For the past eight years I've been paying off the $81,000 in student loan debt I accumulated while in school. It's been a long journey filled with periods of intense motivation and at other times, debt fatigue.
I've been unemployed, underemployed and self-employed in that time. After all of these years, I am so ready to be done. A few months ago I tried to reevaluate my financial goals by looking at my leftover debt, my income, as well as my spending. I saw that my debt free date seemed closer than ever.
Looking at my debt and income I began to realize that I could be debt free in a year. But it would require some work. First, I'd have to pay $2,000 per month towards my debt. In order for that to work, I'd have to go back to living on a bare bones budget.
I never liked the idea of cutting back on anything and everything fun, just to pay off debt. I've played that game before and it's always backfired. So when I heard of the Spending Diet, a free program by Anna Newell Jones, I was intrigued. The Spending Diet lets you spend $100 a month on non-needs. Everything else goes to things you need, like shelter, food, healthcare, etc.
I've always lived on a pretty minimal budget, but my restaurant spending had gotten to be a bit lax. As I started to make more money I was a little more careless with it. Honestly, these things wouldn't have been an issue for me -- except that I'm still battling this debt.
So, a month ago, I committed to a year-long Spending Diet. For one year I will only spend $100 in cash on non-needs monthly. Everything else is going to things I need or my debt. It's the only way I'll reach my goal of being debt free.
Going on a Spending Diet may seem scary, but here's how you can prepare.
1. Know Your Spending Triggers
The first step is knowing your spending triggers. At what moments do you feel most inclined to spend? What areas or locations encourage you to spend, such as a mall or a city center?
I have a few spending triggers. I tend to spend more money when I'm tired and stressed, or because I just want to feel better. Going out to eat or treating myself to a nice dessert sometimes seems like the right thing to do -- especially if I've had a rough week! That's all well and good, but you can't just do those sort of things on a regular basis and still expect to save!
I started to explore other methods of dealing with stress. I've integrated meditation into my life, and am sure to have food in the house at all times so I'm less tempted to go out. I became much more proactive about my spending triggers, rather than reactive.
2. Stock Up on Little Pleasures
Most of my spending tends to be on coffee, tea, happy hour, or dinner. What can I say, I like going out with friends or enjoying a nice soothing cup of coffee. But because of my limited budget, I've had to make some changes.
Before the Spending Diet, I stocked up on coffee and tea (and admittedly, some wine) to enjoy at home -- alone or with friends. By creating a ritual that doesn't involve going out I don't feel like I'm missing out as much.
3. Know How Far Your Budget Goes
At $100 per month, the Spending Diet comes out to $25 per week in non-need spending. It may not seem like a lot -- until you think about what that money can get you. I calculated some of my favorite indulgences to see what I can get each week. Using $25, I can get:
- One coffee out every day
Once I started to really calculate my spending I realized I can still have some weekly fun, depending on what I want to do. If you are going on a Spending Diet, know how far your budget goes and what you are likely to spend it on. I firmly believe that we should enjoy life -- but it's also important to stay on a budget
4. Create a Pinterest Board for Motivation
I have a secret Pinterest board to help keep me motivated. I call it "Debt Free Dreams" and I pin things like travel, interesting recipes, and once-in-a-lifetime adventures. I know how important it is to have a "why" when you are working on a big goal that involves sacrifice. When you don't have a purpose, it's easy to get off track.
When I see pictures of places I want to go, I remember why I'm doing this. Because in a year from now I'll be debt free. And when I get to that point I have so many things I'm looking forward to. I'll build my nest egg and start investing aggressively. I'll travel all over the world, without any guilt. I'll contribute more money to my emergency fund, so I can sleep better at night.
Becoming debt free is a journey that may seem difficult at times. But -- with some hard work and diligence -- it is possible to come out on the other side.