Debt and Spending Habits. Evaluate Your Life and the Current Economy to See How You Can Change Your Spending Habits to Reduce Your Debt

One of my goals in life is to help everyone reduce their debt, even if just a little.

For years I think Americans have spent freely.  If you overspent, you could always just take out a home equity loan to help pay off debt.  Unfortunately, many people ended up with a home equity loan and newly maxed-out credit cards, because their spending habits never changed.

I think part of the reason people have so much debt is because money used to be so available.  Salaries were larger, companies gave out more bonuses, and loans were easy to obtain.  Therefore, people were more conditioned to spend.  However, easy money is no longer readily available to many Americans.  Credit has tightened and many people have lost their jobs or taken a cut in pay.  Many of the jobs that are available are generally at a lower wage, and college graduates are struggling to find employment.  For the young people just starting out, this new economy will be a huge lesson and will hopefully help shape conservative spending habits for a lifetime.  However,  those that enjoyed stock market rallies and large bonuses may need to really evaluate the ‘new’ economy and their own personal spending habits.

So, my goal for anyone reading this is to sit down for an hour or whatever time it takes and really think about their spending habits.  What does spending really do for you?  Does having that new expensive pair of shoes really provide long-lasting happiness?  Do you ever feel regret your purchases after going on a shopping trip?  For some, shopping is a way to deal with personal loss, or just having a bad day.  If you fall into that category, you need to find a new outlet.

Overall, having a lot of debt is like walking around with giant weights on your shoulders.  Envision how reducing that debt a little at a time is like having small chunks of that weight crumbling off of you.  There is nothing positive that comes from debt.  Debt is a bummer; it causes you to spend even more because of high interest rates, debt may cause arguments about money with your spouse, debt may prevent you from purchasing things your really need, etc.  On the flip side,  do you ever hear about people arguing because they don’t have any debt?   Do you ever see someone feeling down because they are debt free?  Never!  You too can have the weight of debt off your shoulders.   But you have to commit to being debt-free with every decision you make.

Here are just a few suggestions to help save you some money and get rid of some of that debt:

1. Reevaluate your car/homeowner insurance. If you have policies with different companies, call around and see what kind of deal you can get by having multiple policies with the same insurer.   Also, evaluate how much you really need to insure your home for.   Many home prices have plummeted in recent years.   Buy enough coverage needed to cover the true value of your home, not what it was worth 5 years ago when you originally took out the policy. In addition, think about increasing the deductible on your policy.   Decide if it is worth it to  pay less every month for your insurance at the risk of having to pay a larger deductible if something does go wrong.
2. Plan your meals (lunch and dinner) a week ahead of time and take advantage of grocery store sales.  Try to go one week without eating any meals out and see what it does to your bottom line.   Even if you find you aren’t saving money (which I would find shocking), you will at least be eating healthier, which is always good.
3. Give yourself a pre-determined amount of money on Sunday to be used for the entire week, and do not use your credit card for anything except emergencies.  Make it a small but realistic amount.  (I recognize you still need to fill that gas tank.)  At the end of the week, evaluate if that made a difference in how you spent your money.  Did you realize you didn’t make impulse purchases that you may have made before when you had that plastic credit card available?
4. Quit smoking!  The positives to that option are numerous, not to mention the money you will save.

The ways to reduce your spending are endless.  The trick is to find the balance of enjoying your life while still being fiscally responsible.
Please feel free to provide comments on creative ways you reduced your debt.

Tagged as: debt, how to reduce debt, Money Saving Tips, saving money, spending, spending habits