The holidays are gone, now what? Are you feeling the effects of high spending and splurging? No worries, I am going to share with you 10 steps to start your New Year on the right foot and kiss goodbye your debt with this New Year Debt Detox Resolution. If you apply at least three of these ten steps, your results will compound positively throughout the year. Let’s get started!
Step 1: Start With Your Mindset
There is no time for regrets; it is done. If you overspent or have a lot of debt and are feeling hungover, decide to take charge and become a new YOU. Remember that your debt doesn’t define who you are. Therefore, stay confident and open to make the necessary changes to better your situation.
Step 2: Set Your Goals and Plans
How do you want your finances to look? It is time to set some goals around your finances and plan how you are going to achieve them and by when.
Step 3: Track All Your Spending
It is vital that you start tracking where your money is going. This tracking will help you to become aware of your money habits and it will allow you not to overspend more than what you are earning. Make sure to create a sheet or use tracking apps like Mint or Account Tracker or even a notebook that you can carry everywhere if you are not that tech savvy. And do not forget to include also the smaller items like your morning coffee, or those little pleasures you bought. Hey, even that gum or candy. Do you have things that go out automatically from your bank account? Make sure you are accountable for those, too.
Step 4: Ditch Your Debt
Plan on getting out of debt this year. Make it one of your top 3 money goals. The best way to get rid of your bad debt is by focusing on one card at a time and by making extra payments on it until it is paid off and make the minimum payments on the rest. Once that credit card is gone, do the same on the next one.
Step 5: Put Money Aside
Yes, I know, how can you cover your bills, pay off your debt and also put money aside? The best way to do this is by paying yourself first! One way you can do this is by setting up auto-withdrawal directly from your paycheck. That way you don’t even see the money and avoid the temptation to spend it. Also, make sure to put the money in an account that you don’t have easy access to to avoid the temptation to use the money.
Step 6: Stop Buying Impulsively
Are you at the store and you saw those fabulous shoes that are in style, and you want to buy them? Stop and think for a minute and ask yourself the following questions: “Do I need the shoes? Are these shoes going to allow me to reach my most important goals or will it delay them? What is more important to me, those beautiful shoes or my future goals?” If after asking those questions, you think you can afford to buy them, be my guest.
Step 7: Eliminate Bad Habits
We all have some habits that we can improve that are costing us money. Do you smoke? Do you eat out every day? Do you drink coffee every day? Do you buy bottled water? Lottery tickets? Hey, no judging here, but if that is what is holding you back from your debt detox, maybe it is time to consider making some changes. Perhaps you can reduce your spending on some of these things and see how that could impact your life.
Step 8: Cancel Those Subscriptions
Sometimes we are not even aware of what we subscribed to or even what is going out automatically from our bank account. For example, are you using that monthly gym membership? What about those monthly magazines? One habit I had to eliminate was Kindle Unlimited and Audible. I love to read, but I could not justify what I was spending monthly on books and audio, so I canceled them. Now I purchase when I am ready for a new book or audio. What about you?
Step 9: Acquire Good Habits
It is not that you have to limit yourself from having a good time, but there might be things that you can do and enjoy without falling in the red numbers in your bank account or without being able to save for the future. For example, I am sure that in your area there are plenty of free events that you and your friends can enjoy. You can check on Facebook or Eventbrite for those. Also, instead of going out and having a big dinner, what about buying groceries and cooking at home with your friends? And before buying something, check online to see if they are selling the same item for less somewhere else.
Step 10: Hire a Coach
This is last step, but it might be the most important. Become financially educated. Hire a coach or consult a Financial Expert. The more you learn and the more informed you are, the best you will do on your New Year Debt Detox Resolution.