Monday, April 13, 2015

Be Debt Free

1) Go through your economy and finances.Write very clearly, using any aids that helps you to understand what's going on, how much income do you have and how much expenses do you have.

This is an image from a Swedish tv show called "Lyxfällan" (Luxury trap) 
- about people living over their resources and how they manage to get their economy in order.
The economical helpers have a pile of bills respective to the income of the person,
and they divide the money to the different categories;
living; food; transport; clothes; savings; others; loans
to show the situation in an easily understandable manner
You could do the same.

Do the envelope budgeting. Divide your incomes in as many envelopes as you need; living; food; saving; paying off debt; other. As you will be using real money and cash for as long as you are in debt, this will work. When the envelope is empty, there is no more money. No credit, no loans, no living on someone else's money or your own future money. So plan.

2) Find out to the pennies and cents how much EXACTLY do you have debt

3) Go through your property and sell anything that isn't necessary for your living and wellbeing.
You do not need luxury items.
You do not need brand items. You do not need collections. (Now, this is not a straight forward question, some collections are harder to recollect than others. Do not sell the rarities of your collection, sell just the collections that can relatively easily be collected again. Like stamps or dolls or malachite items or some specific China pattern. Chanel bags and Hermés scarves. Those things can be found again. Don't sell the knife your great-grandfather made himself or your grandmother's china, if you are collecting that china pattern. Also, if it breaks your heart to sell something, don't.)

4) Downsize. Get a car - if you must have a car - that uses very little fuel.You don't need the latest model of iPhone. You don't need several computers, laptops, pads etc. You don't need a fancy coffee machine or dryer or tens of kitchen gadgets.

5) Cut all the expenses that aren't necessary. Get rid of the television all together and all possible cable costs etc. You don't need Netflix etc.
Renegotiate all deals like telephone, electricity, water etc. that you can, and try to find the most economical solution. Cut your water and electricity use to minimum.

6) Find free entertainment. Things like board games, reading books out loud etc.
Don't go to movies unless someone pays for you. Drop your magazine subscriptions and go read them at a library.

7) Minimize your wardrobe. Learn to mend your clothes. Get rid of all the "dry cleaning only" clothes. Get a working capsule wardrobe you renew with 5 new pieces twice a year.

8) Go through your food budget.
Learn cooking.
Make food plans and menus.
Cook big portions and freeze what's left over if you don't eat it the next day.
See if it works better for you to buy for the day or to buy in big packs and fill the freezer.
Veggies are cheaper than meat, so try to replace as much meat as you can with vegetable proteins, eggs and dairy.
Stop eating store bought snacks, candy, cereals and ready-made food, frozen meals etc.
Learn to make these things yourself, from scratch, and replace candy with fruits.
Start having a "Sunday dinner" with dessert once a week (any day of the week is fine).
Plant a kitchen garden. You can grow tomatoes on a windowsill, if you don't have any land. You can grow a lot of edible things in pots. Everything you grow is practically free food.
Go foraging. Learn to eat mushrooms and other wild veggies. 
(Now, in Sweden and Finland there's something called "Everyman's Right" or "Freedom to Roam", which states that mushrooms and berries that grow in a forest are free to all. One may not harm trees, but most of the herbs are free to be picked and eaten, like nettles etc. There's a lot of "free salad" and greens in the forest to give flavor to your food. Find out what your rights are in your country, what is free to be picked and also find out if some of the edible plants are endangered or protected etc.)
Don't eat out.
Make your lunch for your job, and get a coffee cup that can be refilled and fill it at home. You can be without some brand coffee drinks for the time it takes to get you debt free, and THEN you can start enjoying your favorite "drugs". Frankly, there are copycat recipes for most if not all brand name coffee house and restaurant dishes.
Don't buy bottled water or soda or any drinks, basically. Get a water bottle you fill at home. Learn to drink water in stead of anything else. You can enjoy good wines when it's served free or when you are debt free. Not before.
And every time you think
"I'm going to buy one cup, it's not that much and I deserve it! It can't be that I'm supposed to give up ALL my pleasures!"
tell yourself that
it's just that attitude that got you in debt.
You want to be debt free more than you want that cup of coffee.
It might not feel that way right now, right now I KNOW you want nothing as much as that cup of coffee, but trust me. The feeling is LYING. You want to have a debt free cup of coffee in the future.
You don't want to steal from yourself.
You will go home and get yourself a cheaper but as good cup of coffee at home, and you will feel good about yourself and put the difference in your piggybank and thank God, the Universe, Fate, what ever, that you can save and you can pay off your debt.
And apologise to yourself that you used the money in the past to buy some unnecessary gidgetamathingy so that you can't go and buy yourself that cup of coffee.
And remind yourself of that the world is full of free and cheap pleasures, you are not giving up anything that's not worth giving up, and you will be able to enjoy the non-free pleasures in the future if you choose something cheaper or free this time.
 You can't afford it, get over it.

