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You Won’t Die if You Don’t Buy. Here’s Why.

You Won’t Die if You Don’t Buy. Here’s Why.

Are you grappling with finances? Advice on how to make money is everywhere – from investment planners, successful start-up CFOs, online gurus, and self-proclaimed experts sitting next to you at the bar. They’re all focused on getting more income into your wallet, which is great! But no one talks much about where your money disappears to. I’m not offering a complicated output analysis or turning you into a miser. Consider these suggestions to keep expenses in check. Whenever you’re tempted to purchase on  impulse, I’ll be the voice in your head that asks ,”Will you die if you don’t buy?”

Here’s an interesting statistic: Black Friday is a peak U.S. shopping day. A National Retail Federation Research shows the total spent on Black Friday in 2013 was a staggering US $57 Billion! That’s a lot of buying.

Let’s begin with questions that help you find and plug the holes in your wallet.

1.  What do you spend the most money on?

You won’t forget the restaurant bill last weekend anytime soon but how much in any given month goes to groceries, eating out, fuel/car maintenance, the children and school-related expenses? Numbers in black and white jolt you with a picture of your spending patterns. You’ll know your monthly expense totals per spending category and payment medium like cash, credit card, or check payments. You can then plan which areas to cut down on. You’ll also see exactly why your expense total shot up. If you don’t buy unnecessarily, you’ll stay within limits.

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Tracking expenses requires that you keep all receipts and spend some time once a month to record and add them up. Initially, you need to prepare customized templates using any spread sheet – one form for cash payments, the other for credit card and check payments. Tally your expenses by relevant categories such as groceries, eating out, phone and other utilities, car, etc.

2.  Do you know how much money you have?

Sure you know how much you make and yes, you have money squared away, but do you make sure there is money left after paying your monthly bills? Again, recording your funds in black and white guides you to prioritize your necessary expenses. Don’t buy anything else if your funds are low.

3.  Are you able to pay your credit card bills in full?

If the answer is no, don’t use one. In her book Women and Money: Owning the Power to Control Your Destiny,” Suze Orman describes this as “the downward spiral of paying less than the entire bill and being charged interest on everything you don’t pay off.” Imagine if you had multiple credit cards! Interest on credit card debt is an expense you can avoid. Don’t buy on credit if you cannot  pay  the statement amount in full each month.

4.  Do you know when bills are due?

It’s when bills catch you by surprise that you hastily issue a check and don’t realize that it is not supported by your account balance. Or else, you opt to pay the bill late. You get slapped a penalty for issuing a bad check or you pay interest for late payment. Both are avoidable.  Prepare a monthly and yearly schedule that shows when mortgage, taxes, insurance, school fees, and utility payments are due. Don’t buy at all on the week or month when big payments are scheduled.

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5.  Don’t buy before asking, “What if?”

You’re thinking of buying a new outfit for a close friend’s wedding. What if you look deep into your closet for that cocktail dress you hardly used and jazz it up with a glittery wrap?  What if you borrow a dress from your sister? You want to buy a new grass cutter and a tent for monthly barbeques. What if you rent instead? You’re shopping for a present for your favorite aunt. What if you make her a bead necklace or an embroidered pillowcase? It’s your hobby and you have the materials already! Buying is not the only option.

6.  Mindful shopping can be guiltless, rewarding, and fun.

Review your intention and answer these questions.

Why? Shop only to buy something that’s needed or to get a treat you’ve been saving up for.

How? Make a list and keep to it. Learn the discipline of buying only one major thing at a time. Don’t buy an expensive pair of shoes plus an outfit or a bag at the same time. It builds restraint and guards your cash flow.

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When? Shop only when you can afford to. It’s best to time it during a sale. Don’t go shopping every weekend or simply because there’s a sale. That’s the reason you have a closet full of unused stuff and higher-than-usual expense.

