Debt diet: Be frugal and still fabulous!
NEED TO KNOW
- Natalie McNeal started a personal finance blog back in 2008 called The Frugalista Files
- She shares her "How to Get Out of Debt Diet: Frugalista Style"
The thought of paying down credit card debt, or any type of debt, can be very overwhelming and stressful. Americans have racked up a total of $11.4 trillion in debt, including $852 billion in credit card debt, and a lot of people are having a hard time paying it off. The typical U.S. household is now carrying about $15,418 in credit card debt; an average mortgage debt of $149,782; and about $34,703 in student loan debt, according to Federal Reserve data collected by Nerd Wallet.
Toward the end of 2012 as a nation, Americans were saving more and borrowing less to pay off debt at a quicker rate, but many are still struggling to even get started. Creating a budget plan and figuring out how to start paying down debt can be tough, but thinking about tackling it one step at a time can help you get started. Natalie McNeal started a personal finance blog back in 2008 called The Frugalista Files, in order to teach people how to live a "frugal and fabulous life." Natalie spent a month without any extra expenses, such as getting her hair done and manicures, and she saved $400. She then took a “vow of frugality," and has been helping others save ever since. Just to give you an idea of why Natalie was so concerned with saving, she was battling $20,000 of debt. But by creating a plan, she was able to come out on top and debt free!
With the start of the new year, it's time to get the budget in order! Regardless of how much debt you have, a plan always helps! Check out Natalie's plan she calls the "How to Get Out of Debt Diet: Frugalista Style."
1) Cut Expenses
2) Earn More
3) Invest in Yourself
4) Take a Risk/Have Fun
Once you decide to get your finances in order, here's how Natalie suggests you make it happen!
Know your enemy: Natalie says start by adding up everything you owe, in order to really know your enemy! Then by using a debt calculator, such as this Debt Reduction Planner from CNNMoney, you can get an idea of how long it will take you to pay off everything you owe.
Cut Expenses: Natalie says her No-Buy Month is a classic and a must do. She saved just under $400 and it got her into the habit of seeing a stable bank account. During No-Buy Month, you go a month without spending any discretionary money. Try to find places to cut expenses during the year - including getting lower rates on your credit cards, switching to no fee bank accounts, checking to make sure you have the right cable package and even moving locations if your housing expenses are too much.
Work Your Way Out: Get a side hustle. Sites such as Fiverr allow you to charge five dollars to provide services. One graphic artist was able to earn more than $9,000 $5 at a time. Sometimes you have to create your own work. Skillshare.com allows you to teach locally or online. If you're due for an evaluation at work, make the case for why you want to earn more money. If you get offered a new job, try to negotiate for more pay than what's being offered. You should try to have a savings cushion of at least $1,000 so you don't always run into your account to make your monthly bill obligations.
Pay it Off: Put yourself in the mindset of "paying the bill off" and not just "paying on it." Don't run up any new debt. If you have to freeze your credit cards, then do so.
Invest in Yourself: I'm all about career. If you need to get new skills to get a promotion at work, then see if you can get your company to pay for a class. Or if it's worth it, pay for the class yourself. Community colleges have great certificate programs that are low-cost and can help you become a more desirable employee.
Toward the end of 2012 as a nation, Americans were saving more and borrowing less to pay off debt at a quicker rate, but many are still struggling to even get started. Creating a budget plan and figuring out how to start paying down debt can be tough, but thinking about tackling it one step at a time can help you get started. Natalie McNeal started a personal finance blog back in 2008 called The Frugalista Files, in order to teach people how to live a "frugal and fabulous life." Natalie spent a month without any extra expenses, such as getting her hair done and manicures, and she saved $400. She then took a “vow of frugality," and has been helping others save ever since. Just to give you an idea of why Natalie was so concerned with saving, she was battling $20,000 of debt. But by creating a plan, she was able to come out on top and debt free!
With the start of the new year, it's time to get the budget in order! Regardless of how much debt you have, a plan always helps! Check out Natalie's plan she calls the "How to Get Out of Debt Diet: Frugalista Style."
1) Cut Expenses
2) Earn More
3) Invest in Yourself
4) Take a Risk/Have Fun
Once you decide to get your finances in order, here's how Natalie suggests you make it happen!
Know your enemy: Natalie says start by adding up everything you owe, in order to really know your enemy! Then by using a debt calculator, such as this Debt Reduction Planner from CNNMoney, you can get an idea of how long it will take you to pay off everything you owe.
Cut Expenses: Natalie says her No-Buy Month is a classic and a must do. She saved just under $400 and it got her into the habit of seeing a stable bank account. During No-Buy Month, you go a month without spending any discretionary money. Try to find places to cut expenses during the year - including getting lower rates on your credit cards, switching to no fee bank accounts, checking to make sure you have the right cable package and even moving locations if your housing expenses are too much.
Work Your Way Out: Get a side hustle. Sites such as Fiverr allow you to charge five dollars to provide services. One graphic artist was able to earn more than $9,000 $5 at a time. Sometimes you have to create your own work. Skillshare.com allows you to teach locally or online. If you're due for an evaluation at work, make the case for why you want to earn more money. If you get offered a new job, try to negotiate for more pay than what's being offered. You should try to have a savings cushion of at least $1,000 so you don't always run into your account to make your monthly bill obligations.
Pay it Off: Put yourself in the mindset of "paying the bill off" and not just "paying on it." Don't run up any new debt. If you have to freeze your credit cards, then do so.
Invest in Yourself: I'm all about career. If you need to get new skills to get a promotion at work, then see if you can get your company to pay for a class. Or if it's worth it, pay for the class yourself. Community colleges have great certificate programs that are low-cost and can help you become a more desirable employee.
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