You Can use Your Way Out of Debt

This headline has got to be a typo. How can you use your way out of a money problem? Am I responsible for a federal government program?

When you find yourself in a hole, the first step to get out of the hole is to stop digging. So how can you use your way out of debt? I will explain how.

Google “how do I get out of debt” and scroll down past the paid ads. Just about every consequence from your search will give you some iteration of the following advice items:

  • Get your bills organized so you can see what you are working with
  • Create a spreadsheet of your income and expenses (either on paper or using a computer program/app)
  • Add up your expenses and add up your income. Do you have more expenses than income?
  • Get another job.
  • Eliminate every expense that you can. You can keep electricity, housing and food but not much more.
  • Live this lifestyle until every debt is paid off.

Alright I am getting a little facetious here. But I do not believe that I am exaggerating much. The idea touted is to live as spartan a lifestyle as possible and maximize the amount of money that you pay towards your debts.

The shared theme here is that to get out of debt, you must eliminate everything from your lifestyle and use that money to pay towards your debts.

How long do you think you can live like this? Two weeks? One month?

If you are single then this lifestyle may last longer because you have no one else to worry about. But when there is a spouse, the two of you must live like this. The plan just got much more complicated.

Add children to the scenario and the complication just increased exponentially. A five year old does not understand debt. All he knows is the cable TV is no longer there.

My suggestion is to build in some spending on some “unnecessary” expenses. Allow yourself to do something more than work, work and come home. This will be different for everyone. In my case, we went out to dinner once a week. A nice restaurant, not a fast food joint. It was something to look forward to each week.

We also maintained our Dish TV. No movie channels. This made staying at home instead of going out to restaurants and movies easier to do. We came out money ahead.

We began our plan in 2010. Our 25th wedding anniversary was in 2012 and we had talked about taking a cruise for years. So we also budgeted for this and saved a little every month.

In theory this “frivolous” spending makes the debt pay off slower. But if this tiny bit of fun keeps you on your payoff plan, then you will reach your goal. Living spartan for a month and then giving up does not get you to your goal!

Think of it like trying to lose weight. If your plan is to eliminate everything except kale and celery, you will probably lose a bunch of weight at first but give up in a week or two. The thought of a slice of pizza will become so overwhelming that you’ll go overboard and eat an complete pizza, then feel guilty and quit the plan. But if you eat in moderation by portion control and watching your calories, you will allow yourself to eat a little bit of pizza and nevertheless lose weight. It will be a slower weight loss but you will stick with your weight loss plan because you are not completely depriving yourself of “banned” foods.

Naturally your likes and budget will determine what you can do with your spending. Maybe you can only provide to go out for a meal once or twice a month. Will this “reward” keep you on your plan to get out of debt? It did for me!

Should you get out of debt? Absolutely! But in order to unprotected to success, I believe you must build some fun spending into your budget. This may postpone your end date on paper, but your chance of success will be infinitely better than living on dog food and reading by candles!

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