5) Cable. Your Excuse: “But, but, but I need cable! I get a good deal! It’s only $100 a month! I use it a lot! It’s bundled with my phone and my internet. I’ll only save $30 a month if I cancel it.”
Know what? We don’t care. If you have credit card debt you can’t afford cable. You don’t actually need it. In fact, after you get rid of it, you may well find that you don’t even miss it. Lots of people get along just fine without it. Cancel your cable. Get cheaper internet. Cancel your home phone if you don’t need it. Put the money you save toward your credit card debt. Once you stop spending more than you earn and have paid your debts, you can think about getting cable again.
4) Eating Out: Your Excuse: “But, but, but I love food! I don’t have time to cook! I can’t cook! I’ll poison my entire family! I’m too busy working! It doesn’t cost that much!”
If it didn’t cost that much you wouldn’t have credit card debt. If you are spending more than you earn you have to stop eating out. Learn to cook. When? Well, since you canceled cable, you’ll have a lot more time on your hands. Make yourself a firm grocery budget. You can use the USDA’s food costs estimates to help you. Put all your grocery money in an envelope and go to the store. Don’t spend any more than is in that envelope.
3) Recreational Shopping: Your Excuse: “But, but, but shopping makes me feel better! I’m depressed! My kids need stuff! I need stuff! I have to look good for work! I have to buy expensive gifts for people so they’ll like me!”
If you have credit card debt, you are probably buying more crap than you need. This means that you probably have enough crap to sustain you for awhile. Stop shopping. Have a yard sale. Cut up your credit cards if you can’t make yourself stop. Don’t cancel them, though. You still need to pay them off.
2) Gym Membership: Your Excuse: “But, but, but this is my health we’re talking about! I’m fat! I’ll get fatter! I need the gym! I have a contract!”
Sell your membership or cancel it if its month to month. You don’t really need it. You can do jumping jacks. Also, since you’re going to be eating out less, and sitting on your ass watching cable less, it’ll be easier to lose weight. Once you pay off your debts, you can see if a gym membership fits in your budget. In the meantime, go outside and play.
1) Expensive Cars: Your Excuse: “I am what I drive! I love this car! This car is who I am!”
No it’s not. Sell it. Get a cheaper car. Use the money to pay off your debts. No one cares what you drive except you and really shallow people who suck. Do you really want to be in debt just to impress a bunch of shallow people?
In order to get out of debt you need to curb your monthly expenses:
Let’s say you have $10,000 in credit card debt and your current minimum payment is $250. At 18% with a minimum payment of 2.5% it will take you 382 months to be rid of your debt. In that time, you will pay $14,615.49 in interest. Fun.
If you pay a fixed payment of $250 dollars (your current minimum payment), it will take you 62 months to be rid of your debt. In that time, you will pay $5,386.23 in interest. Still pretty crappy.
If you managed to cut your expenses by $200 a month and applied that amount to your current minimum payment, then paid that amount ($450) it would only take you 28 months to be rid of your debt. In that time, you would pay $2,255.56 in interest.
Still not convinced? You can use this calculator from Bankrate to determine how much money you’re wasting by not paying off your credit card debt as quickly as you can. Getting out of debt will make you feel better than watching TV in a new pair of shoes ever could.
Those of you who got yourselves out of credit card debt, which expenses did you cut? What advice do you have for people who are drowning in high interest credit card debt? Let’s hear it!
(Photo:DetroitDerek)
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Shit, the only one that applies to me is #4, and i only eat out at lunch (not saying it wouldn’t help).
hmmmk, so i guess I’ll have to look a little harder.
OK if you’re in debt and want to pay it off quickly just convert your ways to how the Amish (no offense intended) live. No electricity, they grow their own food, they stay in shape because they do manual labor (gardening, washing clothes by hand, etc.).
@hapless: That’s assuming 1) there’s space for a couple of machines and 2) you don’t go to the gym for classes.
the gym is an absolute necessity. I’d rather pay $40 per month and use up 240 hours with the iron over sitting arround spending money on being out of shape.
Of course, this is sorta preaching to the choir. The people who need to hear this are the ones who have the hardest time listening.
@BugMeNot2: Riiiiiiight, because doing illegal things is a valid way to save money.
*cough*
@GenXCub: Can you tell me how to find out about these seat-filler services? I’m going to Vegas next month and I would LOVE to get to go to a show or two, but can’t really afford it.
Another good tip if you’re a book lover (other than the obvious library) is PaperbackSwap.com. You get rid of books you’re not reading anymore, and you get new books to read. If you don’t like it after all, swap it back for something else.
I almost hate to admit it, but I used to spend about $90 at the bookstore every month (though this did include food purchases, and drinks. I worked there, so I often ate there and bought a bagel each morning). Now, I have spent MAYBE $20 in the last two months. But I have new books coming in all the time, and they cost only media mail shipping (about $1-$2 each).
1) internet is an essential for me. I am a software engineer, and frequently work from home on nights or weekends. I also use the internet for research, reading (rather than buying magazines), online billpay (hey, no checks! no stamps!), communication… I know the library has internet, but at 10 o’clock at night?
2) YOU DO NOT NEED CABLE!!!! “I work hard and need to relax, and would spend more on dvd rentals or at bars without it”, seriously???? rabbit ears, you can still get network tv if you need it that bad, and reading is far more relaxing than tv, so is playing games with friends rather than going to bars, having a conversation, taking a free class…. the library near my house has free dvd rentals, most libraries charge fifty cents or a dollar for dvds….
3) all of the points are excellent!!!! I hear those excuses every day!!!
