Tag Archives: extra income

My top 10 tips for paying off debt

As my journey to debt freedom draws to an end, I’d like to share the 10 things that had the biggest impact to reducing my debt. I haven’t included ‘making a budget’ as I think that is a given!

I’ve separated these points into 2 categories:

Action and Attitude

I believe the Actions you take and the Attitude you have while paying off debt are intrinsically linked. You can’t take action without the right attitude.

5 ACTIONS that helped me pay off debt

Saying No

Learning to say no – to people, to purchases and to yourself plays a huge role in winning the war on debt. I found declining invites from friends for nights out, drinks, weekends away etc to be really tough. Tough, but an essential action to take if you want to set yourself free from debt.

While I didn’t tell friends and family how much debt I was in when I started the journey, I did make it clear that I was making a serious effort to tighten purse strings to pay back debt, and that meant I had to cut some fun things out for awhile. Quite awhile. I learnt to say –  ‘I’m sorry, but I really can’t afford to do ABCXWZ this weekend, I’ve got a tough budget to stick to this week’

Most people understand, and if they don’t, well too bad. Certainly don’t sacrifice your budget for someone who doesn’t respect your goals. This doesn’t mean you can never go out and have fun while paying off debt – it just means prioritise the activities that mean something to you and choose those over spending cash on random nights out every Friday.

 

Record every single purchase you make for at least a month.

I actually recorded every purchase I made for a year. It became a habit and it was the key to becoming completely aware of everything I spent. I mean, if I spent  50cents on a packet of gum, I’d record it. Yep, that probably seems excessive – and sometimes it did get to me. But it helped by revealing patterns and behaviours in my spending and where I could ‘cut the junk’.

When I was fully aware of the things that burnt a whole in my pocket, I continued recording everything I spent as a habit to keep me on track. Debt and paying it off HAS to be at the front of your mind EVERY TIME you make a purchase (big or small) if you plan to win the war.

I just jotted down the purchase and the cost on the note section of my phone. Even the simple action of taking out my phone to add to my purchase list was an opportunity to check myself.  I had a moment to think about what I was about to spend and scan the list of the items already purchased that day / week.

So give it a go – 1 month. Record everything. You will be surprised (and potentially alarmed! 😉 ) at where your money is going.

Implement spend free days

I don’t know who originally coined the term Spend Free days in the world of PF blogging, but it really is a genius concept. Many bloggers out there set themselves spend free days and weeks (and months!)

I soon jumped on board to employ this effective little tactic in my own Get Debt Free strategy. I would regularly set myself 2 spend free days per week. These are days where you spend nothing, except on essential items – ie, a train ticket. Ok, so what stops you buying something you really want on non spend day? Well I saw the whole point of spend free days to curb mindless consumerism on the junk items.  You know, the stuff you buy without even thinking *hand goes to wallet, money comes out, I’m $10 poorer without even batting an eye*….. magazines, coffee, lunch takeout, a glass of wine after work, that kind of stuff. The point of my spend free days was to put a stop to spending without thinking. It worked.

 

Cut the junk STRAIGHT AWAY  

We spend money on so much SHIT. Seriously.  Cut the junk from your spending. Like, straight away. If you are in debt and looking to get debt free, frivolous expenses must go immediately. These purchases add nothing of real value to your life except a fleeting moment of satisfaction or more likely, distraction. Then it is all over red rover and you’ve spent 5 bucks on a magazine to read about the latest Kimye scandal.

Make your budget REALISTIC – it is ok to ease into it.

Yep, I know the enthusiasm…. you are all ready to pay off your debt and you want to go in, repayment guns a blazin’ and smash it out ASAP.

This type of excitement is exactly what you need to get the momentum going. But one of the side effects to this excited attitude is a rather optimistic approach to setting your budget. Which is turn can lead to disappointment, frustration and wanting to give it all up, a few months in when all the excitement has worn off.

I had a huge budget fail when I first set about paying off my debt in March 2013. I drew up a budget which showed I would be out of debt in October 2013. The budget was unrealistic. It didn’t account for EVERYTHING and it left me with very little spending money.  I knew for awhile it wasn’t working but I kept at it, and kept beating myself up when I went over budget (surprise, surprise) each month. Then I hit Debt Fatigue in a big way – I was WAY off my (unrealistic) goal and it would be another 8 months of debt repayment past October. Frustrated, disappointed and sick of debt – I stopped blogging for awhile, although I continued to make smaller repayments. Then I regrouped – I got my shit together with a realistic budget that included everything and set about attacking debt again with my new debt free date.

