The Blog Of TL Wall Accounting

Decreasing Debt

This is the first of a two part series on managing your money. It goes beyond just thinking about budgeting your money, something we feel strongly about. Instead, it’s looking at debt, why you want to reduce it and how, and then looking at why you need to also think about increasing revenue. That’s for next time; right now, let’s talk about debt.

Having too much debt can be debilitating. Sometimes people come up with some radical ways of attacking it. There was a recent story on CNN where a young man just out of college with around $26,000 in debt decided he was going to pay it off in 2 years. How he did it was to go extremely austere. He didn’t turn on the heat in the winter, and he lived in Minnesota. He bought a lot of foods at discounted prices and ate much of the same thing over and over, even when it expired; that put him in the hospital a few times. He bought few clothes, and when he did he went to discount places. He didn’t drive a car for those 2 years so he wouldn’t have any expenses related to that.

There were a few other things he did, but he did end up paying off his debt. It was a pretty extreme way of doing it, and I’m not sure it’s worth going to the hospital, especially if your insurance isn’t as good as his apparently was. What it did point out though was how well things can go if you have a plan, even if it’s not as extreme as his was.

How do you increase debt? Obviously you stop spending too much money. However, you still have to live, and if you have kids, you still need to address their needs. Here are some ideas:

* Cut down on snack foods

* Buy foods that allow you to cook large meals that you can eat many times.

* Buy some items in bulk or on sale and freeze them if you have to

* Cut down on eating out

* Plan your trips out for the day ahead of time and plot a course so you’re not driving all over town, out of order, and wasting a lot of gas

* Instead of going to the movies pay for a service like HBO, which offers 13 channels (2 in Spanish) for only $7.99 a month, which offers movies for children and adults alike at a reasonable price. You can cook your own popcorn for less than 30 cents a bag.

* Plan what you want to buy before you leave the house, and stick to that

* Leave the house with a specific dollar amount in mind and don’t go over that amount, no matter what

* Pay a bit more on at least one of your bills every month, and concentrate on the one with the highest interest rate

* If you must use a credit card, wean yourself down to only one and monitor how much you spend on it

If you can follow most of these rules, you’ll be able to pay down debt without increasing more, still be healthy, and possibly be able to afford one fun day every couple of months or so, which helps make staying in control much easier to deal with. Give it a shot; you might surprise yourself.

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