Can we talk about debt and simplicity for a minute? Yea I know, debt and simplicity seem like a weird couple destined to be at odds with one another. But they’re actually two peas in a pod. By leading a simple life with less, it begets a debt free life. And here’s where that chat about debt and simplicity starts…
In 2014, I had a horrible year with spending. It was a low point for me. I hated my job, was burnt out, stressed out and trying to spend my way out of acknowledging my feelings. I overspent, massively.
When I thought things couldn’t get any lower, they did. Last year, I was laid off from my job. I was forced to face everything head on – my debt, budget, life situation, spending and how I was coping with all of it emotionally.
With employment insurance and some severance as my only source of income, it meant that I would be living on half of what I was used to. Yes, you read right, half the income I was used to. Think of it as starting all over again in an entry-level job, straight out of college but with a 1-year end date.
This is the point where you have to reconsider how you’re living your life and why. It’s a point where you stop and look around. You need to. Understanding why you created a life where you were so financially squeezed will start you on the path to debt freedom, simplicity and happiness.
So I looked within and realized I had created a royal mess.
After losing my job, I finally decided it was time to face it all, gain some clarity and start seriously doing something about my situation.
Here’s what I did:
- Change my behaviour. I owned it and faced the music. I already knew the bills I had to pay and the debt I owed. The truth was, I was overspending and had been ignoring it. I had grown numb to being in debt. It had become an unpleasant fact. I was too accustomed to handing over the plastic.
- I re-evaluated my spending, and realized that things could no longer continue on the same path. The bleeding had to stop. You won’t get ahead of your debt if you keep handing over plastic or spending all the money in your bank account. Healing takes time and you must commit to curbing your spending for an extended period.
- I created a bare bones budget. I looked at the items that were non-negotiable that had to be paid each month. Things like debt, car and renters insurance, mobile phone, rent and groceries are necessary. Everything else had to go. No more fancy clothes, books or restaurant outings.
- With my bare bones budget as a framework, I started cutting things out of my spending. I had already eliminated TV and home phone; it was time to cut further. I gradually reduced Starbucks, using my car, eating out and buying anything other than necessities. I walk or take public transit whenever I can and I plan trips to get multiple things done on the same outing.
- Renegotiate your bills. I started by calling my Internet and mobile phone provider to negotiate a cheaper rate. I even considered cutting Internet altogether and heading to the library for the free Wi-Fi. Luckily, I was able to negotiate a better Internet rate and don’t have to resort to the library quite yet.
- Replenish emergency fund. I would like a 6-month emergency fund, as would all of us, but at my current income level, it’s simply not going to happen. As a starting point, I’m working toward $1000 emergency fund until I earn more. It may take a while, but I can swing $100 a month to set aside.
- Pay down the debt. Debt has always been a priority. I have always put debt payments at the top of the list as non-negotiable. I always pay more than the minimum.
- I started selling everything on eBay. To simplify my life, clear the clutter, and bring in more income, I made the decision to sell most of what I own. If it brought no joy, out it went. So far I’ve sold $756.12 since April 2016. Not bad eh?
- Started earning more freelance income. This is a work in progress and I hope to have more work in the coming months. But, good news is I’m on my way to earning money as a freelancer.
- Revitalized this blog to generate income and opportunities to earn income. Not only did I rebrand the blog because of my new life direction but I also wanted to turn it into a proper business that would showcase my talents and hopefully land me some work and/or affiliate income.
I’m not out of debt. Not quite yet. But I’m on a much better path. I’ve changed my mindset to one of leading a simpler, clutter free life and that debt does not equal any kind of happiness. Debt is something that slows you down from reaching your dreams and life you desire.
The Path to Debt Freedom
The sad truth is we make debt complicated. We get in our own way when it comes to debt repayment. For years, I’ve gotten in the way of my own success of eliminating debt. I let silly impulses and lifestyle inflation get in the way of the real life I desired. I refused to wait for things. And waiting makes you realize what’s really important and what’s not. Waiting stops you from buying silly crap that you’ll end up selling or throwing away a year later.
It’s hard when we live in a society that empowers more stuff, convenience and “why wait when you can buy it now”, but you have to block all that out. It may bring you five minutes of joy now, but five years worth of heartache while you repay it.
We’re bombarded by many “truths” about how we should do things and we’re always on the hunt for the next best solution. Any of this sound familiar?
- You’re always looking for the next best solution. You try debt snowballs and avalanches, and you look at your latte factor all avoiding the simple truth – you’re in debt and you simply have to pay it back. All of your spending got you there, not just coffee. Blaming your coffee habit is not going to make the debt go away. Own up to all your spending, and take action to curb it.
- Should I start an emergency fund, invest, tithe, have 20 different bank accounts, 3 credit cards and a partridge in a pear tree. See? You focus on all the things but your debt repayment. Sure, some of these are important but at the get go, you shouldn’t even be thinking about any of it except for retirement and emergencies.
- Envelopes, jars, binders, fancy budget software and elephants – oh my! Again, yet another decision that blocks you from getting down to work. I’ve tried all of these and none have worked except for tracking my spending and not spending more than I make. Simple as that. If envelopes work for you, go for it, but please, STICK TO IT. Don’t keep changing methods thinking you’re not getting to debt freedom fast enough. It takes time. Consistency is key.
The first step to lasting change and freedom from debt is to change your behaviour and mindset. You must want to change, accept that change, and start to incorporate it into your life. It can be done. You simply have to be willing to toss things out of your life that are not necessities. Believe and have faith in you. You can do it. It may seem uncomfortable and foreign at first, cutting so many things out of your life, but it has to be done. Always remember that it’s only temporary, this stage in your life will pass. You’ll get rid of the debt, learn some fantastic money habits in the process, and then when you have a surplus, you can have a few of those things you cut out of your life back.
You will get past it. It may be a long road but the journey will make you appreciate the sweet rewards of debt freedom at the end.
So here’s to crushing your debt and enjoying the abundance that will follow.