This is a guest post by Andrew Black. If you want to guest post on this blog, check out the guidelines here.
Debt management is no easy task. If your level of debt is quite high and you struggle each month just to pay off your loans, you should start reducing your monthly outgoings. By reducing your monthly expenses, you will be able to retain more money from your income and therefore allocate more cash towards your debt repayments. You may start by switching your gas or giving up your luxuries. If you still need more drastic measures to lower your spending and save more money, here are several simple, yet practical sacrifices.
Set a budget and stick to it
The first step in debt reduction is to be aware of how much you earn and how much you spend. Setting up a budget is the best way to understand where your money goes. You do not need fancy software to create a budget; a simple spreadsheet will do the job. Make sure you list all your incomes and the expenses side by side. You will be surprised and will soon realise that you can easily cut expensive habits.
Every month set up your budget and stick to it. This is obviously the difficult part as you will need to change your spending habits and be disciplined.
Reduce accommodation costs
You may opt to live with your parents or close relatives, at least for the short term or until the time you could comfortably manage your debt. Living on your own is ideal but it is undeniably more expensive. Living with your parents, even temporarily could help you save so much money that in turn you could use to repay your amortisations and other debts.
Alternatively you can choose to share your accommodation. Having a flatmate could help to reduce your rent, while remaining independent.
Eliminate your credit cards
You should consider tearing up your credit cards. Plastic cards only make spending easier. This is ideal if you find it hard to resist the urge to spend unnecessarily. Several studies have found out that consumers usually find it harder to spend in cash. You may be among those people who would think twice before spending much cash on purchases. The amount you could save could be added to the budget you set for repaying your debt.
Save on transport costs
Driving to your office could be costly on a daily basis especially these days when gasoline prices remain volatile. Try to save more of your disposable income through commuting on your way to work. It could also be more practical to walk or cycle to work, which could always be a healthier option to take. Each month, you could be surprised at how significant your savings could be so you could allocate more on repaying your debt.
Dispose your car
Your car could be like a literal cash guzzler. You should be aware that it could entail more costs, not just on petrol but also on tax, insurance, and maintenance. That is why a decision to sell the vehicle would mean so much to your personal finances. Do not worry about how you would get along without wheels. Remember, past generations have functioned quite well even before cars became popular.
Cook for yourself
You know by now that eating out and buying your meals elsewhere could be costly. Why not cook your own meals? This could be a big sacrifice especially if you are not comfortable cooking or if you do not know how to cook. Pack your lunch and even snacks whenever you go to your office so you do not need to eat out, which usually costs higher. You may save hundreds of dollars each month and use the amount to lower your debt.
Do not take expensive vacations
While it is true that holiday vacations are important for recharging your energy, going to exotic destinations outside the country could be quite costly. If you would instead save the amount you spend on such getaways, you could significantly lower your debt. You could still enjoy your vacation without spending so much. Why not explore local holiday destinations?
There could be many other practical ways to save money so you could lower your debt level. You could find and adopt many other techniques to save so you could allocate more on debt payments. Observe financial and self-discipline and you would surely overcome your debt problem soon.
Andrew is a regular finance contributor. After working as a debt consolidation specialist for several years, Andrew has gain experience in debt management and likes to share it online.