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Self-discipline – the key to getting out of debt

When you take out a short-term loan, you’re buying yourself a lifeline. You’ve now got the money you need to get out of the mess you’re in, but you’re not really out of trouble until you can get that loan paid off and balance your income with your expenses.

The first thing you have to do when you find yourself in this situation is to make a spending plan. [LINK – spending plan] Figure out exactly what you have to spend to pay rent, bills, loan repayments, food, and other essentials. And then work out how much you have left out of your income. That’s all you have to cover everything else.

It may not be much. You may only have a few Euros each week to buy a few treats for yourself and your family. If you’re lucky, you’ll have a little more. But whatever that number is, fix it firmly in your mind, because anything you want has to come out of that small sum of money. Drinks with friends, movie rentals, new shoes, birthday gifts, even milk shakes for the kids.

There’s one simple rule: if what you want costs more than you have right now, you have to go without, no matter what. Never dip into the money you have set aside for essentials, and get used to saying no.

Use cash for extra control

It’s far too easy to overspend when you can just put things on a card. Before you realize it, you’ve maxed out your credit, you’ve hit your overdraft limit, or you’ve spent the money you need for something else. So put the card away and use cash instead.
When you get paid, take out your spending cash and keep it separate from any money you need for essentials. Whenever you buy something that wasn’t on your essentials list, take the money from that pile. Now you can easily see exactly how much you have left until you get paid again, and whether you can afford that small luxury you want.

Don’t cheat yourself

Self-discipline is hard, and it’s tempting to play mind games with yourself to try and get around the rules. For example:

  • You’ve had a rough day and you fancy some wine, so you buy a couple of bottles when you’re doing the food shopping. You tell yourself it’s food, so it’s an essential purchase, not a treat, then you run out of food money before the end of the week because you spent more on food than you budgeted.
  • You really want to go for a drink after work, but you’ve run out of spending money, so you borrow money from a friend.
  • A game you’ve wanted for a while is on special offer. You can’t really afford it right now, but it’s such a great price you just can’t miss this amazing deal.
  • It’s your partner’s birthday, and you want to get them a fantastic present. You find something perfect, and it’s a little more than you can afford, but it’s important to show them how much you love them. So you use just a little bit of the bill money, and plan on repaying it next week.

It’s easy to find excuses for overspending or making unnecessary purchases. But if you’re going to get out of debt, you have to train yourself to say no. It’s tough, especially when you have a family, but it’s the only way forward.