Deciding to live life on a budget to beat your debt is smart. It’ll be a challenge, but the freedom you’ll feel after conquering your debt will make it all worthwhile.
It’s essential to get ahead of past credit card bills, as you don’t want a huge chunk of your income going towards things you bought yesterday. Debt can feel like the ghost of your past haunting you, but it doesn’t need to go on indefinitely.
Paying off all your debt will make it easier to pay for major life milestones, or save up for retirement. Whatever you want to do.
Set a Firm Date
Establishing a financial plan and closely sticking to it will help keep you on track because it can be difficult to resist the urge to make purchases. Committing to a date to be debt-free helps you envision the end.
Then, when your last debt is paid off, every penny you earn will be yours to spend as you see fit. The decision to implement a manageable budget will help you live comfortably while you’re paying off your debt and get you debt-free sooner.
How long it takes you to beat your debt depends on a few things unique to your situation:
- How substantial is the debt?
- How high are the interest rates?
- How much income can you put towards your monthly debts?
- Are you using any forms of debt relief?
Tools like a repayment calculator help to determine when you can get out of debt. The date you get debt-free will change depending on whether you rely on strict will-power, or come to licensed insolvency trustees who may steer you towards debt consolidation options, a consumer proposal, or declaring bankruptcy.
Lifestyle Tips for People on a Budget
You don’t need to initiate a self-inflicted austerity campaign against yourself just because you’re on a budget. Even everyday money management tools can bring you meaningful relief:
- Set a monthly savings target, so you put money aside towards debt.
- Clearly define a healthy budget to keep spending on track.
- Use a spreadsheet, paper and pencil, or a spending tracker app to make it easier.
Stick to Basics
Some expenses you can’t avoid paying entirely, like housing and transportation costs. But there are ways to reduce the costs of these things.
Does your household need two cars? Can you move homes or swap cars for something more affordable? Everybody has their own budget and lifestyle preferences. You just need to make it work for you.
Ignore Ads and Instagram
Ever since the rise of social media, right from their living room, people can access a non-stop stream of advertising content. Whether it’s Instagram influencers or friends and family sharing their latest purchases, it’s easy for people to become addicted to these feeds and feel the need to compete.
The flood of pictures of people eating at fancy restaurants, hiking up a tropical volcano or living another version of a fancy life is very difficult to beat. The thing is, these people never post a picture of them paying the bill.
People can choose to live how they’d like, but don’t feel the need to compete on these terms. You can eat well and see the world too! The anxiety of constant comparisons can be avoided if you limit what you see or turn off social media altogether.
Cook More for Yourself
Communities are encouraging people to support local restaurants, and they sure could use the help right now. But eating food cooked outside the home has become a lifestyle that gets expensive sooner than you think.
Cooking at home has other benefits too. You get to control portion size, spice levels, and the freshness of the raw ingredients. Cooking your own food is rewarding, and you won’t believe how much money it saves you.
Try going one month without eating from a restaurant. If you do order food, make it a special occasion, not a regular occurrence.
Eliminate Recreational Shopping
Buy things because you need them, not because the act of purchasing itself is gratifying. We live in a consumer culture where there’s pressure to buy goods, and defying this norm can be understandably difficult!
You may not be just purchasing for yourself, as sharing finances with your family can complicate matters. It seems easy to say, “don’t buy so many things,” but putting this into practice may be harder. Just follow the budget you created. If you feel the impulse to spend welling up, remind yourself of your financial goals.
More Drastic Measures
Not everybody can beat their debt by merely changing their spending habits. Sometimes, more drastic measures are required. If you’ve assessed your finances and determined it will take years to get closer to financial freedom instead of months, G. Slocombe & Associates has options to help you get there sooner.
In British Columbia, two of the most popular forms of debt relief are consumer proposals and personal bankruptcy. We can personally review your finances and guide you along the journey best suited to your situation.
A consumer proposal needs to be filed by a licensed insolvency trustee. In this process, a major chunk of your debts is forgiven, and interest rates stop. The process will take a maximum of five years, depending on the state of your finances.
But it allows you to pay just one fixed fee each month that won’t increase, even if your income should grow or you come into a cash windfall. The monthly payment you need to make is determined by the licensed insolvency trustee, who seeks to find the happy medium between you can afford to pay and what your lender is willing to accept.
There’s no guarantee that the lender will accept the terms, so there is a real incentive to satisfy all parties. Professional help from committed experts will guide you through the process, so you’ll come out debt-free on the other side sooner.
Debt can be daunting, but it doesn’t have to take over your life. If more straightforward measures like creating a healthy budget aren’t enough to get your finances healthy, Debt Help BC is there for you.