The recent government shutdown highlighted that fact for all of us when people ran out of money after a month of no paychecks. It reminded us all that it’s wise to have an emergency fund that can see you through at least a month of financial hardship, but we know that not everyone can save up that much all at once.Americans are in debt.When you’re in a financial hole, it can seem impossible to save any amount of money, BUT it can be done! Making a few changes and sticking with a plan can make all the difference and help you get out of debt in 2019. Here are some idea we share with our clients.
1. Trim Expenses
Take a hard look at your expenses and cut back everywhere you can. Paying $50+ a month for cable TV? Cancel the contract and switch to a more affordable online streaming service like Hulu. Buy groceries at a discount store like Aldi or Walmart. Cook meals and prep lunch at home, use a refillable water bottle, and stop spending money on coffee drinks you can make yourself. Switch to a contract-free cell plan. These little habits all add up to big savings that can be put toward paying off your debt. They also set you up for a more financially sustainable lifestyle once you’re debt free.
2. Cut Up Your Credit Cards
Cut up your credit cards and do not apply for any new loans, cards, or lines of credit. Put a hard stop to your credit habit or you’ll only end up further in the hole. Every dollar you add to your credit debt will make it that much harder to recover your financial independence. Quit cold turkey and commit to cash, or possibly a debit card that you can set to a minimum balance below which it won’t work. If you don’t have the cash then you don’t make the purchase.
Snowballing is a strategy that gives you mental and financial momentum as you pay off your debt. List out all of your debt from smallest to largest. Make the minimum payments each month on everything but the smallest on the list. Pay as much as you possibly can on the smallest debt until it’s eliminated. Then, “snowball” the amount you paid to the first debt into the 2nd smallest debt until it’s paid off. Keep going until you’re debt free. Tackling debts one by one lets you score small victories that keep you motivated, and keep a steady budget that works for you.
4. Discover Free Fun
Get creative and come up with free ways to have fun with friends and family. You’ll be amazed at the ways you can connect with your loved ones and your community. Go to the park, host a game night, cook together at home, get involved with a church group or volunteer at a local charity. After all, they say the best things in life are free! You might gain the additional benefit of more healthy fun as well!
5. Gamify Your Budget
Use one of the many free online tools or apps out there to create a budget. Then stick to it. Make it a game with yourself and your family. Challenging everyone to find creative, frugal solutions together makes it feel like a journey instead of a punishment. If you have kids, make it a teachable moment. Give them a small budget to manage, like the grocery list, and challenge them to find ways to get all the necessary items at the lowest price. Track the family budget and strive to come in as far under budget as possible each month. Reward your accomplishments with a budget-friendly splurge like a pizza night if you hit your goals.
6. Make cash your best friend to get out of debt in 2019
Get accustomed to using cash. It will take some planning, but cash will put you in firm control of your monthly expenses once you have your plan in place. Here’s how.
Most banks have an online or mobile app-based bill pay feature for checking accounts. Set yours to automatically issue a check for regular monthly bills like utilities, rent or mortgage, credit card installments, car payments- anything you know is an ongoing monthly amount.
When your paycheck comes, go to the bank and deposit enough in your checking account to cover your automatic bill payments (plus a small cushion for the unexpected).
Take the rest in cash to pay for daily living expenses. Use an envelope method to categorize your cash. Figure out what categories work for you and label a set of envelopes that each get an allotment of cash every month. You might make envelopes for restaurants, household supplies, clothing, groceries- anything that you buy that isn’t a fixed living expense. Once you’re out of dollars in your envelopes, you can’t spend any more until you get paid again.
Using cash helps you build a tangible relationship with money that’s easy to forget when you’re swiping plastic. It’s also a great way to enforce clear boundaries with your spending. You’re goal is to get out of debt, so shift your thinking into a frugal mode that lets you live your life without too much concern about how it looks to others.
You can do it! Make 2019 the year when you get free- you’ve got 11 more months to work on it. Keep your eyes on a debt free 2020!
Find out more about being debt free in our guide: All About Debt Relief
Follow us on Facebook for financial management & money saving tips!
The Law Office of Barbara B. Braziel helps people get out of debt. We offer free consultations to people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.