5 Obvious Ways to Reduce your Debt

Help! I am drowning in debt! Does this sound like the little voice inside you yelling that no one but you can hear? I, like many people, have fallen into the trap of "Drowning in Debt." I know what your thinking, there are so many books that talk about debt and how to get out of it right now blah blah blah.. Look, there is no big secret when it comes to getting out of debt.. its the same as losing weight, calories in less calories out.. So, spend less than you have coming in. That's the basis of my strategy. Now, I understand that there are the cliché sayings and then there are the real world applications. What if you cant help having more bills than money coming in? Medical expenses anyone? Well, I want to give everyone 5 ways to help reduce the stresses of debt.

It starts with a mindset.
I know this sounds like every other self help book that we have read, but its true. So many of my clients that I speak with around there financial situation have a mindset that the "gravy train" will never stop or they simply haven't sat down to figure out a basic budget. You need to start realizing there is an issue with your spending and then you can sit down and identify the challenges and how to overcome them.
Create a Basic Budget
I know that you may say " I'm not an accountant" or maybe some of you may be saying obviously. This is obvious I feel for most of us.. but ask yourself, how many of us have actually taken the time to sit down and run through their expenses and put pen to paper. I am willing to bet not many. Even I am guilty of this from time to time when I think.. I got this, and then reality hits me and something unexpected comes up and I think to myself, "maybe I shouldn't have bought Starbucks everyday last week" Yes, yes.. its one of my vices.. that and chocolate.. but I digress..
Control your spending
That last point brings me to the next point, if you cant afford it DONT BUY IT. After you have sat down and created a budget, make sure you stick to it with your everyday spending. it is very easy to let your everyday spending get away from you by telling yourself "its only 5 dollars.. etc." Well that $5 can quickly turn into $50 a week in extra expense, that adds and extra $200 a month. If you have leveraged debt or more commonly called credit cards or loans ( more on that in another post) that extra $200 can do a lot of damage to that "oh so high" interest rate most of those carry.
Don't overextend
If most of these points seem to be coming back to following a budgeted plan, that's because they are. You cant do anything with your debt or situation without assessing it first. So if your getting ready to buy a house its a good idea to plan on it well in advance to save for the down payment, and give yourself a buffer incase the unforeseen raises its ugly head. Most people think because the banks say you can afford something that means they can. That cant be further from the truth.. 2008 anyone? Those numbers are derived from the banks risk tolerance and what they are willing to accept into their debt portfolio and your interest rate will reflect it. What you need to do, is understand what you can truly afford and, ill say it again, STICK TO IT!
Keeping away from the Joneses
Every hear that saying "Keeping up with the Joneses?" Well if not it simply means buying it because everyone else is. Here is another relevant saying " if everyone jumped off a bridge would you do it to?" I'm not saying that you shouldn't go buy a nice house or car or maybe a kick a@# shoe collection, but don't feel like you are less because you can't. This Point is particularly pertinent for me personally. I didn't have a lot when I was a kid, and now that I am all grown up I feel I need to make up for it or something. But the truth is, is that I don't NEED the Lexus, Mercedes, or BMW that I have been wanting. I want them. I have had to realize and make goals to attain them. Meaning I want to have $x amount of income before I make that purchase.. not just because someone at a car dealership says I can "afford" it.

Well ladies and gents, those are my 5 obvious (or maybe not so obvious) ways to help reduce our debt. I am a big believer in the KISS principle (Keep it Simple, Stupid) If you need a calculator or flash cards to figure something out its probably not sustainable.

Thanks for reading :)