Set yourself up for success with a realistic budget. A good budget is not rigid, it’s flexible and fluid and allows you to adapt when you need too. When you look at your expenses, cut the junk first – without even considering keeping those items. Then, slowly, you can whittle down your expenses.  You will be surprised what you are happy to go without and places your budget can be cut further once you get into a momentum.

5 ATTITUDES that helped my pay off debt

Never EVER EVER give up

We all know the saying and it’s cliché for a reason.

If you don’t give up making repayments, you will be debt free. At some point. One Day. Maybe not when you thought – refer to my Budget Fail – but if you don’t stop making those payments, the numbers will continue to tick down. We all have shit days when paying off debt. The days we want to buy everything in sight, where we are angry, frustrated and generally just pissed off at the hold debt has on our lives. Don’t let any of those reasons make you give up. Giving up is not an option. Take another look at the budget, cut yourself some slack for a week or buy a nice little purchase for yourself. Then get back on the horse and keep going.

Own your OWN debt

You are in debt because of you. If you acknowledge you are in debt but refuse to blame yourself, well, you are going to get nowhere fast. The most important thing when making a financial life change is the long term change of bad financial habits or behaviours. If you are looking around at everyone else to blame for your situation, you will never change the habits that got you there in the first place.

Continue to give and pay your own way

Ok, so this is a dual tip – action and attitude. People with stingy attitudes towards giving will NEVER BE SATISFIED with what they have. Getting debt free isn’t about being stingy towards others. I have continued to donate to charities and causes I support. There will always be others worse off than you. Sure, debt sucks but I don’t struggle to put food on the table or pay my rent. Others aren’t so fortunate. Never think that your situation is the worst. Wherever there is a lack, there is an opportunity to give – so have a giving attitude. Also, don’t skip out on a round of drinks with your mates if you have chosen to go out for the night. If you can’t afford it, don’t go.

Don’t think you are alone

If your attitude is Woe Is Me, No One Else In The World Understands This Debt Thing, then take 2 seconds to type I’m In Debt into google and you will see no, you certainly are NOT alone. There are so many stories, so much inspiration, so much advice out there around getting out of debt, you should never feel alone. Ok, so maybe you are the only one in your family or circle of friends in debt, but investigate the resources available to you – and the support! The PF blogging world has been a huge inspiration to me.

And my last piece of advice?

Be passionate

A passionate attitude toward doing all you can to get out of debt, will see you realise that debt free date sooner than you thought possible. So get started today – and change your life! Debt free is set free.

So, there are my top 10 tips – I’d love to hear they number 1 thing that has helped you on your journey to debt freedom!

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January 2014 – At a glance debt and savings stats

During 2014, I will be posting a monthly ‘at a glance’ update on my Debt and Savings balances.

At the end of January, things were looking like this:

Debt

Credit card 1 – $0.00

Credit card 2 – $0.00

Personal loan: $5925.05

Savings

$140.54

Things are going to be fairly quiet and unexciting around the savings corner until March!

Later alligators 🙂

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Week 29 – Expense and Debt Update

A bit late with my weekly update, but here are the stats for Week 29.

While nothing much as changed on the debt front, I did stick to my goal of only buying 1 coffee and shopping at ALDI for my weekly shop. I also managed to not spend money on alcohol…but my boyfriend very kindly spotted me some beers last night 😉

Spend summary

Monday: $3.00 water, $15.00 on travel card

Tuesday: $0.00

Wednesday: $150.00 on travel card, $140 board

Thursday: $40.50 gifts

Friday: $23.00 gym

Saturday: $70.00 dentist, $4.50 coffee, $30 phone recharge card, $35.00 donation

Sunday: $27.30 dinner

Total spend: $538.30

Debt update

Credit card #1 – $0.00

Credit card #2 – $0.00

Personal loan: $6708.64

Total debt remaining: $6708.64

Total starting debt: $14,744.12

Debt reduced by Week 29: $8,035.48

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Week 18 – Run your own Debt Race

I am running my own debt race. The last few months I have realised that the pace that I set can change from time to time, but as long as I am moving forward, I will cross the finish line. It may be later than I planned, but I will finish regardless.

In an earlier post, I compared paying off significant debt to running a marathon. I actually ran my first marathon at the start of June, and let me tell you, now I know what it feels like to run a marathon, the analogy could not be more true!

