Debts can weigh heavy on us. The stress and mental clutter of knowing that those bills are there looming over us can make it hard to enjoy even the simple things in life. When we’re drowning in debt every dollar we spend becomes a guilt-trip, even if we’re buying things we actually need. Our debts can even hurt our credit scores making it challenging, if not impossible, to secure the employment needed to pay off the debts. This creates a spiraling cycle of borrowing and missed payments that can be hard to break free of.

There are two golden rules for killing debt. While implementing these lifestyle changes takes concentration and effort, mastering them will get you debt free in no time.


Create an effective budget

Budgeting can be an emotional roller coaster, but once you admit you have a problem you can take the steps needed to solve it.

Start by calculating your monthly income to know what you’ll have in hand to spend each month. Next, list down all the family’s expenses including: utilities, car, tuition, healthcare, groceries, clothing, debt, mortgage or rent, taxes, insurance and other things that you spend on each month. After calculating your monthly expenditures and listing your anticipated expenses you’re ready to cash your next check and put your money to work for you.

The “Envelope” system

I can’t stress the envelopes system enough!

There are massive amounts of reviews and explanations of the envelopes-based apps. Mint, Mvelopes, Good budget (read a review here), and You Need a Budget (YNAB) are a few of the most common.


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The premise of both paper and electronic envelopes is simple: make separate envelopes for different expenses and put money for each expense in each envelope. As the month progresses, you can spend out of each envelope for each type of expense. Once you reach your limit for the month you’re done. You can’t borrow money from other envelopes to pay bills in another category or buy unnecessary items.

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This system, whether real or electronic, curbs overspending and helps you budget your paycheck effectively. The goal is to spend less than your paycheck and also any spending on things which are not absolutely necessary. The leftover money you save the first month can also be added to the amount budgeted to pay down your debts – starting with those debts costing you the most in accrued interest.

With apps like those mentioned above you can either link your bank accounts for fast access and quick budgeting, or you can opt for a program that makes you manually enter your financial data.

Be aware that linking your bank accounts to third party applications is not without its risks. Usually banks are quick to point out that they’re not liable for any security breaches of your financial data should you choose to give out your passwords and that route. However, you may decide that for a short-term use with the potential benefits to outweigh the risks.

Other apps like YNAB don’t auto link to your accounts, which forces you to manually enter your bills and receipts each month. Though it’s more time consuming, it has the benefit of being both safe and secure, while also forcing you to adopt positive habits – like sitting down to re-evaluate your finances on a regular basis.

As you work through your budget the first few month’s be sure to track all your expenses and save and enter all your receipts, you may find that there were some hidden expenses that you forgot about that are eating up your monthly paycheck. Tracking everything will allow you to analyze any potential places to cut down until the debts are paid off.

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You may find that a consultation with an accountant is also worth your time and efforts. They’ve seen it all and can offer invaluable advice to get you debt free sooner than if you go at it alone. An accountant can also help your family in other ways, suggesting ideas and solutions you may have missed or helping you take advantage of certain tax laws and other legal opportunities.

Staying within budget

coins-1015125_640If you can imagine your debt free life, but are still not sure how to get there, keep in mind that in order to achieve the life you want you will have to temporarily curb expensive habits like shopping for unnecessary gifts, clothes, and other items, or spending on entertaining, dinners, and outings.

Additionally, gradually reducing or giving up on expensive habits like smoking and drinking will save a significant amount of money every year. Use a smoking cost calculator to see how much money you can save by quitting this addiction – money that can be used to pay down your debts. Giving up on unhealthy habits will also reduce health-care expenses or even health-insurance premiums as well.

Remember, it’s very important for all the family members to stick to effective budget habits. If even one person won’t stick to these habits, that will have adverse impact on the family budget. Dissenters will also tend to undo the hard work of other family members. Make sure everyone is on board to work towards the same goals. Ensure that each person understands (appropriate to their age level) that budgeting and reigning in spending is a short-term hardship to get to a long-term place of freedom from debt.

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