Debt Diet: 3 Ways to Save Money & Pay Off LoansLifestyle The List
If your credit card debt is out of control, you're not alone. One woman managed to pay off $23,000 in fifteen months. Now, people are clamoring for her secret!
Anna Newell Jones was a newlywed whose husband refused to share a bank account with her until she paid off her credit card debt. So she made a plan! And now her book Debt-Free Living has helped Americans collectively pay off over $3 million dollars in debt.
Are you ready to kick your savings into high gear? Read on for three ways to get your finances in order by going on a “debt diet.”
1. Make a Reverse Budget
The first step to absolving your debt is making a reserve budget, which requires a little bit of leg work. Anna says start by taking three months of your past statements, which should include your checking account and credit cards. Once you’ve gathered all your documents, separate them into spending categories, so you can clearly discern your average spending habits. This is where you decide to cut costs – as well as experience a rude awakening! "You actually might have more money that you're spending on ‘wants’ than you even realize,” Anna insists.
Once you’ve assessed all your expenditures, Anna instructs to make a "debt hit list" – which means organizing your debts in the order you'll pay them off. Which bill do you pay off first? "The debts that have the highest interest rate are going to go at the top,” Anna recommends, “followed by the lowest interest rate debts.” Woohoo, we can almost smell our credit scores rising!
2. Spending Fast
Step two of Anna’s debt diet is going on a spending fast. This is how you’ll stash up the dough to pay down your debt. “Fasting” is all about nixing luxuries and only spending on what you absolutely need. “A ‘spending fast' is bare bones living at its finest,” our expert explains. “You create a ‘wants’ and a ‘needs’ list, and you spend just on the needs." For many of us, this probably spells packing more homemade lunches instead of dining out. Need help distinguishing needs from wants? If you’re ever torn on whether to buy something, Anna says ask yourself if you want that item more than getting out of debt!
#3: Having Support
Last on our list is establishing a support system, which is paramount to your success. “The support factor is so important,” Anna emphasizes. “There's just so much guilt and shame around it." If you need an extra boost in morale, Anna can help in this area, too! Consider joining her “And Then We Saved” Facebook group, where users share experiences and cheer each other on. Anna’s forum has helped people pay off three million dollars worth of credit card, student loan, and mortgage debt. A little support can go a long way!
Diets aren't just for your body – they're for your wallets, too! Remember: if you ever fall off the horse, you can always jump back on and recommit to the process. Happy savings!
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