You’re broke and in debt. How in the world are you supposed to pay EXTRA in order to get out of debt? I feel you. I was there for a long time. Frankly I think that’s why we didn’t deal with this sooner. We believed that we just had too much debt and there was no way out until we made more money. Turns out, we were wrong. Somehow we found $400 for extra debt payments. For us the key change was proper budgeting and reducing our spending. So what can you do when you feel like you are drowning? Start small and question everything.
What can you sell?
I’m sure you’ve heard this before, and you probably don’t want to part with your stuff. I get it, but let’s be real. Are you buried in debt? Is that thing that you are holding onto really bringing you happiness? Would you be happier being out of debt than keeping the old record player that you never use? (Please don’t say you don’t know what a record player is….)
Can you imagine your life after debt? Are your material possessions what will bring you joy and contentment? I doubt it. It’s SO easy to get caught up in the habit of accumulating more stuff. I do it too, so no judgement here. I just want you to consider the possibility that reducing your debt will make you happier than keeping stuff you rarely use.
When we got started I discovered that I don’t have all that much to sell. I am ready to sell my engagement ring and our matching wedding rings, but I’m still trying to figure out where to sell them. Does this sound crazy? People on social media certainly thought so. To me, the rings are just a symbol and not a reflection of our commitment to our marriage. Reducing our debt holds more value than a piece of metal. We would be happy with inexpensive replacements.
Are you willing to reduce or eliminate some luxuries?
I’m not saying you should stop bathing or using electricity. You don’t need to live on rice and beans. I don’t believe extremes work well for the long haul. However, if you are in debt, you DO need to make changes to improve your situation. I’m just suggesting that many of us spend more than we should on our lifestyles.
Do you go tanning or get your nails done regularly? Do you pay for a cleaning service or a lawn service? How often do you buy coffee out instead of making it at home? Are you eating out more than you are cooking at home? These are all things to consider, but ultimately you have to decide what works best for you.
Depending on how much debt you have, it could take awhile. You have to find a balance so that you can stick to your long term plans. I started out wanting to be super extreme, and my husband had to bring me back to reality. We need to be able to enjoy the journey, not just the destination. Debt has been holding us back for so long. I’m done letting it rob me of my happiness, and I’m not waiting until I’m 100% debt free to enjoy life. We are changing our habits, but we are not becoming minimalists.
How can you reduce your utilities?
This is a surprisingly easy way to save money because often it happens just by asking. It also pays to read your statements to learn about any promotions the companies may be offering.
In Ohio, we have the Energy Choice program. This program allows us to shop around for suppliers for our gas and electric service, which can sometimes make a big difference. I used to be afraid of the Energy Choice program. I didn’t want to get locked into a contract and lose the ability to participate in the equal payment plan program. Now that we are budgeting with YNAB, I am confident we can create our own equal payment plan and have the money available for the months that the bills are higher! Our gas bill alone dropped $25 PER MONTH just by signing up for a different supplier. The electric options weren’t enticing, but we’ll keep watching for new options!
I’ve also heard some chatter in my budgeting groups about not using air conditioning to save on electric costs or not turning the heat on until you absolutely have to. To be perfectly honest, I’m just not willing to do that. I will cut back in other areas, but I’m not willing to be miserable in my own home! Our thermometer automatically switches between heat and air conditioning to keep the temperature around 72 degrees. I’d like it warmer in the winter, but I compromise with Jim. Of course you have to decide what’s important to you. Maybe you’d be comfortable not running air conditioning until it hits 75 or 80. Maybe you’d be comfortable not using the air conditioning at all. It’s definitely worth thinking about if you are cutting corners. It’s just not a strategy that I’m using.
How much is entertainment costing you?
Cable is a BIG expense that can often be negotiated. It’s a pain, but typically you can call once a year to get the latest promotional pricing package. This is especially true if you are willing to change providers if they won’t negotiate with you. Most providers would rather charge you less to keep your business than lose you to a competitor. It maybe require getting a bundle package with a service you don’t need, but who cares? If it saves you money overall, it might be worth it!
Do you need cable at all? Is that a radical idea? We haven’t had cable for a few years because we just felt the expense was WAY too high and it was causing us to be lazy. We used to sit for hours after dinner just watching TV. That’s not healthy for our bodies, our minds, or our relationship!
We don’t skip TV completely, and it seems like we still watch too much! We have an antenna to get local channels (thank God for PBS Kids), and we have Netflix and Amazon Video. It was hard the first month, but now I don’t even miss cable. (Okay, I do miss it when the Cavs are in the NBA finals and the games are on cable only. But LeBron isn’t paying my cable bill, so I suffer through it.)
I’ve heard some friends talk about cable packages that are over $100 per month. That could make a huge impact on paying down debt and saving on interest. Depending on your balance, an extra $100 per month could allow you to pay off a debt YEARS faster! It’s your call. Is cable worth the cost for you?
Could you skip an upgrade?
The other big expense most of us have is our smartphones. Trust me, I get it. I won’t do without mine either. However, I am willing to explore options for saving. Check out your statements and your data usage. Are you paying for more data than you need? Are you exceeding your data allowance and paying overage fees? You never want to pay overage fees because that’s way more expensive than just paying for a larger data package.
Do you upgrade your device every two years? I bet you don’t really need to. We used to do it because it was “free,” but now I know it was not really free. It’s much easier now to see the true cost of your new phone because most companies are more transparent about it. We are currently paying $32/mo for my husband’s phone. As soon as my phone was paid off, we started paying on a new phone for him. We “needed” new phones so we’d have better cameras for taking pictures of our son. Thankfully it’s interest free, but it’s still an added monthly expense. I intend for my next phone to be a middle of the road phone that costs $250-$300 instead of the name brand top of the line $800 phone!
Could you change your insurance coverage or company?
When’s the last time you looked at your car or home/rental insurance? Do you have any idea how much you are paying? I rarely look at my bills because it’s the same every month. Now that I’m questioning everything, I decided to check it out.
Do you have your home and auto insurance with the same company? If not, consider consolidating. Most companies offer pretty great discounts for having more than one line of insurance. Many companies also offer discounts if you insure more than one vehicle with them, so be sure you and your household members are using the same company if possible.
Are you happy with your coverages? Are you paying for something you don’t need? Could you increase your deductible to save a little money? Be sure you have money in savings to cover your deductible, especially if you do raise it. I used to be afraid to raise our auto insurance deductibles. Now that we have a $1000 baby emergency fund, I feel comfortable having a $500 deductible on both comprehensive and collision. Increasing our deductibles and removing rental car coverage saved us $40 per six months. It’s not a huge amount, but every little bit adds up.
Are you happy with your company? If not, shop around. We’ve been with State Farm since we were both teenagers and are not willing to switch. It may not be the cheapest insurance, but we are happy with our coverage and our service. If you don’t have any particular loyalty to a brand or you’ve had poor service, get some quotes! Just be sure you are comparing apples to apples. You don’t want to get super cheap insurance only to find out nothing is covered.
You can do this!
Don’t talk yourself out of it before you start. Don’t assume that you just don’t have the money. That’s what we did for a long time. When you get serious about destroying your debt, your priorities change. As your priorities change, you can change where you put your money. I didn’t get a raise or inherit any money. We just reigned in our spending, looked for ways we could save on every expense, and reallocated some of our money. I’ll write a full post on our exact numbers in the near future.
Did these suggestions help? What have you done to find money for debt payments? Share your tips below so we can all benefit!