This headline has to be a typo. How can you spend to get out of a money problem? Am I in charge of a federal government program?
When you are in a hole, the first step in getting out of the hole is to stop digging. So how can you spend to get out of debt? I will explain how.
Google “how do I get out of debt” and scroll down past paid ads. Most of your search results will iterate over the following tip items:
Organize your invoices so you can see what you are working with
Create a spreadsheet of your income and expenses (either on paper or using a computer program / application)
Add up your expenses and add up your income. Do you have more expenses than income?
Get another job.
Eliminate all the expenses you can. You can conserve electricity, shelter, and food, but not much else.
Live this lifestyle until all debts are paid.
Alright, I’m getting a bit of a joker here. But I don’t think I’m exaggerating too much. The touted idea is to live as spartan a lifestyle as possible and maximize the amount of money you pay to cover your debts.
The common theme here is that to get out of debt, you must eliminate everything from your lifestyle and use that money to pay off your debts.
How long do you think you can live like this? Two weeks? One month?
If you are single, this lifestyle may last longer because you have no one else to worry about. But when there is a spouse, you two must live like this. The plan became much more complicated.
Add kids to the stage and the complication just increased exponentially. A five-year-old does not understand debts. All you know is that cable TV is no longer there.
My suggestion is to incorporate some expenses into some “unnecessary” expenses. Allow yourself to do more than work, work, and go home. This will be different for everyone. In my case, we went out to dinner once a week. A good restaurant, not a fast food place. It was something to look forward to every week.
We also kept our Dish TV. There are no movie channels. This made staying home instead of going to restaurants and movies easier to do. We left with money ahead.
We started our plan in 2010. Our 25th wedding anniversary was in 2012 and we had talked about taking a cruise for years. So we also budgeted for this and saved a little bit each month.
In theory, this “frivolous” spending slows down debt. But if this little fun keeps you on your payment plan, then you will reach your goal. Living Spartan for a month and then giving up doesn’t get you to your goal!
Think of it as trying to lose weight. If your plan is to eliminate everything except kale and celery, you will probably lose a lot of weight at first, but give up in a week or two. The idea of a slice of pizza will become so overwhelming that you will overdo it and eat a whole pizza, then feel guilty and abandon the plan. But if you eat in moderation by controlling your portions and watching your calories, you will allow yourself to eat some pizza and still lose weight. It will be a slower weight loss, but you will stick with your weight loss plan because you are not completely depriving yourself of “forbidden” foods.
Naturally, your tastes and your budget will determine what you can do with your expenses. Maybe you can only afford to go out to eat once or twice a month. Will this “payoff” keep you on your plan to get out of debt? He did it for me!
Should you get out of debt? Absolutely! But to be successful, I think you need to include some fun expenses in your budget. This may put off your end date on paper, but your chances of success will be infinitely better than living off dog food and reading by candlelight!