My best tips to get out of debt

As described in the About page, I am on a journey to get rid of the debt, clutter, and excess weight in my life, as well as to look at these issues in the broader social, political and economic context in which they occur. When something is happening on such a massive scale, it’s not a matter of individual weakness. It’s a matter of a profound change in people’s environments and cultures. Unfortunately, in individualistic societies like the US, Canada, and the UK, these matters are seen as individual problems with only individual solutions. And that’s why people in these countries are among the fattest and most indebted as individuals.

Despite the changes in our environments and cultures that are necessary to create healthy societies, we do also need to take action in our own lives as individuals, before we go bankrupt, drown in hoarded clutter or develop preventable diseases because of unhealthy living. We owe it to ourselves, our families and friends, our communities and countries, to be the healthiest we can be in mind, body and finances.

On a personal level, I feel I am doing the best on tackling debt out of the unholy trio of debt, clutter and weight. We reduced our debt from over $21,000 to the current $4,000 in three years. At the rate we are paying down debt, we will be debt-free in five months. During that time, I have made only marginal improvements in terms of clutter and weight. I have at least not increased the clutter. I have lost a few pounds and made it out of an obese BMI to an overweight BMI. I am currently maintaining this weight.

I feel that part of my success in dealing with debt is changing my mind set about what gives me a sense of control over my life. I have experienced five episodes of clinical depression, beginning at age 12. During one of these periods, I dealt with the depression by over-spending. I felt like I had very little control over my life, and being able to buy whatever I wanted gave me a sense of control. In fact, studies show that buying things can set off the reward centre in our brains, which gives us a jolt of dopamine. Dopamine is a neurotransmitter that is also implicated in addiction. This article discusses spending as an addictive behaviour.  This article is about help for compulsive shoppers:

Gail Vaz-Oxlade was a profound influence on me in terms of reframing my views on spending and debt.  I am an avid fan of her TV show Til Debt Do Us Part. Gail helps people regain control over their finances by looking at their spending, debt and income, and putting them on budget. Here is Gail’s interactive online budget.

I tried budgeting software, namely YNAB (“You Need a Budget”). Although I found that it worked well as software can recommend this for people who want to use a budgeting application, I did not stick with it. I found that it took a lot of time, and my husband was never on board with it. If you are in a live-in relationship, you really need to tackle spending together.

I tried carrying around a little book with me and writing down expenses. I abandoned this within days. I realized during my daughter’s assessment and diagnosis with Attention Deficit Hyperactivity Disorder (ADHD), that this largely hereditary way of being was also a good description of me. I become easily bored. I am interested in everything, and distracted by everything. It is very difficult for me to control impulsive behaviour (but I do). I bet there are a disproportionate number of adults with ADHD who are in debt.

I tried the Mint.com application for my Android phone instead of writing things down. I do not recommend this application. I found that it was not versatile, and eventually abandoned it too. There are other money management apps out there. No doubt some of these are useful, but I’m not sure that any would work with my personality type.

Gail Vaz-Oxlade recommends using cash only, and putting all the cash you need for the week in jars marked “food”, “transportation”, etc. We do not do this.

So, how have we brought the debt down? My husband grew up in poverty and has an eye out for prices. He is a good comparison shopper. I ask myself before buying anything: Do we really need it? How often will we use this? How long will it last? Where will we put it? The fact that our place is cluttered is a strong incentive for me not to buy anything other than food. I buy clothes only when something I need wears out (like a winter coat, pantyhose or plain black shoes), or my daughter outgrows her clothes.

Our biggest challenge in terms of spending is eating out. All of us love food, and we like variety. Because our apartment is cluttered, we often eat out to socialize rather than inviting people over. However, we can limit how many times we eat out per month.

We do not spend much on entertainment. We have a cable subscription. We rent about three videos per month for $5 each. We take our daughter to a museum occasionally. We take advantage of free community events. We sometimes go to local beaches. We go to the park. We accompany my daughter while she cycles down the Rideau Canal, which is close to our home. Eating out occasionally is the bulk of our entertainment spending. We go on one one-week vacation every year, usually somewhere we can drive to. Last year, we had the use of someone’s cottage near Westport. This year, we have the use of someone’s trailed in Nova Scotia.

Our car is a beat-up 2004 Toyota Echo. It is fuel efficient and completely paid for. We ensure that we maintain it carefully, with regular oil changes. My husband uses it to get to work. I live a seven minute walk from work, and my daughter is a ten minute walk from school. We save a lot of money by walking whenever we can. This is a major reason why we still rent a downtown apartment.

We have saved enough money for a down payment on a house, but have resisted buying until all our debt is gone, and until we can save $10,000 for closing costs, moving costs, any repairs or furniture we might need. We may bump this up to savings of $15,000, because we may need a down payment on buy a second car if we move. When we do buy a house, we will not splurge on the biggest one the bank would be willing to give us a mortgage for. This would leave us unable to save for retirement or our daughter’s education. We would like to buy a modest house, when the time is right.

