Now that I’m no longer semi-anonymous with my finance blogging, I tend to have a lot of friends and random people asking me finance questions.
I have people pouring what seems like their heart and soul to me because they really want to change and improve their situation.
This is something that I love about being a personal finance blogger – the fact that I can (hopefully) help someone change their life and teach them how to manage their money better.
Many of the questions I receive involve debt and what they can do to change their situation.
Someone told me they had over $200,000 in student loan debt, another person recently told me they had over $100,000 in credit card debt, some are hiding their finance problems from their families, some have told me that they are beyond house poor and they don’t know what to do.
The list goes on and on about the stories that I have heard.
I think the first thing a person needs to do when it comes to eliminating their debt is to realize WHY they are in debt in the first place (the next step is to actively reduce your debt – read How To Eliminate Your Debt). If you don’t know what your problem is, then it would be hard to make a positive change.
Yes, it is great to just start attacking your debt, but you also don’t want to fall into a vicious cycle of going into debt over and over again.
Here are some of the many reasons for why you may be in debt.
You think you have plenty of time to pay off your debt.
When I was in the middle of paying off my $40,000 worth of student loan debt, I remember being asked why I wanted to get rid of my student loan debt so quickly.
You know the saying about how there is no such thing as a stupid question?
Well, I thought that question was extremely stupid. I thought (and still think) it was probably the most stupid question I have ever been asked or heard.
I can’t remember the conversation exactly, but I remember them saying something about how I’m young and I should enjoy my money more and that I can worry about my student loans later.
Why not just pay off your debt more? Would you really rather have than 100th pair of jeans instead of putting more towards your debt? I know for a fact that I will probably completely forget about an article of clothing (even though I love clothes!) and I will appreciate my debt being paid off more.
I still enjoyed my life while I was paying off my debt, and I definitely do not think I was suffering at all.
It’s been around seven months since I completely paid off my student loans, and I couldn’t be happier!
You also never know what may happen. If you wait to pay off your debt and instead spend your money on things that you don’t need, you may fall into a bad situation. What would happen if you lost your job, came across high medical bills, or something else?
Wouldn’t you have wanted your debt to be gone?
Your credit card is not a new income source. If you treat your credit card this way, then you should cancel your credit card.
Oh well if closing your account means that you will be lowering your credit score, you are probably doing worse damage anyways by racking up large credit card bills that you can’t pay.
If you are using a credit card, then you should be working to pay off your balance completely each month.
So-and-so has debt, so it’s fine if you do too.
Many people compare their debt amounts to others in hopes that they will feel more “normal” about their debt and not feel as bad. An example would be if you are 30 and the average 30-year-old has $10,000 worth of credit card debt (I completely just made that number up). You then use this number as a “guide” to yourself so that you can feel more comfortable about your debt.
However, WHO CARES about how much debt another person has? How exactly does knowing what the average amount of debt a random 30-year-old has affect you?
Is that person you?
So, why would another person’s amount of debt even matter to you? That makes no sense!
Just because someone else has $10,000 worth of credit card debt from buying too much clothing does not mean that you should too. You never know, this amount may be breaking them on the inside even if they aren’t showing it.
You believe you deserve the items you buy.
Yes, you may be awesome and think you deserve it, but should you really be buying it? Just because someone else just bought a 100 inch 3D TV (or a mansion, nice car, gadgets, a crazy-expensive wedding, etc.) doesn’t mean that you should as well.
You might think “oh well they have a comparable job to mine, so, if they can afford, then I can too.”
However, you have no idea how this person is paying for it. Maybe they saved for years, or maybe they are just putting everything on their credit card.
I recently talked to someone who has over $100,000 in credit card debt and I could tell they were in panic mode. They bought way too much house, way too much car, way too much everything. They thought they deserved it all since others were buying something similar.
You don’t need to keep up with the Joneses!
There are many ways to cut down your spending. Below is a quick list:
- Lower your cell phone bill. Instead of paying the $150 or more that you spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $5. YES, I SAID $5! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. I created a full review on Republic Wireless as well if you are interested in hearing more. I’ve been using them for over a year and they are great.
- Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 gift card bonus to Macys, Walmart, Target, or Kohls!
- Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first four weeks are free too) and you get meal plans sent straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 per person or less. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
- Look for coupon codes. I search for coupon codes for everything. Today, I have two for you. I have a $25 Airbnb coupon code and a free taxi ride with Uber. Both are great services that I have personally used.
- I highly recommend that you check out Personal Capital (a free service) if you are interested in gaining control of your financial situation. Personal Capital is very similar to Mint.com, but 100 times better as it allows you to gain control of your investment and retirement accounts, whereas Mint.com does not. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation, your cash flow, detailed graphs, and more. You can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more, and it is FREE.
- Check out my recommendations page for a full list on money-saving websites.
Why are you in debt? What reasons have you caught yourself using?
If you’re feeling extra brave, please share how much debt you have (house, car, student loans, credit cards, etc.).