4 Strategies to Get Over While Getting Under

Do you have a love affair with debt and living above your means?  In my early and mid-twenties I assumed everyone had debt.  I went to an expensive graduate school and took out student loans.  After school, I moved into an apartment I could not afford and spent more than I made on socializing with friends.  Initially I was having fun, until the debt payments started to grow.  If you are in this situation or have been in this situation, you know what it’s like being in a bad unhealthy relationship with money. 

Something needed to change.  I needed to get out of this bad relationship.  How do we get over the debt and expenses?  One of the best solutions is to live under your means.

Here are four simple strategies to get over debt while getting under your living expenses. 

1. Sell Your Car.  According to Statista.com, 44 percent of Americans have car loans.  In a recent USA TODAY article, they stated the average car loan is now $551 per month for 69 months.  Americans definitely have a love affair with their cars.  If you have a car loan, you should sell your car, pay off the loan and use the left over equity to pay for an affordable car with zero debt.  You will notice progress immediately if you are in financial distress.
2. Move to a More Affordable Apartment or House.  Based upon data from Census.gov, 30.4 percent Americans rent and 58.6 percent of Americans own their home.  While out of those 58.6 percent of home owners, 62.9 percent have a mortgage payment.  If your monthly rent or mortgage payment is under 25 percent of your take home pay, you are in a good position.  If your payments are over this 25 percent threshold, you should move to a more affordable living arrangement.
3. Live on a Budget.  In a recent post Budget Your Way to Freedom, I speak to the importance of budgeting to get ahead.  Monthly budgeting allows you to control your money and tell it where to go.  You should outline the necessities such as food, shelter and clothing.  After you have the basics, work your way backwards from your most important items to the least important.  One of the last items should be a 5 percent contingency fund to catch any overages during the month.  If you have money left over either use it to pay off debt or put into an emergency fund.
4. No More Debt.  Thanks to Statista.com we know that Auto loans now account for 9.28 percent of U.S. debt. Mortgages are still top, making up 67.63 percent while student loans account for 10.5 percent.  Your first move on debt is to stop using debt now.  Your second move on debt should be to consolidate your loans.  You can also negotiate with your creditors to lower your debt amount and payments.

Once you have completed this process, you will be on your way to getting over your debt problem by living under your means. In my twenties, I had a paid for car, but used the other three strategies to get out of debt.  Remember the borrower is always slave to the lender.  Control your own destiny by taking control of your finances. 

Which of these strategies can you start today?

Disclosure of Material Connection:  I have not received any compensation for writing this post.  I have no material connection to the brands, products, or services that I have mentioned.  I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255:  “Guide Concerning the Use of Endorsements and Testimonials in Advertising.”