There are consequences of spending more than you make and it can become very overwhelming. Eventually you will have too much debt to live and most likely become very depressed and/or riddled with anxiety. Luckily there are ways to get out of that black hole we call debt.
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Related: 8 Simple Steps to get out of Debt
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To start you need to figure out what got you into this mess in the first place, so that you can change the pattern. For most it boils down to bad spending habits, if you are wondering what would be considered bad habits, here are some examples of bad spending habits:
- Spending more money than you make: Most would think they can’t do this, it would be impossible to spend more than you make…right?🤔 Nope, you can make $1,000 per month but actually be spending $1,200. Borrowing money from family and friends, dipping into savings, going into overdraft on your account, or credit cards. Any of those options will eventually result in more and more debt.
- Using credit cards: Having credit is a good thing, but only if you are very responsible with money and make a consistent income. Using credit cards for everyday purchases often leaves people in crippling debt. They are spending a little bit here and there, not thinking it is very much. These small purchases add up and then interest starts to accumulate and next thing you are drowning in debt.
- Shopping addiction: You would be surprised how many people suffer from this, you might and not even know! If you find yourself impulse buying or purchasing “things” just because you are having a bad day you may fall into this category. This is especially a problem if you hide your spending and debts from your partner. Huge red flag that you may need to evaluate your spending habits.
- Using debt to pay off debt: You can probably figure out why this is a bad idea, we all know it is but sometimes we feel we have no other choice. One debt collector could be hounding you and your family (yes I have had debt collectors harass my parents long ago😣) so to make them stop you take out another loan, payday loan or borrow money to pay it off. However, you are still in debt and just postponing the inevitable.
Those are just a few examples.
Now the key to stopping any bad spending habits is to change your lifestyle and start a budget! A great way of living to consider is the frugal lifestyle and/or minimalist living. Either of those will help you save money and actually improve your mindset thus making you happier.😍
First off you will never have too much debt to live, there are always options to getting out. Even if you have no income you would still have the option to claim bankruptcy. Before you go down that rabbit hole🐰 let’s discuss ways to getting out of debt and living a debt free life!🤗
Step one: Budget
Create a budget, I cannot stress this enough! You NEED to know how much money you have coming in vs going out AND where exactly it is going. Here are some resources you can check out to help you create a budget:
5 Things you need to know before budgeting
How to budget if you suck at saving
Step two: Debt
If you are reading this post then I am assuming you are drowning in debt, so first off you need to face reality and realize your life may not be the “funnest” over the next while. You need to focus on getting your debts paid off, so any extra income should ALL go towards your lowest debts first. To help you can follow my 8 Simple Steps to Getting out of Debt.
Step three: Make Money
Making more money to put towards your debt will speed up the process and keep you motivated. I always suggest paying the minimum payments on all debts, but then put all your extra money on the smallest debt to get it gone fast, then keep moving up the list. I have a ton of resources for ways to make extra money on the side, remember this extra money is not to be included in your budget since it is highly unreliable.
Work from home jobs that don’t cost money
Best side hustles anyone can do
How to make extra money on the side
Step four: Savings
You will eventually want to start a savings to prevent yourself from getting into debt again. You never know when something unexpected will happen and anything has the potential to put you back in debt. You should also consider an Emergency fund before you start a savings fund.
I hope this helps you get out of debt or at least jump starts your motivation.
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