Are you ready to pay off your debt but have no clue where to start? Read the first post in my series about paying off your debt, then read through this series until you get to this post, our fifth in the series.
So far you’ve committed to getting rid of consumer debt for good and changing your mindset to successfully pay off your debt. You’ve also you’ve figured out why you’ve incurred the debt you have, either because of a life changing event or a money sinkhole, and you’ve tracked your income and expenses. Now it’s time to take some action and start making real changes in your financial life if you haven’t started already.
Why You Should Start With The Little Things
The most important part of paying off your debt is permanently changing your mindset to one that allows you to live within your means. If you start making drastic changes immediately, you might end up in a situation much like a yo-yo diet. Instead of pushing yourself to the limit by completely changing your life all at once, you should start with the little things and gain momentum as you get further along in your debt pay off journey.
What Are The Little Things?
Great question! The little things are whatever you see in your historical expenses that you wouldn’t mind getting rid of or scaling back on. Unfortunately, every person is different so I can’t tell you exactly what to cut. However, there are quite a few expenses many people would never miss.
Some Expenses You Probably Won’t Miss
Stupid fees are one expenses that absolutely no one would miss. Quit incurring fees from over-drafting your bank account, making late payments or little fees that provide no value to you whatsoever. Pay more attention to your finances and you could save hundreds in this category in just a couple short months.
Another trick companies use to take your money is the subscription model. You have the best intentions when you signed up for the gym or those magazines sitting unread on your end table, but you never really got around to taking advantage of your subscription services. Instead of letting subscriptions continue to take your money month after month, simply cancel these services. There may be termination fees, but if you’ll save money in the long run by cancelling now, generally it is a good idea just to pay the fee and get it over with.
Another way to make a small change is to simply cut back a little bit on your every day expenses. Decide on a percentage you’re comfortable with and reduce your spending in some of the categories you know you overspend in. It might be clothing, dining out, or buying gourmet groceries. Regardless of which expenses you decide to cut back just a little bit on, it’ll all add up in the long run.
Some Little Actions You Can Take To Save Some Major Money
Believe it or not, there are some simple actions you can take that won’t change how you live your life at all but these actions will save you a ton of money. My personal favorite is called “the ask”. All you have to do is call up a service and ask for a discount. You’d be surprised how often it works.
One example of “the ask” that I use every few months is calling my cable company and asking for a discount. Whenever they try to increase my rate, I simply call and ask for a discount. Sometimes I have to ask to talk to a supervisor or the customer retention department, but I’ve received a discount every time I asked! This discount has ranged anywhere from $120 to over $600 per year! That’s a lot of money when you’re trying to get out of debt.
Another great way to use “the ask” is to lower your interest rates on your credit card debt. Many times, if you simply call your credit card company and ask them to reduce your interest rate they’ll comply. Make sure to highlight why they should lower your rate. Explain to them that you’ve made the last year’s worth of payments on time and you’ve been a customer for 5 years.
What Should You Do With All Of The Money You Save?
If you’re now spending less than you earn and these techniques have saved you even more money, I bet you’re thinking that you should use this money you saved to immediately pay down your debt. There is a better place to put at least a little bit of that money, which we’ll discuss next in the next installment of the get out of debt series.
What little expenses have you been able to reduce or completely cut out without missing them? Any big win stories on using “the ask”? I’d love to hear about it in the comments below!
Photo by: MoneyBlogNewz – Text added by: Lance Cothern