Whereas spending money made me feel like I was in control, now I realize that it is just another way to dig yourself into a position in which you have fewer choices. It helps to have a spending goal, such as buying a house is for us. That way, I can forego buying little things, knowing that every penny will be put toward a house. Gail Vaz-Oxlade is excellent at showing people how very small but frequent expenditures can add up considerably.  Because of her, I bring my lunch to work more often, or go home for lunch, and do not spend as much in coffee shops as I used to. Some of what I do anyway for health reasons, such as drinking tap water instead of pop or juice, also saves money.

Learning more about ADHD has also made me change. In the past, I would get bored with jobs and frequently change. I established and ran a research and communications business for 15 years, which was perfect for me because it gave me interesting projects to work on and the variety I craved. However, when I went back to school to do a Ph.D. and had a baby, I was lured by a job with a regular pay cheque and a health plan. Whenever I feel like quitting, I restrain myself. The loss of the income and benefits would have a major negative impact on my family. To avoid feeling trapped and becoming depressed, I have put a life plan in place. It is more than an exit strategy from my current job, it is an entrance strategy to the rest of my life. This helps me deal with anxiety and frustration. Having a goal to work toward makes me feel like I am taking positive action.

Charitable giving in a situation of debt has been a challenge. When not in debt, I make sure I give away a portion of my income to people who need it more than I, and organizations who serve people in need. While in debt, I reduced my givings. I still give to people on the streets in my community. I support friends who raise money for causes, depending on the cause. I have given money for earthquake and tsunami disaster relief. I am looking forward to getting out of debt not only for my own sake and my family’s, but so I can afford to contribute more to charity. That is also a motivation for me not to buy stuff that will simply clutter up my home. Not only do I not need it, the money I spend on it could represent a meal for someone who really does need it.

Not spending money on things I don’t really need gives me a sense that I am in control of myself and my life. Being debt-free will give me many choices. When I decide whether to buy something or not, what goes through my head is NOT “I can’t afford it”, but “I choose not to spend money on this, so that I can save it for something more worthwhile.” “I can’t afford it” makes me miserable and makes me feel out of control, like I have few choices. “I choose to save my money for some other purpose” (becoming debt-free, buying a house, making a more substantial contribution in my community) makes me feel in control, and like I am making the right choices. Instead of feeling miserable, I can feel good about what I’m doing. I am trying to take this approach with making the right eating choices too.

Some web sites share useful tips about living frugally and simply. The best tip I can give you is to feel good about simple living, rather than jealous of what other people have, or feeling like you need objects to prove your worth as a human being, or succumbing to pressures from family, friends or neighbours for a bigger place to live or a grander means of transportation or the newest electronic gadget.  No matter who you are in the world, someone will always be better off than you in some way. No matter who you are, someone will always be worse off than you. Your challenge, should you accept it, is to develop a sense of self that is separate from spending and objects.

Please feel free to share with me any tips that have worked for you.

 

2 thoughts on “My best tips to get out of debt

  1. Great tips.

    Renting a place until you can afford to buy is brilliant and sensible. Keeping housing size down is brilliant. I recommend it too. How much space do you need anyway?

    Don’t even buy a car if a bus will do living in the downtown core – rent a car if needed to go on a holiday.. Okay so you might miss out on a few things, but it was worth it in terms of debt rise and savings are really possible when there isn’t a car payment, insurance and maintenance included in the budget.

    Having a clothing dryer is over-rated – clotheslines work as do clothes racks. Clothes dryers are huge electricity hogs.

    If you live in Nova Scotia, Frenchys is the way to buy clothes – they have the greatest trendy (if you like) and non-trendy (if you like that instead) mountains of great clothing – all you need is patience to go through them. Save your money for a special item. Have some fun and a visit with others at the bins while you are at it.

    If you sew, go to discount fabric places – the exact fabrics are at the more expensive fabric stores.

    Looking for sales and being open to yard sales, flea markets etc. is not only fun, but easy on the budget if you are looking for a buying fix especially. There is too much obsessing about brand new things.

    Store brands are exactly the same product in an not fancy package.

    Get to enjoy cooking – there are a million recipes online – put the three ingredients left in the fridge in Google and see what amazing meal choices you have – eat in – this one is hard because eating out is the best entertainment value going all round and hard to resist – haven’t really totally solved this one yet. It is the number one money thief going.

  2. “Some web sites share useful tips about living frugally and simply. The best tip I can give you is to feel good about simple living, rather than jealous of what other people have, or feeling like you need objects to prove your worth as a human being, or succumbing to pressures from family, friends or neighbours for a bigger place to live or a grander means of transportation or the newest electronic gadget. No matter who you are in the world, someone will always be better off than you in some way. No matter who you are, someone will always be worse off than you. Your challenge, should you accept it, is to develop a sense of self that is separate from spending and objects.” – this is such a good thought to put out to the universe – there is just too much of everything and simple pleasures make a day worthwhile. The rest is all fluff and fancy.

    Su

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