9) Get frugal with EVERYTHING. Try to see how little you can use of things like tooth paste and toilet paper.

10) cut all your credit cards. Don't buy anything on credit. Pay everything straight, in cash. Even debit cards make you use more money that you need to!

11) try to get more incomes. If you can't it's OK because the trick is to minimize the expenses, not to maximize the income.

12) Start paying your debt.
Start with the money you have borrowed from family and friends.
Then pay off the ones with highest interest. If the interest is the same, pay the smallest ones first. If the amount is the same, pay the ones that will cost more in the future first. If the development is the same, pay the oldest ones first.
Try to consolidate your debt.  

13) Every month, put at least 10% in a savings account first, before paying or buying anything else.
Whenever you get even a cent extra money, use it to pay off your debts. (Or put it on the saving account, to be able to pay off bigger chunks at once.)
Everything you don't spend, save. (We get our "salary" twice a month. Every time the new "salary" comes to our account, we save what's left of the previous "salary".)
Empty your pockets of coins and bills when you come home at night and save that cash.

14) Change your words.
Instead of thinking "that's so cheap, it only costs ---" think "I don't need to buy that, I'll save an extra --- and can pay off my debt earlier!"
Learn to think "what can I do without that?"
If the word "budget" sounds like a "diet" and reminds you only of things you can't have and you have to be without and you have to give up, change it. Use "spending plan" in stead. Or "Roadmap to economical freedom and independence".
The same with "debt".
Use words that make the saving and paying off your debts look exciting, interesting, positive, empowering - after all, you CAN get debt free! You can pay off your loans! You can pay your bills! You can!
Rename bill paying. Rename everything! :-D

15) Start respecting money.
Now, this might be a lot of hoohaa, but it might also work. Treat every coin and bill in your wallet as if it was an irreplacable piece of a collection. Smooth the bills gently and put them in neat order in your wallet, all facing the same way, from the smallest to the biggest. Always have a little money in your wallet. You can even polish your coins if you want to. Scrooge McDuck might be onto something ;-) :-D

16) cut the stimulants. Cut the coffee, tobacco, drugs, alcohol, candy... None of that is necessary. All of that costs more than useful substances. Something like tea or chewing gum might have a positive health effect or a psychological effect that makes it worth the money to keep using, but potato chips, coca cola and cocktails don't. It might be hard to get over the addiction, but it's definitely worth it, in every way.
Also, it's easier to cut an addiction if you get a fun and enjoyable life. People happily in love can quit anything.

17) Cut out the gym, hair dresser, spa and beauty treatments, tanning and salon visits. Start growing your hair long, stop shaving.

18) cut vacations and traveling for as long as it takes you to pay off your debt. You will have time and money for both AFTER.
(Remember, YOU created your debt. No-one forced it on you. YOU are 100% responsible for it. YOU spend your vacation money on something else before you even got the chance to travel. YOU did. This is just a reasonable and deserved consequence of YOUR OWN ACTIONS.)

Find out how much will it cost to repair or replace something that is essential for your life. For us it's the internet. We will always have enough money saved to buy a new computer at any time. That money will not be used to anything else, and not be counted as backup plan or something like that, because we need the computer at all times. You might need to have saved as much as it takes to repair your car, or to pay medical bills or to travel to see your dying parent the last time. What ever it is, you know what you need.

20. You also need some plan for "I want to quit, I can't do this!" moments. You need to plan some sort of mini vacation during which everything is "normal" and you don't need to save money and think about your debt and try to figure out how to earn more money... For example, visit a museum or art gallery you have been interested in for a long time and treat yourself with a nice lunch out. Take a mini beauty treatment at a spa. Something like this. Go have a picnic. Have a candlelight dinner. Go to movies and eat trash food after. I mean... something that to you means carefree and luxurious, but that is still relatively cheap so that it won't crash your plan for economical freedom.

21. Pay your bills in time. Pay your bills as soon as you get them. If you can't, call the company and tell them you'll be paying a little late. Some times that is enough for them not to whack any late payment fees on you.

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