1. Mobilize the troops.
Focus on the problem. A lot of people will stick their heads in the sand and deny that they actually are too deep in debt. Others know they have a problem but don’t face it because they see it as unsolvable or too big to face. That is just not true. Have courage! No matter how bad your debt problem, there is a debt solution. It may be painful, but unless you plan on dying within the next couple years it will almost certainly be worth it. Admit your problem. Focus on your problem. Defeat your problem.
2. Stop the bleeding.
Stop getting deeper into debt. You only hit rock bottom when you stop digging. Destroy all your credit cards. Identify all non-essential spending and eliminate it. Be honest. If you have really focused on the problem you should be able to do this somewhat objectively. Seriously think about what do you really “need.” As much as you may like that expensive food item or getting your nails done or that beer at the end of the day you don’t really need them. It may seem impossible to give them up, but they are not crack. You aren’t physically addicted to them. You are the creator of your own actions. Do you control your life or does your desire for immediate pleasure control you? Toughen up and show some will power. You are much stronger than you may think.
An easy expense I think is worth mentioning specifically is entertainment. Entertainment is a completely non-essential expense. Not that you should leave a gloomy, gray existence devoid of all fun, but you don’t need money to have it. There are many great, free ways to entertain yourself. Most of them are actually much better for you emotionally, mentally and physically than the narcotic-like, hyper-pleasurable entertainment sources our society typically seeks. Go to the park. Play a sport with some friends. Go for a hike or walk. Rent movies, music and books at the local library. Draw a picture of the sunset. Write a story or blog. Have a conversation. Some of these activities lack superficial charm and immediate gratification, but the more you do them the more you realize what great substance they have.
3. Find cheaper equivalents
This is related to the second step, but easier. Often there are cheaper ways to accomplish what you are trying to do. For example, do you need to drive to the corner store when you could walk or bike? This may not seem like much of a savings, but over the course of a year it could mean a few tanks of gas. Do you really need a printer when you can print as much as you want at work? Do you really need to go buy a hammer when you could pound that nail into the wall with a brick or a crescent wrench? That may sound absurd, but does it really make any difference if you don’t use the hammer very often and you accomplish the same result?
Similarly, many people waste money on equivalent items that could easily be had much cheaper. I’m talking about buying generics. Do you really need a ten dollar bag of gourmet coffee at home and/or a daily four dollar cappuccino at Starbucks when you can get a pound of generic coffee for four bucks? Do you need Tide over Sam’s Choice Detergent? Often generic products are made to mimic a name brand, having identical ingredients and indistinguishable characteristics. Do you need a more luxurious used car that could break down at any moment when you could get a new economy car with a hundred thousand mile warranty? Transportation is a big money waster. Ultimately, all that matters is that you get from point A to point B in an acceptable amount of time. Too many people feed their egos and buy into the misguided notion our society has that you are defined by your car. You are defined by your car, but only in the sense that it shows what an idiot you are if you blow tons of money on something that moves people no better than a much cheaper equivalent.
4. Call for back up.
Get a savings account and start depositing any extra money you make into it. Keep in mind this shouldn’t be done until your debts become manageable. Having a certain amount of money set aside for the unexpected is essential to financial freedom. Besides the obvious psychological benefit of having a Plan B, savings also save money in the long run. This is because when you get pushed into a tight situation by an unexpected, emergency expense you usually have to use an expensive method to get money. This could mean anything from a credit card to a pay day loan. In any case, you’re paying a premium because you need the money so badly and lenders will take advantage of that fact. Don’t get pushed into that corner. Always have an ace up your sleeve.
5. Create a long term plan.
Once you have reined in your spending it’s necessary to create a realistic long term budget. This means something you can live with for awhile. Like the dieter trying to lose weight, you must first get the bulk of the weight off by cutting your consumption rather drastically, but after awhile you have to come up with a plan that you can actually follow in the long term. This means bringing back those little pleasures from before, but in moderation and with any equivalents you can live with. In my experience, once I have grown accustomed to the cheaper generics or the absence of certain entertainment, I really don’t need the old ways. However, there will always be things you’ve been dying to buy again ever since you went into money saving mode. Bring those back. Saving money is a lot like dieting. You can’t be anorexic. You have to allow yourself certain things in moderation or you will go nuts and binge, getting just as fat and bloated as you were before.
6. Make more money. Get creative.
Obviously, one of the best ways to get out of debt is to have a higher income. This can come in many forms. It’s usually going to involve additional work, but that doesn’t necessarily mean it has to involve a lot more work. Creativity and thought can often save you boatloads of effort. You could get a second job of course. That’s straightforward and pretty much a guaranteed way to increase your income. But consider other things, too. Maybe you could sell stuff on E-Bay? Maybe you could sell home-grown vegetables and herbs at a farmer’s market? Maybe you could write articles for websites like Bukisa (welcome to the club!)?
The key to this phase is to capitalize on your talents and skills properly. Even the most mundane people tend to have something they are exceptionally good at or have a large amount of knowledge about. Make this work for you. People tend to pay more for things they can’t do themselves. This means uncommon skills have more potential value. However, you still have exploit that value. Find what you’re good at. Think of how you can make money off of your skills and knowledge. If you’re good with cars, offer to repair the cars of acquaintances (most people are dying to find someone they know and trust to work on their car rather than taking it to a mechanic). If you’re a good dancer, look into becoming a part time instructor. If you like sports, try becoming a little league umpire in the evenings. If you like arts and crafts, make ‘em and sell ‘em at fairs and festivals in your area.
Not all ideas will make that much money, but every little bit helps. Plus, if you’re lucky they’ll be activities you enjoy doing in their own right. The internet or your local library might have information that is helpful in figuring out how to capitalize on your talents and skills.
Remember: you must be fearless and you must endure. Great accomplishments often require you leave your comfort zone and work brutally. There is a reason most people aren’t wealthy. It takes effort, discipline and dedication. No matter what happens though, even if you fail completely in your goal, you will be a better person for trying.