4) You shouldn’t be purchasing big ticket items if you have a credit card balance. I do own some expensive things, like a coach purse, paid for in cash, purchased at a point in time when I did not have a credit card balance, as a gift to myself for getting my diploma (in computer science). I have had it for three years, it is good as new, and keeps me from wanting to buy some cheap new purse every season. And it sure helps jazz up the same dang clothes I wear all the time… so I can pay off my current credit card balance…
5) gym membership… well, if you use it, keep it! but only if you seriously use it at least 3 times a week! otherwise you’re just throwing money down the drain… and even if you do use it…perhaps explore free alternatives if they available.. are you using classes like yoga, and the pool? that’s worth it. but weights? you can get those used cheap. Treadmill? go outside. bicycle? go outside….
While I agree with this list in principle it is extremely misguided.
Personal finance is behavioral. At the same time, getting out of debt can take a long, long time. Some people can cut that time a bit by living in the dark and eating nothing but ramen. But most people, they will try it, make some progress for a bit, but over time, burn out and then just go right back to where they started.
It’s like losing weight, really. Some people can ditch 100% of unhealthy food, and run a miillion miles a day. Most people, though, cannot. They will try it, make some progress, but then they are miserable, they miss pizza or whatever, then go right back to square one.
Some people really enjoy their gym membership, you know? If you are serious about getting out of debt you will find the places you can sacrifice. There’s usually plenty of ways (another one: going out to a bar or club is really, really expensive). Or you can figure out a way to get promoted or get a raise and grow your way out of the problem.
Posting a hard and fast list is simple-minded and condescending.
@bonsaitree: I like your post, because it emphasizes moderation and takes personal circumstances into consideration.
No set of “rules” is one size fits all, since everyone’s living situations varies widly. For instance, I find it smug and presumptuous when one insists the rest of us have no need for a mobile phone, only a land line. For me this is completely the opposite; why keep a land line when only telemarketers call me here? What good is it going to do when I need to take a call while not at home?
On the other hand, I can gloat about not needing an automobile, since I have great public transporation.
It’s all about moderation – just don’t spend money on thing you don’t need, and be wise. You don’t have to live like a pauper…by the way, a flask is also great if you want to save money!
Thanks for the kind words @RICHCREAMERYBUTTER .
Many moons ago, I used to work for an accounting & law firm where the partners did some pro bono credit counseling work. I’m actually a software engineer by trade.
One of the biggest lessons learned was that most folks are in financial trouble because they simply don’t keep track of their money. Some people were simply “poor” and others were in debt due to medical expenses. Still, these people were the exception rather than the rule.
It was a real learning experience to sit across the table from well-educated and otherwise brilliant artists, scientists, lawyers, and professionals who were under mountains of debt and had seriously bad (scores <~ 500) credit.
For most of them, they got “used to” being in debt due to college loans and, since they were making good salaries, never gave budgeting a second thought. Everything was on “autopay” and they hardly ever looked at their account balances.
The senior partner in the firm used to advise strongly AGAINST anyone, initially, setting a budget because most of them didn’t have ANY idea where their money went.
He advised them as a “Step 0.” to simply keep track of EVERY expense for 1 month (or even as little as 2 weeks + utilities & mortgage/rent) and then give us the list. After we visualized the numbers to show them where all the money was going, we could begin to construct a debt plan and budget for them.
wow, i got 3 pages into this thread, and have come across some interesting points. IDK if anyone else does it this way but in regards to dropping cable and watching your shows online…
I got Mozilla Firefox, added the addon called “Adblock Plus” and was able to watch all those online shows with the “limited commercial breaks,” commercial free.
I now catch up on entire series worth of shows, like “Battlestar Galactica,” “Lost” etc, that i otherwise would never have been able to get into because i wasn’t able to see it from the beginning, best part of it is i don’t even bother with the tv set anymore.
Get rid of your phone bill by using magicjack- $19.00 per year! My wife loves the high dollar pocket books but I bought two LV’s recently, one at auction for $10.00 and another at a yard sale for $1.00. Just bought a pair of docker shoes like new for $1.00 at a flea market and a great pair of jeans for $1.00, three shirts that look like new for me for $1.00. It can be done!
Start a cash only plan. If you are using credit cards to pay for gas, groceries, utilities, etc… then you are living beyond your means. Credit card users spend more than those who use cash.
Write down an budget and stick to it. Tweak it when you need to. Make sure you are putting money away for an emergency fund.
My advice is to sell things you don’t use anymore (and things you probably bought with your credit cards in the first place) on ebay (or craigslist which is free, but it usually only sells to locals who are willing to come pick stuff up), and put the money you make back towards the credit cards. You’d be surprised what people buy, even broken electronics sell because people who know how to fix them are willing to buy them. Also, I recommend not putting ALL your money towards your credit cards, set a little aside each month for emergencies rather then using your credit card for emergencies, because otherwise you’re just depending on your credit cards which is what got you in the credit card mess in the first place. The way I see it, it’s worth it to pay an extra $15 a month in interest to be able to have a little bit of savings set aside. I also recommend a 2nd job, even if it’s just part time. My first job pays my monthly bills, gas, food, and a little savings, and my 2nd job (part-time) money I put towards my credit cards. I push myself to make $1000 payments by using my savings. For example if I only make $800 a month at my second job, I’ll take $200 out of my savings to make a $1000 payment. Lastly, ALWAYS make a payment that is more then the interest incurred. For example, if you get your bill and the interest for that month is $70, paying only $70 or less than that isn’t going to make your full balance go down.
“But, but, but this is my health we’re talking about! I’m fat! I’ll get fatter! I need the gym! I have a contract!” – it’s not true. Where there’s a will, there’s a way. If you really want to get in a better shape exercise at home or go running, you will get the same results and save money.