Money Card

More than ever people find themselves in need of debt advice, that is, advice on how to eliminate debt. If you are in debt, the first question to ask yourself is “How did I accumulate so much debt?” If you don’t know how you got into debt, then you won’t know what needs to be fixed and how to keep yourself out of debt in the future. For some people, they got into debt because they don’t make enough money each month to pay for the necessities such as rent, utilities, groceries, etc. For some people, they got into debt because they faced an unforeseen situation and were financially unprepared (e.g. college tuition, or a funeral). However, some people are in debt because they were unwise with their spending, spending more money than they could afford. If you fall into the first two categories, then the best advice on managing debt is to

1. increase your income,
2. start a budget so that you control where you money goes each month and
3. attack the credit card or loan with the smallest amount first.

Be creative about how to increase your income. Can you pick up a second job at the local ice cream parlor? What about tutoring math or reading? Can you speak English? If so, then how about offering your services for English conversation? How about renting out that spare bedroom? Perhaps you can downsize by selling that expensive bike you don’t use, or that bed that just sits in the guest bedroom, or the third television. Don’t fall into the trap of feeling deprived and embarrassed at the thought of selling something you own – instead feel victorious! You are one of the few disciplined people in America who can sacrifice today for a better future. The second step is starting a budget. Know where your money is going each month. Set aside a small amount of money each month even if it is only ten or five dollars. This money will be useful if you face another unforeseen situation and will teach you how to be disciplined about saving. Next, try to think of creative ways to cut back. Is there a community garden where in exchange for volunteering a few hours you can get free vegetables? There are organizations such as Treasure Box where you can buy a box of groceries valued at $70.00 for only $35.00. Can you make bread instead of buying it? The ingredients of flour, yeast, etc. will go farther than a single loaf will. Can you turn the heater off and put more sweaters on? Again, don’t fall into the trap of marketers and advertisers who want you to believe that you need to spend money to feel good and if you can’t then you are deprived. Think of this as a game of wits and ingenuity. How much money can you save each month by being creative and thinking outside of the box. Finally, attack your smallest bill first. Pay the minimum payment on every other bill and use any excess money you have, and the money you saved by being a creative budgeter, to pay off the bill with the smallest amount. Finally, if you fell into the latter category, before following the three steps above it’s important that you begin by changing your attitude towards “stuff”. Take some time to write a list of what motivates you to spend money even when you know you do not have that money to spend. Is it loneliness? Is it a sense of insignificance that you’re trying to ignore by accumulating more stuff? Is it the poverty you faced growing up that drives you: if you tell yourself “no, I can’t buy this” then you feel impoverished and bad about yourself? Is it to impress? If so, who exactly are you trying to impress? Once you can identify what is motivating you to spend in excess, then write a list of 5 things you can do to change. Here are some ideas. Are you bored, lonely or trying to gain a sense of significance through shopping? Then volunteer at a homeless shelter or an elderly home. Seriously, there are elderly people out there that are so lonely they sit in front of grocery stores hoping that today, maybe, they’ll get to talk with someone. Be the person they talk to! Are you trying to live up to the Joneses? Instead of trying to compete with the Joneses become the Joneses by being the first household to get creative about how to get out of debt. Once you tell people about your ideas, they’ll go home and copy them! Have you bought into the idea that if you can’t spend money then you are deprived? Then counteract the hours of marketing that you unknowingly take in each day by refusing to watch commercials. Every time a commercial comes on television, say out loud “Yeah, right! I know what you’re trying to do.” and then mute the television. No matter what drives you to spend excessively, if you sincerely want to change then find out what is causing you to spend and work towards rooting out the problem.