Tax season is creeping up on us again. Are you expecting to receive a refund this year?
If so, that money should be used to pay down debts.
A lot of people see this as “found” money – something they can use to go out and splurge on the latest gadget or take that trip they’ve been waiting for.
But it’s not free money. You earned it in the first place, and while you may have been forced into “saving” it by the government, it’s still part of your overall financial picture.
Using it to pay down existing debt isn’t nearly as fun, but it’s a heck of a lot better for you in both the short- and the long-term.
One of the first things you should do when trying to pay off debt is to find ways you can save money.
It seems obvious, doesn’t it? It’s just too bad that most people aren’t willing to give up their luxuries (which is partly why they’re in debt in the first place).
What do you spend money on every month that isn’t a necessity?
A daily latte at Starbucks? The deluxe movie package from your cable company? Maybe a weekly dinner out with the family?
While you may enjoy all these things, they all serve their part in keeping you in debt.
Sit down and add them up, and see what you could be putting toward those outstanding credit card balances every month.
I’ll bet you’ve never really looked at those expenses as a lump sum, have you?
If you handle most of the finances in your household, chances are you’re going to be shouldering most of the work when reducing your debt. But that doesn’t mean you should be going it alone.
Getting your family members involved helps them to understand the reason it’s necessary, and will help them to accept it when expenses need to be scaled back.
You’ll obviously need your spouse to be actively involved in the process, but if your kids are old enough to understand the situation you should include them in the plans as well.
They don’t need to know every little detail, but they should know why you’re making these changes. It’s also important that they understand that it may lead to frustration sometimes, both for them and for you, but you’re doing everything you can to get out of debt and back on top of things.
It’s easy to say that all it takes is willpower to overcome bad spending habits, but some people just aren’t able to muster the resolve it takes.
If you’re looking for help to overcome poor spending habits, there are several options.
1. Debtors Anonymous
DA uses the time-tested approach of Alcoholics Anonymous to deal with debt issues. You can get more information and find a local chapter on their website at www.debtorsanonymous.org or by calling them at 781-453-2743.
2. Mental Health Professionals
Therapy can make a big difference in your outlook on debt, and your ability to stop overspending. Medical insurance sometimes covers this type of therapy, but if not there are plenty of low cost or even free resources. The National Mental Health Association website is a good place to start at www.nmha.org
3. Books & Websites
There are plenty of books available on managing debt. Your local library will likely have a good selection, as will your local bookstore. There are also plenty of helpful websites where you can get more information and support materials.
4. Friends & Family
This is a touchy one, but it often helps to get moral support from your friends and family. Letting them know about your problems can get them onboard the solution. Only you can decide if your friends and/or family are going to be supportive however.
I realize this is going to sound cliche, but one of the most critical aspects of getting yourself out of debt is a positive mental attitude.
If you don’t honestly believe you can get yourself out of debt, and overcome whatever it is that got you there in the first place, it’s highly unlikely you’re going to succeed.
If you struggle with believing in yourself, here are some simple strategies that can help:
- Get motivated by visualizing your future and how your life would be different if you had no debt.
- Be realistic about how long it’s going to take to be debt-free. Don’t expect to have your debts paid off in 6 months if they took you 5 years to accumulate.
- Stop making excuses for why you need to wait until “tomorrow” to start paying off debt.
- Remember that you’re far from the only person going through what you’re dealing with.
- Learn more about financial planning and money management by signing up for a basic personal finance class or reading a book on the topic.
- Remember other challenges you’ve faced and overcome in the past and use them as inspiration for this one.
You might even want to read a book or two on life management skills, positive thinking, etc. They can be a little sappy sometimes, but it’s amazing how inspiring they can be as well.
