How to get out of debt – the Vikera approach (Part 2)

Good Saturday morning to ya! Now that the holidays have died down and you are on solid ground again, are you ready to look at your financial situation?

I began writing on this just before the Christmas holiday, which was bad timing, admittedly. I did get the project going, however, on how to put together your Ins and Outs list. You should probably read this first to refresh you: Groundwork.

Welcome back, let’s get started.

If you’ve done Part 1, you should have two lists that look like this:

Imaginary money in

Imaginary money in

My reaction the first time....

Imaginary money out

You DEFINITELY should no longer look like this:

IMG_7138

Pep Talk

Remember whatever sacrifices you make won’t be forever, just until you are satisfied with your financial position.

Step 3

Even if you’re pretty lean and your gap is small or you’re looking at a chasm, this is what you do next.

  • Decide what you can cut out right now, today, immediately! Ask yourself right now: “Self, what kind of lifestyle would you like to have?” Look at your Outs. You know what the essential things are and what’s not. You know you don’t NEED to have your nails done or you don’t NEED a $7 coffee every day and you certainly don’t NEED cable. Or maybe you do. You were probably thinking about what you would cut while you were doing your Outs anyway, so you know where to start.

I won’t judge if you keep mani-pedis. For me, I have to eat out at least once a week. That’s my thing. I don’t feel guilty about it. You still have to have pleasure in life, but you have to cut at least one thing though. Take a deep breath.

Look at your list of Outs draw a line through the thing/s you can do without. Write down: Debt Repayment total and write the total of what you’ve just cut. Now that you’ve cut at least one expense, how much did you free up? Good for you! That’ll be money in your pocket next month!

  • Are you paying for what you use? When I got divorced, I did things just like when I was married: got the same cable package, phone service, etc. I never changed. It was what I was used to and I was comfortable. For last two years, I make it a practice once a year to review my services since my life and needs change year over year. Don’t continue to pay for things you don’t use/want/need. You can negotiate, ask for discounts, make sure you’re not spending money you don’t have to spend!!

TIP: When I review every year and cut back costs, I bank the difference. Every year, my car insurance goes down. I keep my OUT the same (from 2012) and bank the difference. Last year, I banked $150 a year. This year I will be banking $300. Painless!

  • Can you bank more money without making more money? For some people, it is not a possibility to make more money. I get it. What you make is all you make, like me, but if I get unexpected money – a bonus or kickback or gift – I bank it immediately. I don’t even let it sit in my account for it to think it’s real money, even if it’s $20. You didn’t have it 10 minutes ago, so what does it matter if it’s gone again. You’ve got a point, sure, but use it for good!

TIP: I signed up for a credit card that not only has low interest, but is one that gives me money back. I bank that money every year. If I sell anything I own, I bank that money. I bank gifts, I bank any extra money.

If you can do any of this through online banking, it would be even better! I have $25/month going to my savings/debt on the same day my car insurance gets paid. Painless! In reality, the same amount of money will be going out a month, but going to different places: some to Them, some to the Bank of You!

I’m going to give you a week to work on this. This is a big one. A big (and most painful) part of financial health is awareness! You have to know what you’re paying for and what you pay! It might take some time to do the research.

Note: I know this doesn’t address the issue of the debt you have right now. This is to slow down the stream TODAY. The debt you already have is still there, but right now, today, you’re taking the step to reduce future debt! You need to fix the leak first. It’s important!

Let me know how you do!

Look out for Part 3 on January 18.

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