We’re months away from the New Year, let me ask you a question, how are you doing with your New Year’s resolutions? Many Americans set paying off debt as one of their resolutions. Did you? Money resolutions are the third most popular goal set by people at the beginning of the new year, right behind losing weight and getting organized.
If you wanted to become debt free in 2015 there are two ways you can do it: you can cut spending to free up some extra income or you can start earning more income. I think it’s safe to say that cutting your current expenses is easier (at least in the short term) than finding a second job or asking your boss for a raise.
Here are four ways you can cut spending and allocate more money towards repaying your debt:
Stop spending emotionally
Can it really be that easy? Yes it can. As a financial planner I tell a lot of my clients that spending money is just as much an emotional and mental action as it is a physical one – and that’s the truth. We often feel the need to indulge in a little retail therapy when we have a bad day, but that’s just an emotional crutch.
Personal splurges are not necessary for living and once we get over that mentality our extra spending can stop. The next time you pull out your wallet to make a purchase, just don’t. Leave your wallet in your purse and walk away. Once you overcome the need to spend you’ll start saving money.
Cut back on the coffee
I am the first to admit I love a good Starbucks hot chocolate just as much as the next chick, but as a financial planner I just can’t justify the expense. There is something about Starbucks that makes my day a lot better, especially during those 3 o’clock afternoon lulls.
The secret is to cut back not cut it out. If spending cuts are too restrictive we won’t stick to them. Allow yourself to have one coffee a day instead of three and you’ll watch the savings add up. Remember that every dollar saved is a dollar that can be allocated towards repaying your debt. If that’s not good enough motivation remember that summer is just around the corner and Starbucks isn’t good for the waistline.
Brown bag it twice a week
I am so guilty of this. I hate cooking and I hate doing dishes. On top of that I’m a really bad cook, my specialty at the moment is a bowl of cereal. Since I’m not willing to learn to cook eating out keeps me alive, but it also keeps my bank account balance very low.
I’ve started bringing my lunch to work twice a week; it’s not meatloaf and mashed potatoes, it’s just snacks and sandwiches but it’s helping me save over $20 a week – that’s over $1000 per year that can be put towards paying off debt. I’m sure once I start to see the savings add up and my credit card balances go down I’ll be so motivated that I’ll start bringing my lunch three days a week. Before you know it I won’t be eating out at all.
Skip the magazines
I used to be highly addicted to reading US Weekly. I mean I had a really unhealthy addiction to celebrities because their lives are so much better than mine. However after a while I just couldn’t justify spending $6 a week to read about people I don’t even know. I cut down to In Touch magazine which is only $3.50 and I started buying it only once a month. Moderation and affordable substitutions are a nice way to save money and cut excessive spending.
What can you cut out of your weekly spending?