Over the past five years, I’ve been on a mission to get out of debt. Bad choices in my 20s, combined with a marriage breakdown and a job loss left me in a deep hole which has been an adventure to climb out of. While I wouldn’t wish my experiences on anyone, I do know that I’ve learned a lot from them. It’s said that what doesn’t kill you makes you strong and I would definitely agree!
One thing that I think helped me along the way was the fact that I wasn’t prepared to give up. Don’t get me wrong, there were plenty of days when all I wanted to do was sit on the couch with a blanket and hide from reality, but there were very few when I actually gave in. I’m lucky to have been exposed to a number of people, through books, seminars, and social media, who see the world differently and who see opportunities where others don’t. People like T. Harv Eker, Mark Victor Hansen and Brendon Burchard taught me that your life is what you make it while others, such as Dave Ramsey and Gail Vaz Oxlade, kicked my butt into gear with their no-nonsense attitude and common sense strategies.
No matter what your situation, there’s something that you can do to improve it. If you’re challenged financially, chances are that what got you to where you are is partly bad circumstances and partly bad choices. It can be hard to step up and take ownership of the choices we made that got us into trouble but by stepping up we also give ourselves the power and control to turn things around. One thing I committed to early on in my journey was not blaming myself or the past for where I was. Instead, I chose to focus on what I could do right then and there to make things better. For me, the most tangible thing was to find as many ways as possible to increase the amount of money I had available to pay off my debts. Here are five strategies that I used. Maybe they’ll work for you too.
- Increase Your Income – This sounds obvious but it’s surprising how many barriers people put up when I suggest this as an option! Increasing your income doesn’t necessarily mean taking on another job. It could mean negotiating a raise in your current position. Often people are afraid to ask for a raise but if you’ve been in your role for a while and you do a good job then it’s not unreasonable to approach your employer to ask for more money. Do your research and find out what other people in other companies working a similar job get paid. That way you have something tangible to back up your request. You could also apply for another job that pays more or take on a part-time job. Just 10 hours a week at minimum wage puts an extra $400 a month in your pocket. Taking on a job that allows you to earn tips or commission could boost your income by a lot more. With so many employers posting opportunities online, it’s worth taking the time to browse through the listings in your area to see what’s available.
- Reduce Your Expenses – This is a strategy that worked really well for me. Once I figured out that killing time by wandering through my favourite stores was playing havoc with my bank balance, I took a long hard look at where I was spending small amounts of money on a regular basis (picking up food for lunch and coffee were my two main money-suckers). Then I tried to create new habits that would help me stop spending that money. I also took a look at my regular expenses and challenged myself to answer the question, “do I really need this?” and “could I put the money I’m spending on this to better use?” Often we spend money out of habit rather than necessity, for example: subscriptions and services that we pay for each month, but don’t use. Cutting back on these can save you a surprising amount of money and you can put that towards something that’s more important to you. For example, when I realized that what I was spending on cable each year would pay for a flight home to England, I decided to give up the cable and watch shows online instead. Similarly, when I calculated what I was spending on fast food, I decided to start cooking more meals at home and putting the money I saved against my Visa card. Over time, those small changes made a big difference and made me much happier.
- Barter – There are lots of online sites now that allow people to trade services with others and it can be a great way to save money on things that you need. Over the years, I’ve traded time volunteering at a yoga studio for free classes, I’ve taught piano in exchange for driving lessons. I’ve tutored in exchange for manicures and house sat in exchange for air miles. If you have a skill or area of expertise there’s a good chance that someone is willing to trade their skills for yours. All it costs you is time, which in my book, is a bargain!
- Sell “Stuff” – Considering that I’ve only been in Canada for 15 years, it’s amazing to me how much stuff I’ve accumulated in that time. When I made the decision to sell my house, I had to start decluttering in a major way. While a lot of stuff ended up being donated, dumped, or recycled, there was also a reasonable amount of stuff that I was able to sell. Sites such as ebay and kijiji make it easy to get rid of things that you no longer need and it’s surprising what people are looking to buy. If you have books, furniture, toys, clothes, or appliances that are in reasonable condition you may be surprised by how much money you could make by selling them. The added bonus is that you have less clutter and more room when all that “stuff” is gone!
- Watch Your Fees – Fees seem to be a fact of life. We pay fees on investments, on our bank accounts and for borrowing money. Often they add up to a significant amount of money each month. Sometimes we pay more than we need to; sometimes we pay penalties that we could have avoided. If you find yourself regularly paying account fees, penalties for late payments, or fees for making extra withdrawals or going over agreed credit limits then it’s worth investigating how you can change your habits (or change your institution) to reduce them.
One thing I know for sure when it comes to getting out of debt and building financial security, is that it’s better to do something rather than doing nothing. Not everything you try will work out but if you keep trying, eventually it pays off. Our financial institutions do a great job of making us feel as though we need a degree in finance to manage our money, but it’s not true. Money management isn’t rocket science, it’s pocket science. If you know how much is coming in and how much is going out, if you keep track of your expenses and you give every dollar a purpose then you’re well on your way to taking control of your money. Paying off debt isn’t easy, but if you can boost your income each month and put that money against your debts, you will get there a lot faster. If you have strategies or suggestions for ways to boost your income, I’d love to hear them!