5 Ways to Start Digging Out of Debt
Ready to be debt-free? Here are five ways to get started.
1. Operate on a cash-only system. Set a budget for your weekly expenses, such as groceries and toiletries, and withdraw that amount of cash from the bank each week. Then spend only what you have in hand. “If you don’t have the cash, you don’t buy it,” says Stephanie Smith, a psychologist in Denver, Colo., who specializes in debt counseling. “We’ve become so accustomed to credit cards, we’ve lost all perspective of what cash can buy and of what we can and cannot afford.”
2. Drive a wedge between looking and buying. To help curb impulse shopping, make a list of things you want to buy, then wait, says Kelly McGonigal, PhD, a Stanford University health psychologist. The act of putting the item on a list gives you the warm fuzzies that come with the promise of reward, she says. “But, two weeks later, you’ll be amazed at how much has fallen off the list because you’re no longer under the spell of the product’s advertisement or fantasy.”
3. Reduce your wants. Think of emails and catalogs from retailers as “want generators,” says Kelly McGonigal, PhD. Contact these companies and ask to be removed from their mailing lists, or subscribe to a service that will do it for you, such as GreenDimes.com. Toss unsolicited coupons directly into the recycling bin. “When you are trying to save money, nothing excites the brain more than the idea that you are getting a bargain,” she says. “But, obviously, you’re not saving money if you’re spending it — even if it sounds like a deal.”
4. Don’t ignore debt. People don’t realize that the seed of the stress response is rooted in the unknown, says McGonigal. So trying to keep stress at bay by not opening the bills or balancing the checkbook is bound to fail. “Your mind will keep trying to solve this problem, and the less information it has, the more it’s going to worry,” she says. “That puts you in a never-ending stress response and takes a huge toll on your health.”
5. Establish a pay-off plan. Having a clear strategy for paying your debts each month and knowing when you’ll be debt-free is great for peace of mind — and motivation. For tools you can use to start your own step-by-step payback plan.
More tips for “Escaping the Burdens of Debt Stress.”
“People with high happiness set-points are human just like the rest of us. They don’t have special powers, an extra heart or X-ray vision. They just have different habits. It’s that simple. Psychologists say that at least 90 percent of all behavior is habitual. So, to become happier, you need to look at your habits.”
How’s your “practice” of happiness? Ask yourself these two questions:
- What is the No. 1 habit I can develop in my life that will have the greatest positive impact?
- What is the No. 1 habit I can remove from my life that will have the greatest positive impact?