Like many things in life, it’s far easier to fall into debt than it is to get out of it.
Back in 2017, I finally came to terms with the fact that I was nearly $33,000 dollars in debt. Since then, I’ve managed to pay off about $10,000 dollars of that amount.
Upon reflection, I realized that there were several habits on my part that greatly contributed to the astounding amount of debt that I’m currently in.
Here are 5 habits that I had to drastically cut in order to reduce my debt.
1. Plan more meals at home
Prior to beginning my debt payoff journey in 2017, I had spent an absolute fortune on eating out.
I would literally eat out for breakfast, lunch and dinner almost every day. With each meal averaging between $7 to $10 dollars, I could easily spend $30 a day on fast food and take-out.
Instead of enjoying a modest food budget of about $300 to $400 per month, I was easily spending nearly 3 times that amount every 30 days.
Had I opted for buying groceries and preparing meals at home, so much of the extra savings could have gone to bolster my emergency fund.
2. Save credit cards for emergencies
One of the first things I did when I created my debt payoff plan was to determine which expenses were contributing the most to my current debt balance.
I came to the overwhelming conclusion that with the help of my two high interest credit cards, I had spent thousands of dollars on discretionary expenses and other non-essential purchases. I ended up maxing out both cards after racking up nearly $8000 in credit card debt.
Surprisingly, I was still a bit clueless about what exactly all that money had been spent on.
It wasn’t until I went back and reviewed nearly two years worth of credit card statements that I finally realized just how much money I had spent on non-essential impulse purchases.
As smart as I thought I was about managing credit, it never dawned on me just how long it would actually take to payoff my credit card balances.
3. Moving can be costly
Getting your own place can seem like a dream when you’re either renting out a room from someone or still living at home.
However, the cost of living is far greater when you’re renting out a place on your own.
When I moved into my new apartment in 2016, I was so excited that I hardly considered the fact that my living expenses were about to nearly double.
From moving cost to security deposits to actually furnishing my new apartment, the entire process managed to wipe thousands of dollars from my savings account.
All of the money I had saved from living at home for a few years was nearly spent in just a few months, which quickly led me to begin living paycheck to paycheck.
4. Plan ahead for travel expenses
I’ve always been a bit of an adventurous and spontaneous traveler.
But when it comes to taking unplanned trips or vacations in the spur of the moment, your personal finances can end up suffering dearly for it.
On several occasions, I managed to overspend hundreds of dollars on trips and vacations that could have easily cost much less had I just planned them ahead of time.
As a result, I have ended up spending a fortune on last minute plane tickets, hotels and other travel expenses. Now I plan all of my trips several months in advance!
5. Beware of Payday loans
These were by far some of the worst type of debt that I could have ever amassed.
When your bank account runs dry and your credit cards are maxed out, sometimes your only option until payday is an emergency loan.
Some of these payday loans include exorbitant fees and interest rates that can literally trap you in a vicious cycle of indebtedness.
All in all, I have not made the best financial decisions in the past, which has caused my personal finances to suffer tremendously.
But creating a budget gave me a renewed sense of purpose and the confidence to eventually payoff my entire debt balance.
I hope that by sharing these experiences that you too can potentially avoid some of the same financial pitfalls.