M is for Money

This is Part 6 of Deliverance from Debt: Part 1, Part 2, Part 3, Part 4 and Part 5

I knew I had a debt problem long before I did anything about it. Based on my balance and how much I could pay each month, it was going to take a decade to be debt free. That was simply too long, so I stuck my head in the sand and kept spending. It’s a common reaction, many people never start down this road because the journey is a long one.

Everyone wants to get out of debt the quick and easy way. Unfortunately, that method doesn’t exist. You can’t get out of debt overnight, there is no quick fix to years of overspending. But there are ways to speed up the process, wiping months or even years off of the schedule.

Getting out of debt takes money. If you want to dig out faster then you need to find more money to put towards it. There are several ways to do this:

1) Earn more
2) Spend less
3) Do both of the above

Earning More Money

Earning more money is in some ways easier than trying to cut expenses, most of us aren’t very good at cutting back. It’s also effective, if you stick to your budget this extra money can go straight to debt repayment. Regardless of your current commitments, there are ways to bring in a few extra bucks.

Second Job – give up your free time for a year and take a second job. Pulling double shifts is tough, really tough, but think of the payoff. You could be debt free in no time if you’re willing to work your tail off.

Side Income – there are lots of ways to earn side income without taking on another job. You can earn dough from doing online surveys, selling your handmade crafts at fairs, or being a mystery shopper. See this post on Side Income for more ideas on making money.

Raise – go ask your boss for a raise, but don’t go in cold. Prepare an argument for why you deserve more money - have you brought in new clients, saved the company money or been an exemplary employee? Are you underpaid compared to the average for your field? Be bold not bashful, you need the money. Put every dime of that raise towards debt.

Snowflake – snowflaking is the act of putting extra bits of money to work, in this case by paying off your debt. This extra money could be a refund or rebate, money you found on the street or leftover money in your budget. Instead of frittering away these funds, use them to speed up your debt payoff.

Sell Stuff – have a garage sale or use ebay and craigslist to clear the clutter and bring in extra cash. Look at your life, what do you have and not use. Chances are you paid for some of that stuff with debt, now do the reverse.

Spending Less Money

If you can’t earn more then you’ll have to spend less. Look at your budget again, especially your variable or discretionary expenses. Where can you cut, what can you live without? These don’t have to be permanent changes, unless you want them to be. But until you are out of debt, luxuries are something you cannot afford.

Frugality – frugality is about being a conscious consumer and user of resources. You can cut back on things that are of little value to you while not impacting your lifestyle. It’s a mindset more than a to-do list, weigh the value you will receive against the cost of an item. Use coupons, wait for sales and ask yourself, do I really need this? Here are some more ideas on Frugality.

Cut Your Fixed Expenses – frugality will only get you so far, so where else can you cut. If you want to get out of debt as fast as possible, move to a cheaper place, take in roommates, sell your car, drop your monthly subscriptions. Get creative, rent out your garage or extra room as storage to offset your housing costs. Check craigslist for people exchanging housing for help, there often people looking for childcare or domestic type help in exchange for a room.

Move in with Mom and Dad – the bane of 20-somethings everywhere, move back in with mom and dad to cut costs. You should still pay rent and help with bills, you’re an adult now. But they usually give you the family discount (and your mom is secretly thrilled to have you back in her clutches). Don’t let pride get in the way of getting out of debt, in many cultures kids remain at home well into adulthood.

Go Homeless – you wouldn’t be the first person to give up the comfort and cost of a home to pay off debt. Some people live in cars because the have no choice, others do it as an extreme way to cut cost and get out of debt. Put your stuff in storage and get a gym membership so you have a place to shower and get ready each morning.

Do a Little of Both

The more money you have to throw at your debt, the faster it will be gone. I erased over $20,000 in credit card debt in one year by taking on a higher paying job and drastically cutting my spending. If you are discouraged by your debt payoff timeline, do what you can to speed it up. The fastest way across that finish line is to earn more and spend less.

Part 7: Keeping Focused