Simple steps can save you cash and cut your debts

Spending is not an issue when you have the means to do it – after all, it is the right of a person to spend out of what he earns.

But this spending is a problem when your expenditures become more than your income – this is a time when you should start thinking about a debt reduction plan it gets out of hand.

While debt reduction may seem to be a very daunting task, there are many small things, which if taken care of, can bring you relief.

Cut up your credit cards

Try to avoid using your credit card as much as possible and make your payments with cash. Using cash prevents you from spending more money than you have. Moreover, when you pay with cash, you get a feeling that you are spending money; by using credit card, somehow that feeling of spending is missing. Minimising the use of credit cards would help stop further growth of your debt.

Set realistic targets

Now, how to pay off the debt already accrued on your credit cards? Make realistic targets for specific periods of time such as starting off with one credit card and then moving to the next one once you’re done with the first one. Achievement of such small milestones would give you a feeling that you are making progress instead of feeling miserable by looking at your total debt as a whole and you would be encouraged to follow your debt reduction plan further.

Moreover, set a percentage of paying back more than the minimum required balance each month as this would also lead to actual loan reduction instead of prolonging this burden.

Put extra money to work

If you are expecting to get some additional income, such as some work bonus or a windfall, don’t plan to spend it for some luxuries. Instead, use it for paying off your debts – a better financial position is more important than going for luxuries that might push you into further debt.

Become a seller, not a buyer

As much as we love to buy new stuff, we should now think of benefiting from the old stuff lying at our homes idle as well. Different e-commerce sites have made this so easy now so these should be made use of. Before you buy some new stuff, make sure you get rid of the older version of that stuff by putting it on sale on some well-known e-commerce site. This would provide you with some funds to buy the new stuff instead of having to arrange for the entire price.

Change your habits

A change in our daily habits can help in reducing a lot of our needless spending. If you buy your lunch regularly or a coffee every morning, you should think of giving up these habits. Make your coffee and lunch at home and save on the money you spend in restaurants or elsewhere.

This does not mean that you must give up the habit of going to restaurants or meeting up with friends, but plan to eat out every week or two weeks. This would considerably reduce your spending and you would be able to save up for paying off your debts.

Shop smarter

You are not being asked to completely give up brands but if you can reduce your branded shopping, that would be a huge plus for you. Or at least make it a habit of doing your grocery shopping from local discount stores. We don’t always realise that we spend quite a lot on groceries each month. If we do our shopping from discount stores, we would be able to make a considerable amount of savings.

Another thing to keep in mind is that you should always have something to eat at your home before going for shopping as when you’re hungry, you tend to spend more on eatables.

Make friends with benefits

If you are good at something, offer to do it for friends and ask them to do something for you in return that they’re good at. For example, if you want to have a haircut or want to get some other thing done from a parlour, try to ask your friends who can do such stuff. In return, offer them something you have skills in. You can use your savings towards debt reduction.

Steven Rooyen is a husband, father, senior debt advisor and a financial consultant at Sort My Debt. With over a decade of experience in different financial fields, Steven has helped many people resolve their debt problems and become financially strong. While not doing that, you can find him reading books and roaming with friends.