Drowning in Debt? Here Are 5 Things To Stop Doing Immediately
When you’re drowning in debt it can feel like you’ll never get your head above water. But in these situations, even small steps can make a big difference.
To zero in on some of these steps, we reached out to A.J. Schneider to get her take on what you need to stop doing immediately when you’re drowning in debt. Schneider’s the founder of Beyond the Green Coaching, a financial coaching company dedicated to helping people and small business owners rewrite their money stories and build long-term financial clarity.
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One thing she acknowledged right off the bat is how finances tie into emotions.
“When you layer in the deeply emotional, psychological component of debt,” she said, “It’s hard to navigate sound financial decision-making when you feel anger, guilt, shame, or overwhelm.”
Our aim here is to help you get clear on things you can stop doing that will move you forward as you work to get out of debt.
1. Stop Ignoring the Numbers
It can be easy to ignore the actual numbers when you’re overwhelmed by debt, but Schneider said this is a mistake.
“When you don’t understand what you can afford to spend, you think everything is discretionary,” Schneider cautions. “Getting clear on the numbers on a regular basis holds you accountable, empowers you in everyday decision-making, and makes you feel in control versus beholden to your debt,” she says.
When you’re ready to take control, sit down and list out all of your debts and necessary living expenses. This will give you actuall numbers to work with.
2. Stop Doing Mental Math
“Mental math is not real,” she said, “That’s why they invented calculators! You cannot figure out your spending in your mind.”
To create a real budget that will work for you, you need actual numbers. Schneider suggested budgeting weekly to account for payments and expenses. Get out pen and paper or download a budgeting app, and get to work.
3. Stop Autosaving for Investments
If you’re drowning in debt, you need to know where all of your money is going and funnel it towards where it’s going to do the most good now. Autosaving for investments is usually a great idea, but if you need to build up cash reserves for an emergency fund or want to pay more towards your debt, stop autosaving.
Schneider said, “If you’re really focused on debt repayment, stop autosavings on investments and build up your cash reserve.” Put that money back into your budget as savings or debt payments to help meet your financial goals.
4. Stop Paying More for Your Lifestyle
We’re not telling you to stop spending money on everything that you want, but looking at how much you spend on your lifestyle may reveal spending that you could actually be putting towards your debt.
“Living off Ramen noodles and pretending you’re going to stop getting your nails done doesn’t work if it’s not realist,” Schneider said.
Your budget should include your lifestyle, but there are also ways to cut back to free up money for debt payments. For example, you don’t have to cut out Netflix entirely, but you can downgrade to the basic plan and watch the ads, which would save about $10 per month. Other small swaps like this can really make a difference to help get out of the debt cycle.
5. Stop Borrowing Money
Taking on more debt while you’re already drowning it in is going to stall any progress you might be able to make. When you’ve stopped ignoring the numbers and know exactly where your finances stand, you can make a budget that accounts for living expenses, debt payments and lifestyle.
Small swaps and intentional decisions can lead to incredible progress, and making a plan, paying off debt, and saving for your needs and wants will give you more financial freedom.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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