Where have I been these last few months? Ive been here, plugging away at debt, but Ive relaxed my grip on the expectations I placed on myself to meet my targets every week, and every month. If I didn’t relax, I would have given up all together.

I came out at the start of this debt breakup totally focused on clearing this debt in 8 months. I stood at the starting line of the marathon, believing I could finish by 4 hours and 40 mins. I had this time set in my head, just like I had an 8 month deadline to be debt free.

And they both started so well. But like many marathon rookies – EVEN THOUGH I KNEW THIS – I ran to fast at the start. I was excited to be there, all that training, and I just wanted to run.

When I paid my first debt repayment in February, I was champing at the bit to get this thing rolling, budgeting my way to what appears now, to be a fairly unrealistic timeframe.

And don’t we always start with a bang on any new endeavour. But where does the hard work come in? Not at the start when it’s all new and fresh and ‘Yeh baby, I can DO this!!” *high fives self*

The hard part comes in when you are in the thick of it, on the longest stretch, where it just seems there is no fcking end in sight. During the marathon, that was the 26km – 35km stretch. I’d lost sight of the 4 hour 30 min pacer – he smashed past me about 22kms. I knew then, that I wasn’t going to finish in the time I wanted. Although I felt no different physically, mentally, that realisation almost shut me down. I wanted to give up. I just told myself to let it go – run your own race.  I slowed down at that point, if I didn’t, I would have burnt out at the pace I was running and wouldn’t have been able to finish. Mid race, I adjusted my mental expectations, set a new pace and kept going.

Run your own race.

I am at that same stage with debt. I’m deep into the second card repayments – and it’s once step forward, 2 steps back. I wasn’t where I had planned to be at this stage and it was doing my head in.I wanted to give up and say fck it, everyone is in debt – why bother? Then head to the nearest mall and drop 1k on a new wardrobe 😉

But instead, I have just adjusted my expectations of myself and what I can afford to pay off, and what I do want to spend my money on. I don’t want to miss out on living my life. I don’t want to not buy a coffee everyday – yes peoples, you will hear no more griping about coffee on this blog. Ive come to peace with the fact that coffee is my little burst of morning happiness, and for $3.90 a day – I’m buying that happiness 😉

I finished the marathon in 4 hours 56mins. Longer than I expected. But I FINISHED.

I will break up with all my debt. It will take longer than I thought. But I will FINISH.

Don’t give up. Change your pace if you need to. And keep moving forward.

So peeps, here is my debt summary at 18 weeks:

Credit card #1: 0.00

Credit cards #2: $2140.00

Personal loan: $6977.00

Total debt: $9117.00

Total starting debt: $14,744.12

Debt reduced by week 18: $5627.12

Ps – I cracked the under $10,000 mark and didn’t even realise until I did the sums just now!

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Does budgeting equal the death of spontaneity?

Budgeting certainly does put a dampener on spontaneous activity if that spontaneous activity relates to spending. And most of my spontaneous decisions do involve spending. I can’t ever recall saying (as a spontaneous suggestion):

‘hey, lets stay in tonight and watch a dvd we have already seen a million times and cook that 89 cent packet of popcorn!!!  wooo hoooo!!!”

This is often the suggestion of ‘cheap things to do’ when you are budgeting. And true, it is cheap, and a good idea. But my spontaneous activities / impulses generally follow along these lines:

‘Ive had a shit day at work, let’s go and drink cocktails’ – leads to…..5 cocktails and $100 from my back pocket

‘I know we are saving, but let’s just check out that awesome new restaurant that getting all the good reviews on Urban Spoon’ – leads to….very small portion sizes for a ridiculous amount of money

‘Just this once, I want to buy really ‘good’ (read: expensive) face cream and see if it does actually do anything better than normal face cream’- leads to $80 on cream that doesn’t do anything better.

The thing is, a lot of my financial blowouts have been results of spontaneity. And Im not saying that the above example, on their own, will break your budget…but when this happens frequently, it will derail your best efforts at budgeting.

A lot of people who budget, ‘plan’ for ‘spontaneity’ with a little fund of cash they can dip into should the moment call for some awesome unexpected adventures or purchases. I think this is a great idea.

In the end, it’s all very well to moan about budgeting killing spontaneity, but it just comes down to bigger picture stuff. Do you want that face cream now (which, ps, won’t work) or do you want reach your goal on travelling around the world sooner?

No brainer.

