When it comes to paying off debt, sometimes, as the saying goes, “Drastic times call for drastic measures.” If you’re not drowning in debt, it may work to chip away at it, cutting back and kicking in an extra payment here and there. Often, though, it requires a major lifestyle change to move a mountain of debt, especially if your debt repayments are letting you go hungry! You may have to step far out of your comfort zone, at least for a while. But with a dedicated effort, you can pay off your debt and settle into a new life of financial freedom sooner rather than later.
If you’re overwhelmed by your debt, consider these seven lifestyle changes:
1. Sell your car
Having your own car is cool!, but the cost of owning a car is huge. However, life without a car may not be as difficult to manage as you think. If anyone in the household works from home (or close), one could drive while the other walks, bikes, or uses ride-sharing or public transportation to get around.
Getting rid of your car (or trading it in for a cheaper one) will drastically reduce your costs. There is also the added benefit of exercise if you choose to walk or ride a bike. Even if you can’t sell a car, you might still be able to downsize. Consider selling or trading for a less expensive or more fuel-efficient model.
2. Take on a Roommate
Sharing a significant part of your housing costs is a great way to free up cash to pay off debt. And, yes, even couples or families can consider this. Getting a roommate can be a big change, though, especially if you’re used to living alone or you’ve never had success living with someone else. Whether you’re living in the informal areas, are leasing an apartment or house together or you’re renting out space in a home you own, agreeing to live with someone is a commitment not to be entered into lightly.
Here are a couple of tips on choosing a roommate:
Don’t assume that a good friend will make a good roommate. You don’t want to lose a good friend over incompatible living habits. Unless you know how someone functions around the house, don’t assume it’s a good fit. You can put the word out with friends, family, and co-workers, or use social media to find a roommate.
Check potential roommates as if you were hiring them for a job. You might check for references, verify their employment, or even review their credit history to be sure you’ve found a good match.
There are quite a few Facebook groups where you can possibly find a roommate – especially if you are moving to a new town.
3. Move to a Smaller Home
If you maxed out your housing money with your last home purchase, moving to a smaller home with a lower mortgage payment will free up cash to pay down debt.
You might have made your purchase with the mindset that bigger is better, but do you really need as much space as you have? Could you make the sacrifice and downsize even for a short time? A smaller space could mean big savings: Not only will you have a lower mortgage payment, but you’ll have lower maintenance costs, lower property taxes, and insurance, and you’ll need fewer things to fill up your home.
While moving to a smaller home has its financial benefits, it is a major lifestyle change. And if you have a family, you’re not the only one who has to adjust. For a time, it may feel a little cozier than what you’re used to. Friends and family may not approve of your decision, especially since house size is often tied to success and social status. Remember, you’re bucking the trends to buy a debt-free future.
Very often, we find that people rent a big home rather than buying their own small home. While this might seem clever from a debt perspective, you are also missing a huge opportunity to build up your capital. Be smart about whether you rent or own, and what property to move into!
4. Adjust Your Social Life
A social life gets expensive quickly, especially where status symbols are so important, and it’s one of the easier areas to trim. You don’t have to ditch your friends forever, unless, of course, they’re only your friends when you’re spending money on a night out. The goal is to scale back on the amount of money you spend on nights out, traveling, eating out, etc. Look at how often you’re doing those activities and see if you can cut it in half. If that’s too easy, then cut it in half again.
Downsizing your social life may sound depressing, but there are a few benefits. First, you’re moving closer to getting out of debt. Second, you’ll have a lot more free time to invest in something productive. Don’t spend those free hours sulking around the house—find free things you enjoy, or use that time in a way that will help you pay off more debt.
5. Redirect More “Free” Time Toward Making Money
There are endless ways to make extra money these days. Previous generations probably would never have imagined you could make money by giving people rides, renting your house to vacationers, or reviewing products online.
Still, coming up with ways to make money takes a significant change in thinking. You may be used to spending your free time watching television, reading books, or pursuing a hobby—and you shouldn’t give up those enjoyments. To pay off your debt, though, you have to embody the belief that “time is money.” Every spare minute you have is a minute you can use to make more money to pay off debt.
So for me – TV is a definite No No. TV wastes a lot of time and all that advertising entices one to spend more money on unnecessary things. Advertising is made to let us feel bad about ourselves. We are made to believe that we will only be happy once we buy that Volkswagen, or rather the Audi Q7, no wait – it has to be the Discovery…or shouldn’t it be the Bugatti Veyron with the Diamond crust? You see, advertising is made to want things you don’t need, else you would go and find what you need. So stop watching TV. Save that money. Spend the time reading good books about getting ahead in life!
Look especially for the options that bring in more money. For example, you can pick up some overtime at work, take on a part-time job, or start up a serious side business. The harder you work, the shorter this lean season will be. Getting out of debt is about spending less AND making more!
6. Get Obsessed With Your Debt
Up to this point, you may not have paid much attention to your debt. Maybe you spent a few minutes each month looking at your accounts, or maybe you set up the online payment and forgot about it. To pay off debt quickly, though, you have to have a healthy obsession with the numbers.
Let go of the “not good at math” excuses and commit to making progress. This is why you can login to Brainydebt to see all your debt and to keep the numbers in front of you. You might spend hours each week plugging in payments, adjusting your balances, and recalculating your payoff timeline. Doing the work will help you stay on top of your debt and keep your target front-and-center.
Major lifestyle changes can be challenging. Stay focused on your goal of financial freedom and celebrate milestones along the way. Today’s sacrifices will bring major rewards before long.
7. Avoid all the bling of status symbols.
Now this is the big one I think. Here in Africa – and I think in most big cities around the world – we try to look richer than we are. Somehow we tell ourselves that we need to have a fancier car, nicer clothes and shinier shoes than the next guy. What happens is that we get lured into ever more debt by opening clothing accounts and buying cars we definitely cannot afford. We don’t have the money for maintenance, so we don’t do any maintenance…we rather spend the money on a set of fancy new rims or noisy exhaust pipes instead! So after a while the car breaks down and it’s lost a lot of value! And the clothes we bought are out of fashion before we paid for them even. Now we are out of money and out of options.
Don’t fall for this trap. Let the other people go around with their shiny cars…you know they are bought on debt and will not last. Don’t be one of them. Rather pay off your debt and invest wisely, and one day you will buy a shiny new car for cash!
Now get going by registering on the Brainydebt app for your own debt account. Type in all the debt you have and let us help you come up with a repayment plan that is right for you…then all you need to do is stick to those promised payments.