With whom? Don’t shop in a group. You’ll end up with purchases made from getting carried away. Maybe someone else bought it or somebody said “Buy it. It’s such a good deal!” It’s hard to think clearly with opinions flying about, but going with a level-headed friend can curb your impulses.

Working as hotel expatriates, a group of 5 of us single women often shopped together. We were of the same built and shoe size. We bought – in one go – similar outfits and shoes in varying colors and styles. It was really fun but even then, I was the voice of reason (and party pooper) always asking “Will we die if we don’t buy?”

What? Buy the original. Go for quality and versatility. Be willing to pay expensively. The number of times and ways you’ll use good-quality things will be worth their price. There is no real excuse to buy knock-offs or pirated stuff which don’t last and add to landfills. Instead, save up and buy the original or choose good quality, unbranded products. Never buy products from endangered species. Animals should not unduly die just so you can buy.

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Where? Have a list of personally preferred brands you use and shops you buy from on the basis of quality of product and service. This builds relationship and rewards. It also keeps you from unscheduled purchases in random places.

Who? Consider the makers’ and sellers’ corporate social responsibility record: do they pay fair wages, sustain the environment, minimize waste, and give back to the community? Choose to spend your money in support of people who’re doing good things.

By sticking to a set of criteria, you simplify buying decisions and actually save money. Check out these other money-saving enjoyable experiences, too.

7.  Do you block the flow?

Doing all these suggestions could reveal you’re not doing so badly, financially. Don’t forget other people who are not doing so well financially and be willing to help them out. Help could be in the form of a small monthly donation or a one-time donation to a cause you care about. Or it could be a loan to a struggling friend. Be part of the flow and respect the law of abundance. When you cascade some of what you have to others, you also make space in your wallet for more.

Featured photo credit: cohdra via morguefile.com

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Last Updated on July 10, 2020

The Definitive Guide to Get out of Debt Fast (and Forever)

The Definitive Guide to Get out of Debt Fast (and Forever)

Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

Identifying All of Your Debts

The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

Here’s how you can get started identifying your debts:

1. Own Your Debt

Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

2. Make a Debt Tracker

It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

3. Get Your Debt Number

Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

Prioritizing Your Debts

All debt is not created equal. It’s imperative to understand that there are different types of debt.

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1. Understand Bad and Good Debts

Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

There are three main types of bad debt:

  • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
  • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
  • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

Good debt is identified as investments in your future. Here are three common types of good debt:

  • Student Loan Debt
  • Mortgage Loan
  • Business Loans

2. Decide Which Debt to Pay off First

Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

3. Don’t Pay the Minimum Amount

Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

Removing Obstacles to Pay off Debt Quickly

Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

1. Set a Reminder to Track Your Debt

“If you can’t measure it you can’t manage it.” -Peter Drucker

It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

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Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

Set weekly and monthly goals so you can have short term wins and keep the momentum going.

2. Hide Your Credit Cards

If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

3. Automate Everything

Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

4. Plan Ahead

Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

5. Live Cheaply

The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

  • Live with roommates
  • Cook dinners and prepare lunches for work instead of eating out
  • Cut cable and choose Netflix or Amazon Prime
  • Take public transit or bike to work

Finding the Lowest Interest Rates

The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

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1. Maintain a High Credit Score

Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

  • Never miss a payment
  • Don’t exceed 30% of your credit limit
  • Don’t sign up for more than one card at once
  • Limit hard inquires, like auto-loans and new credit cards
  • Monitor frequently with free credit-tracking software

2. Find Balance Transfer Offers

Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

How to Get Rid of Debt Forever

Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

1. Keep Monitoring and Adjusting

Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

2. Earn More Money

There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

Here are some examples of ways to earn more money:

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Talk to Your Boss

Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

Start a Side Hustle

This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

Build an Online Business

There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

3. Celebrate Your Wins

As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

4. Set New Financial Goals

Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

Conclusion

Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

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Featured photo credit: Pepi Stojanovski via unsplash.com

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