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Week 7 – Spend and Debt Update

Another interstate trip this weekend for a good friend’s Hens Night 🙂 As I write this update I am extremely fuzzy headed and hungover from waaaaaaay to many cocktails last night. My liver is taking an absolute beating in April with all these events!

Here are my stats for the week – Im quite excited to say that next pay date I will be able to smash the balance on Credit Card 1 – HECK YESSSSSSSSSSS!!!!

Total Income 

  •  $1595.00

Spending / Expenses:

(Amounts in italics are included in my regular monthly expense budget as listed in this previous post)

  • Monday: $0.00
  • Tuesday: $47.50 drinks
  •  Wednesday: $4.50 coffee, $3.70  lunch
  • Thursday: $460.00 debt repayment to credit card 1
  • Friday:  $4.30 coffee, $19.00 gift, $140 board
  • Saturday: $10 breakfast at airport, $10.80 lunch, $2 travel, $17.00 airport shuttle, $50.00 ‘Hen’s night’ payment.
  • Sunday: $33.00 cab to airport, $11.20 breakfast, $10.90 lunch

Total Expenses / spend: $823.90

Week 7  Summary

Income $1595 +  $9.37 = 1604.37 – expenses $823.90 = $780.47

Week 7  debt status

Credit card #1 – $299.00

Credit card #2 – $4615.45

Personal loan – $7309.87

Total Debt : $12, 224.32

Initial Debt: $14, 744.12

Debt reduced by week 7:  $ 2519.68

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Week 5 – Spend and Debt Update and No Spend Challenge

nospend

This week was my No Spend week challenge! And when I say No Spend, I mean aside from the expenses already allocated in my budget aka my  financial commitments, in italics below.

How did I go with my No Spend week?! Pretty good! There were 3 purchases (outside my budgeted expenses) but bear with me while I explain (not excuse!) those after the summary of Week 5:

Total Income 

  •  $1595.00 (pay)  + $20.00 extra income* = $1615.00

Spending / Expenses:

(Amounts in italics are included in my regular monthly expense budget as listed in this previous post)

  • Monday: $0.00
  • Tuesday: $0.00
  • Wednesday: $0.00
  • Thursday: $570 Credit card #1 debt repayment, $130 Credit Card #2 debt repayment, $140 board, $25 internet, $20 Phone, $180 travel,  $60 tithe (my allocated tithe is $40 per fortnight but remember I had $20 towards tithe left from last week so I donated all $60 at once this week) $129.00 flight*, $156.50 flight*, $30.00* market stall fee
  • Friday: $0.00
  • Saturday: $0.00
  • Sunday: $0.00

Total Expenses / spend: $1440.50

Week 5  Summary

Income $1615.00 +   $33.85  (bank balance at start of the week) – expenses $1440.50 = $208.35 in bank  account

Week 5 debt status

Credit card #1 – $632.12

Credit card #2 – $4566.00

Personal loan – $7309.87

Total Debt : $12, 507.99

Initial Debt: $14, 744.12

Debt reduced by week 5:  $2,236.13

*Let me explain my spending on flights and the market stall fee. This month I am travelling a lot interstate for personal reasons (ie, not on works dime 😉 for an engagement, wedding and hens weekend (all separate weekends!). These are some huge life moments for some of my best friends and days I want to participate in regardless of debt status. So I have budgeted accordingly in the lead up to April for these events. I had to buy flights this week or else risk the cost increasing further.

The market stall was my shot at generating some extra income (I’m still trying to figure out ways of increasing income – I hold no particularly valuable talents and my baking isn’t something people would ever pay for 🙂

My mum is an amazing dressmaker and has a stall at monthly craft markets, so this week (last minute) I split the cost of the stall with her to sell some of my handmade cushions. My  half of the stall cost was $30.00. As I hadn’t budgeted for this (and it was my no spend week!) I tried to offset the cost by reducing my monthly phone cost (Im on prepaid, not a plan) from $50 to $20.00 and use that $30.00 for the stall. I only sold $20.00 of stock so I didn’t quite make back the cost of the stall. But it worth a shot!

So, overall I am really pleased with my no spend week!!!  I didn’t buy ANY coffee, any magazines, any snacks….I think I might incorporate a No Spend Week into every month…

Ps – whilst on No Spend Week challenge, I read a blog – And Then We Saved – and the writer was actually on a No Spend challenge for OVER A YEAR. Impressive!!!

And there I was patting myself on the back for forgoing my coffees for 1 week!!!

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