has experienced a lot of things many people will never be able to -- and who has a lot of people who love me. Once I get rid of this pesky debt, my life will be as close to perfect (no life is perfect) as a human life can be -
for me. We all have different standards regarding quality of life, but every day I realize this debt has controlled me for too long; now that I am starting to control, it I already feel better. More powerful. And by no means am I out of the woods. More like right in the middle of the woods - but I used to be scared to even step one foot into those metaphorical woods. Once this debt is gone completely, I can truly enjoy life 100% and never abandon the principles I learned throughout this journey so I never make the same mistakes again.
Hope this helps someone; it helps me just to write it down. I don't want to live my life on lease or loan, nor do I want to spend money that isn't mine. I don't want a fancy car or a sky high mortgage. I don't care about appearances. I care about not wasting precious time I could be with friends and family, and how am I going to get to them without enough money to put gas in my car?
Living outside of your means is an addiction, a subject I am extremely well versed it. Thus, I know to approach this like any other addiction - a total shift in priorities, a lot of hard work and dedication, and always - one day at a time. Trust me, if I can do it, anyone can.
