6 Lifestyle Changes That Will Help You Pay Off Debt
The saying "Drastic times call for drastic measures" is very much relevant for anyone who needs to pay off debt. Yet many of us try to climb out of debt a little at a time, cutting back a few expenses to kick in an extra payment here and there. Sometimes it requires a major lifestyle change to pay off debt. You'll have to move completely out of your comfort zone, at least temporarily. The upside is that you can pay off your debt faster and settle into a new, debt-free life faster than by making smaller payments whenever you can.
Taking on a Roommate
Getting a roommate can be a big change, especially if you've lived alone for most of your life or you've never had success living with someone else. Having someone take on a significant part of your housing costs will free up cash that you can use to pay off debt.
Whether you're leasing an apartment or house together or you're renting out space in a home you own, agreeing to live with someone is a commitment you can't afford to take lightly.
Here are a couple of tips on choosing a roommate:
Don't assume that they'll make a good roommate just because they're a good friend. Your living styles may not be compatible and you don't want to lose a friend over a bad living situation. You can put the word out with friends, family, and co-workers or use social media to find a roommate.
Vet potential roommates as if you were hiring them for a job. You might check for references, verify their employment, or even review their credit history to be sure you've found a good match. Make sure you abide by the applicable laws, particularly when it comes to discrimination.
Moving to a Smaller Home
If you maxed out your housing budget with your last home purchase, moving to a smaller home with a lower mortgage payment will free up cash you can use to pay off debt.
You might have made your purchase decision with the mindset that bigger is better, but do you really need as much space as you have? Could you make the sacrifice and downsize even for a short time?
Not only will you save on your monthly mortgage cost, but your maintenance costs will also be lower, you'll spend less money on things to fill up your home, and you'll pay less in property taxes and insurance.
While moving to a smaller home definitely has it's financial benefits, it's a major lifestyle change you'll have to get used to. And it's not just you, the rest of the family will also have to adjust to the smaller space. For a time, it may feel a little cozier than what you're used to. Friends and family may not approve of your decision, especially since house size is often tied to success and social status. Remember, you're making the change for a better future.
Downsizing to Just One Vehicle
Having a car makes life so much easier, particularly when there are two adults in the family. But, depending on your lifestyles, it may not be as difficult to manage as you may think.
Getting rid of a vehicle means drastically reducing your transportation costs. You may be able to completely eliminate a car loan. Even if the vehicle is paid off, selling it completely gets rid of the maintenance cost associated with it.
If one or both adults in the household works from home, managing with one vehicle may not be as difficult as you think. The working spouse could be dropped off at work or the spouse who works from home could walk, bike, or use ride sharing or public transportation to get around in the day.
Downsizing your vehicles doesn't have to mean getting rid of one completely. You may sell or trade for a less expensive model or a model that has better fuel efficiency.
Giving Up (Some of) Your Social Life
You don't necessarily have to ditch your friends forever, unless, of course, they're only your friends when you're spending money on social events. The goal is to scale back on the amount of money you spend socializing—nights out, traveling, eating out, etc.
Downsizing your social life may sound depressing, but there are a few benefits. First, it keeps you from spending money, freeing up cash you can put towards your debt. Second, you'll have a lot more free time to invest in something productive.
Don't get rid of your social life then sit around the house and sulk—use that time in a way that will help you pay off debt.
Redirecting All Your "Free" Time Towards Making Money
There are endless ways to make money these days. The generation before ours probably would never have imagined you could make money by giving people rides or renting your house to vacationers.
Coming up with ways to make money takes a significant change in thinking. You may be used to spending your free time watching television, reading books, or pursuing a hobby. To pay off your debt, you have to embody the phrase "time is money." Every spare minute you have is a minute you can use to make more money to pay off debt.
There are lots of ways you can make a little extra cash, but you'll be able to make a bigger impact focus on things that bring in more money. For example, you can pick up some extra hours at work, take on a part-time job, or start up a serious side business.
Becoming Obsessed With Your Debt
Up to this point, you may not have paid a lot of attention to your debt. Maybe you'd spend a few minutes each month looking at your bills and setting up the online payment. To pay off debt, you almost have to be almost obsessed with the numbers.
Not being “good at math” can no longer be an excuse for not making progress. It may take spreadsheets, lists, or smartphone apps to keep the numbers in front of you. You might spend hours each week plugging in payments, adjusting your balances, and recalculating your payoff timeline. Doing the work will help you stay on top of your debt and let you know how much progress you're making.
Major lifestyle changes can be tough to adjust to, but keep in mind that you're doing it for a better future. Making the sacrifice now means you'll save thousands of dollars and have much more financial freedom than if you took your time paying off your debt.