Featured Image: Simon Cunningham
Anyone can slip into the debt train, and before you realise it, your 1000km ahead of where you started.
What that means is that even if you don’t intentionally try to borrow (yes, borrow, because its not your money) too much at a time, or rather borrow microscopic amounts. Eventually, it adds up to more than your income can handle. I know this because I’ve been there. Being a young man, I didn’t realise that receiving credit cards didn’t mean “debit cards” and that the money wasn’t originally mine. Or, that by not paying the monthly minimum I would be charged interest. That interest, in my case 19.99% generally is what makes debt worse and harder to pay off. This includes student loans, which Millenials are having a lot of trouble paying off, mainly because of government policies, but lets save government policy on education for another time. Now that isn’t to say its impossible to become debt free, or that you’ll have to cut back, in your basic necessities, but rather, your going to need to close that fist tight around your money and not be so liberal.
I will outline the 7 ways that I managed to pay off both my credit cards, and student loan.
#7 Slice the card
Photographer: Consumerist Dot Com
This one is specifically for credit cards (you can cut up the student loan receipt.. but, you may actually need it). When you have means to spend more money, most of us will take advantage of it. The longer we hold onto these, the more likely we use it to spend. We’ll even invent reasons to use it, sometime legitimate reasons, but nonetheless, reasons that will push you further into debt. This is especially bad when we’re already in debt, as adding into the pool will make it that much harder to get back into a freer life.
#6 Food Banks
Photographer: Mack Male
Some of us shun the food bank, not because we know that people not as fortunate need it, but because we find we are above it. Dump that pride and don’t feel too bad, we all need that help. That also doesn’t mean you have to go to it forever, just until your debt is gone. Besides, if you end up feeling guilty, then volunteer, I did, and it felt great to give back.
#5 Save Money
Photographer: OTA Photos
Wait, how is this possible you ask? Let me assure you that this is possible. The biggest mistake that people will do when paying off debt is that they’ll believe that they can save nothin. If you can manage it try to save at minimum, 10-15% of extra income, or whatever you can (remember debt-payments come first). If something happens where you need extra money, you won’t be forced to rely on a credit card.
#4 Cut out those Luxuries
Photographer: Scott Swigart
Lets be clear here, a luxury is something that is a non-essential to your everyday living. That includes, cable, internet, coffee dates, eatting out, etc., Sorry folks. If you really can’t manage to cut any of this out then at the very least limit going out to once a month, using the cable at a friends (lame, I know, but affordable), and using free public WIFI (its everywhere these days). The luxuries of your life will definitely differ from person to person so may want to make a tree diagram of whats essential to your life, and what isn’t. This will help organise exactly what should be cut, and once you see how much money your going to be saving, you’ll honestly wonder why you didn’t cut it out before.
#3 Negotiate with the Lenders
Photographer: Sean Hayford Oleary
Ugh.. as a Canadian rule, we don’t generally negotiate, we normal just suck-it-up or or leave once we have a chance. But, I have to say that negotiating with the lender is so important that your going to have to try. When you do this your interest can be waived, your total debt can be cut by 50% or more, or you could at the very least have your account frozen so you accrue no more interest. This is one of the most important tips I can offer as it has huge benefits and can shorten that time it takes to be debt-free.
#2 Borrow From Family
Photographer: Jody Ferket
Sometimes we have to go on our hands and knees to beg. In this case, you don’t. Families overall will lend the money to you and often they won’t ask for it back unless its really needed. Just be sure the member your borrowing from won’t hound you, because the stress of having a nagger will double the stress you feel.
#1 Prepare a Budget!
Can I just say, “you MUST do this”. The single most important thing you can do whether debt free or not is to have one of these things handy. Knowing your income and expenses gives you a visual of what you should be spending, where you can make cuts, how much money you have to left over at month end, etc,. By doing this you can also see at what point in time you will be finished paying off your debt. Knowing this can help put a deadline in your mind, which has been proven to make you stick to your goals.
I sincerely hope you found these tips useful and hopefully will be debt-free soon!
A few resources for you if your looking to get a little extra reading, or if you need a budget template.
Budget Calculator (Template): http://goo.gl/RJfseZ
Personal Budget Planning: http://goo.gl/Vaf9kH
Food Banks Canada: https://goo.gl/Rb4KEP