Lace & Pearls Test

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6 Debt Reduction Tips

11442069295_8e5b8ac486_z[Photo credit: Lendingmemo]

My husband and I are currently in the process of paying off our credit cards (one of my new year resolutions). Getting out of debt is more than just paying things down, it’s changing your routine and breaking bad habits. I thought it would be helpful to share my experience and hopefully inspire some others.

  1. Create a Budget: My husband and I have been using the budgeting system YNAB (You Need a Budget) for a few years. It a little complex but once you get the hang of it, it’s totally worth it.
    • Challenges: YNAB encourages users to combine their checking and savings into one account and use the YNAB system to do checks and balances. The YNAB interface is your source of truth. This helps users stick to their budgets and not overspend.
    • Benefits: You can create various categories for your budget, plan for the future, and allocate your money down to the dollar in order to save.
  2. Develop a Strategy: Start with the card that has the lowest balance, and then proceed to the next. The idea is to create a snowball effect and use the amount that you used on the previous card for the next in line.
  3. Change Your Mindset and Lifestyle: This one is tough. My old self would come home from work and do a little online shopping, my favorite past time. I kid I kid, but not really. To break a bad habit try to stay busy – work out, cook a good meal, etc. Find new interests and hobbies.
  4. Unsubscribe from Retail Emails: This tip is not for the faint of heart, but for those who are serious about getting out of debt. I have not made this leap yet – how could I unsubscribe from my favorite retailers (J.Crew and Loft)!
  5. Create an Emergency Fund: During this time you will also want to save some cash. Pick a dollar amount and put that same amount away every month. Soon you’ll find that you have saved a lot of cash, and who doesn’t want that. This way if an emergency comes up, you don’t have to rely on your credit card and fall back into old habits.
  6. Give Yourself an Allowance: Nobody said you have to go cold turkey. It’s not easy to stop spending if this is the lifestyle that you have grown accustom to. Allow yourself some spending money to use however you like. Just make sure to stick to the amount you have budgeted. You don’t want to jeopardize all your hard work.

I hope you find these tips helpful. If you have some of your own advice, please share it in the comments.

Comments

  4. I totally needed this! I have a horrible spending habit. I just can’t seem to save money! Whether its buying a new top I love or getting my mom a little gift, I just have to spend. I’m gonna give up shopping for Lent and then see where to go from there.

    Reply

    • So glad you enjoyed this post. Thanks for commenting. Best of luck on reducing your spending. It can be tough but totally worth it. 🙂

      Reply

  5. I so need this. I’m a massive shopaholic! Unsubscribing from emails is a really good idea…and I should probs try #6 too. Thanks for the tips (and good luck from a fellow shopping addict)!

    Reply

    • Thanks Lena. You’re right in your comparison to dieting and budget. You have to be realistic and allow some wiggle room in order to stay on track.

      Reply

    • Thanks Mojisola. Glad you enjoyed the post. I agree with you 100 % about allocating money, I couldn’t have said it better.

      Reply

  10. I moved from california to Copenhagen and one of the things I noticed is that debt is practically non existent here! They are really strict about loans, credit cards, and people just don’t really have them as a rule. I, on the other hand, came with my wallet full of them! Interesting cultural difference. Now I’ve cut down to 2 and I feel much better hehe 🙂

    http://www.danikamaia.com

    Reply

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