Last summer I sold my house and moved back into an apartment. One of my reasons for making this move was to simplify how I use money. And it worked.
I’ve always had a bit of an odd relationship with money. Although, I spent nearly 25 years of my life in debt, I’ve always hated debt. It just feels so oppressive. And so throughout the last 25 years, I’ve constantly looked for ways to reduce debt. I’ve found a few good ones along the way.
5 Ways to Kill Debt
I’ll start with the little things first:
- Cut back on luxuries: We all have more crap than we really need. I used to get by with nothing more than a studio apartment, a bed, a desk, a TV, and a stereo. I know those days are gone, but do you really need four different movie and music streaming services? Do you need cable? Internet? And that closet full of shit you rarely use? Be honest and consider your needs vs. your wants.
- Pay a little extra each month: If you’re in debt, pay a little more than the minimum payment each month. In 2003/04, I went from being $12,000 in credit card debt to zero by rounding my payments up $50-$100 a month. That was a great feeling. Unfortunately, I still had $25K in student loans to pay.
- Start saving: Even if you have a lot of debt, savings is still good. It comes in handy in case of emergencies, and it offsets the debt. Most electronic banking systems allow you to automatically move money into savings each month.
- Ditch the car payment: When I was younger, I never had a car payment. I saved my money and bought good used cars outright. Recently, I’ve moved back to that philosophy. After going about 20 years with car payments, I no longer have one. It’s amazing how much cashflow that creates.
- Rent instead of own: Although it was the equity from my house that helped to get me 100% out of debt, I’m not sure I’d want to buy again unless I could buy outright. Renting simplifies your money needs. I no longer have home-owners insurance, taxes, or bills for upkeep and repairs. My current financial situation feels like heaven instead of hell.
Less Bills Equals More Cashflow
I regularly assess how many monthly payments I’m making. I take a good hard look at needs vs. wants. Are there ways I can turn two payments into one? Could I find less expensive alternatives? You might be surprised to know that I have literally reduced outgoing cashflow by 40% or more by downsizing into my current living situation. That’s a crapton of money that can now go toward savings and retirement.
My goal is to retire on the early side of 65. I’m going on 57, so I need to get my ducks in a row. With healthcare costs rising and insurance needs, retiring a little early could be challenging, but I’m going to give it my best shot.
I encourage you to consider your own finances and make some changes. Be careful of what’s going out. If you take an honest look, chances are high that you’re spending more than you need to be spending. I know. Although I’ve reduced my spending, I still spend more than I really need. It’s easy to do in today’s world. But I also keep a close watch on my spending behaviors. There’s a fine balance.
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