If you are anything like me, creating a Budget makes you want to hide under a blanket and forget the whole idea of getting out of debt.
Well, I'm here to tell you that you don't have to start with a budget.
Don't get me wrong, budgets can be great, because they raise your awareness of what you are spending. But, a budget is not the only way to raise that awareness.
I did create a budget, and it did help (a lot), but it wasn't the only thing that opened our eyes and moved the needle for us.
So aside from a Budget, here are my top 5 tips for getting rid of debt in 2019.
1. Break the Cycle of debt with a Starter Emergency Fund
If you don't have money set aside for emergencies (that are inevitable), you will have no choice but to add more debt to pay for them.
Saving up a Starter Emergency Fund of just $1000 will catch the most common small emergencies (like blowing a tire or getting a broken appliance repaired or taking a pet to the vet).
If you've never had money in the bank before, you might feel odd when you do, like that money is just sitting there doing nothing. You might be tempted to throw it at your debt or spend it on something big that you've been wanting. But I promise you, it's not doing nothing, it's the buffer between you and the edge of disaster.
2. Record all your income - every penny, from every source
We all have more money coming into our lives than we think we do. Your paycheck is not your only source of income, I promise.
You might find that you have "extra" money from:
- Sales of your clutter
- Side hustle
- Pennies on the ground
- Cash in an old purse
- And more
Simply carry a notebook or sheet of paper in your purse and write down every little bit of money that comes into your life. You might be surprised at how much more you have to work with than you thought.
3. Track where it ALL goes
The act of tracking all your spending brings huge awareness. Write down what you spend every cent on. You'll find that just knowing you'll have to write it down will curb your impulse buying.
You'll get a clearer picture of where your biggest money leaks are. And once you notice them, you will naturally spend less on what you don't really need.
Once you've tracked a few weeks of spending, really LOOK at it all.
- What did you spend a lot on with nothing to show for it now?
- What did you spend more on than you felt was worth it?
- What could you stop buying that you wouldn't really even miss?
- What are you embarrassed that you spent so much on?
Cut the easy things first, the no-brainers, and stop spending money on what you don't value. Just this will free up a lot of money to throw at your debt.
4. Decide NOW where you will send EVERY unexpected penny
Now that you see that you have more money coming in than you thought from Tip #2, and you freed up some more with Tip #3, you need to decide to put it ALL to work for you instead of just spending away the "extra" money as if it doesn't count.
It counts my friend. You could have hundreds more every month that could help you create the future you dream of.
Instead of thinking of that unexpected $20 as extra that you can blow on going out to lunch, use it to your advantage.
Right now that means paying off your past, but once that's done, you can use that extra to start saving for your future.
Don't blow the "extra".
We decided that every "extra" penny would go to our debt snowball. I wasn't above sending in an extra payment of $12.47 to my debt if I returned a purchase for a refund. If I hadn't pre-decided that all the "extra" was going to debt, I could have so easily spent that money on just about anything else.
If a big, unexpected windfall came in (think bonus or birthday money), we might take 10-25% for a nice dinner date which we hadn't had in months, but that was the only exception. The rest went to debt, and that paid our debt off a lot faster.
5. Visualize your debt payoff progress with trackers
If you've been around here for a while, I bet you knew I would bring this up, as my first chart was such a game changer for my focus on our debt, but I could not leave it out.
Visual tracking is the secret to not only staying motivated, but also making the whole thing into a fun game. With every line colored in you'll feel a surge of power, it will energize you in a way that numbers on a spreadsheet just can't do by themselves.
Make a chart to color in as you pay off your debt, or use some other visual or hands-on method, but don't stick with just numbers, trust me, do something visual.
So there are my top 5
- Break the Cycle of debt
- Record ALL your income
- Track where it ALL goes
- Decide where to send the "extra"
- Visualize you progress with trackers
Which of these have you already done? Which one are you going to do next? Let me know in the comments.