5 Ways to Start Digging Out of Debt
Ready to be debt-free? Here are five ways to get started.
Set a budget for your weekly expenses, such as groceries and toiletries, and withdraw that amount of cash from the bank each week. Then spend only what you have in hand. “If you don’t have the cash, you don’t buy it,” says Stephanie Smith, a psychologist in Denver, Colo., who specializes in debt counseling. “We’ve become so accustomed to credit cards, we’ve lost all perspective of what cash can buy and of what we can and cannot afford.”
Drive a wedge between looking and buying. To help curb impulse shopping, make a list of things you want to buy, then wait, says Kelly McGonigal, PhD, a Stanford University health psychologist. The act of putting the item on a list gives you the warm fuzzies that come with the promise of reward, she says. “But, two weeks later, youíll be amazed at how much has fallen off the list because youíre no longer under the spell of the productís advertisement or fantasy.”
Reduce your wants. Think of emails and catalogs from retailers as “want generators,” says McGonigal. Contact these companies and ask to be removed from their mailing lists, or subscribe to a service that will do it for you, such as GreenDimes.com. Toss unsolicited coupons directly into the recycling bin. “When you are trying to save money, nothing excites the brain more than the idea that you are getting a bargain,” she says. “But, obviously, you’re not saving money if youíre spending it — even if it sounds like a deal.”
Don’t ignore debt. People don’t realize that the seed of the stress response is rooted in the unknown, says McGonigal. So trying to keep stress at bay by not opening the bills or balancing the checkbook is bound to fail. “Your mind will keep trying to solve this problem, and the less information it has, the more itís going to worry,” she says. “That puts you in a never-ending stress response and takes a huge toll on your health.”
Establish a pay-off plan. Having a clear strategy for paying your debts each month and knowing when you’ll be debt-free is great for peace of mind — and motivation. For tools you can use to start your own step-by-step payback plan, see the “Pay It Down” Web Extra! at ExperienceLife.com.