Making changes for a debt-free lifestyle

How many times a week do you simply walk into a convenience store or neighborhood shop to grab some drinks, a bag of snacks or a candy bar?

Well, the devil’s in the details, and when you’re already over your head in debt, it’s not such a great idea to keep up your lifestyle as if nothing’s changed.

If your goal is to quickly become debt-free, then you need to make some adjustments to your spending habits. And once you’re in the clear, you should be wary of falling back into those same habits that got you into the debt in the first place.

If you can’t see your enemy, how are you going to conquer it? You need to paint a picture of your debt blob, and understand exactly how it’s draining your finances.

How much money are you putting down each month to pay off your debts? How much time will it take to clear your debts? How much do you need to pay your monthly bills, your rent or mortgage, your groceries, your gas? Where’s that money coming from?

Make some diagrams, charts, spreadsheets, lists—whatever suits you best. But the point here is to make concrete this mysterious problem and take away any questions or doubts in your mind about how it came about and how you’re going to solve it.

It’s also important to create a bare bones budget for making it through these leaner times. But you need to figure out what it is that you really actually need to survive. As you will hopefully find if you truly honest with yourself, it’s not so much. For example, do you actually need the latest HDTV or those brand name shower curtains in order to live from day to day? Do you need to get your hair done as often as you do? Do you need that gym membership that barely ever use?

Think about the reason you got into debt in the first place, and realize that you need to adjust your lifestyle a little. Of course, it can be harder to do this if you’ve become used to certain indulgences and luxuries, and if you shop and eat out with friends who have the same tastes. But if you tell your friends what you’re dealing with, it’ll make things easier.

When you’re struggling with debt, it may seem like all you have to do is cut up your credit cards and just walk around with cash. But how much cash will you carry? How much will you let yourself spend? How often will you take out more cash? Will you sign up for new credit cards if a department store happens to offer a big discount when you sign up for their credit card?

Creating a budget helps, but once you have your budget, you need to be prepared with a strategy to enforce the budget as you face the onslaught of consumer temptation that awaits on every street and billboard and lurks silently in your very home—these days, no consumer is safe from the seductive world of online shopping. There’s no escaping the myriad ways that businesses have come up with to entice you into spending money, so you have to be strong and disciplined as you continue your mean, lean spending diet. If you don’t have the money sitting in your bank account right now, you shouldn’t be spending it.

If you have a friend who’s also struggling with financial woes, ask her to be your “accountability buddy,” so you can keep an eye out for each other and make sure spending limits are enforced and there is serious progress in paying off your debts. Or at least confide in a friend who can be counted on to call you up every day or once a week and find out if your plan is working or if you need to make some changes. Having a partner can help you spot any problems with your budget, like if you’ve been too restrictive or too loose in setting your spending limits.

This is a hard habit to break, but it’s similar to avoiding impulse eating when you’re trying to lose some weight. For starters, never go into a grocery store when you’re starving, or you’re bound to buy extra items you normally wouldn’t. Likewise, just because a store is having a sale or something is on discount or you have a great 2 for 1 coupon, this doesn’t mean you need to buy it. If you really need to go shopping for necessities, give yourself a time limit—if you know exactly what you need, you won’t need more than 10 or 15 minutes to get in and get out. It’s all about streamlining.

The more closely you stick to your new set of spending rules, the faster you’ll see results in paying off your debts, and the less likely you are to fall back into old and dangerous spending habits once you’re debt-free.

Photo: Tax Credits