Do you want to get out of debt? The secret is to change your daily habits. Here are three new practices to start if you're going to get out of debt and start living free:
Make it a daily habit to spend one less minute on your social channels than you did the day before. After just one month, you’ll have an extra half hour in your day to engage in productive activities. After a year of the minute-reduction habit, you could have over six extra hours per day! Plus, less time on social media means less time looking at everyone else’s clothes, makeup, vacations, and fake perfect lives. This makes it less likely that you’ll engage in the dreaded FOMO spend. In other words, it’s often the “fear of missing out” that leads people to buy things they don’t need. According to the financial research site bankrate.com, 64% of millennials feel pressured to overspend, and most of those surveyed reported feeling this pressure from friends or social media. So give yourself a much-needed break from the social screens, even if it’s just for a few minutes at first. Think of each social media break as if you’re shutting off the FOMO vacuum that pulls time and money from your day.
By the way, if you think giving up time on social media is difficult, you’re not alone. Reducing screen time is hard, and it takes an abundance of self-discipline, but you’ll be rewarded with more money in your bank account. If you need some encouragement, consider the following quote from Dave Ramsey. “We buy things we don’t need with money we don’t have to impress people we don’t like.”
If your bank offers free checking accounts, open a second one. Label your original checking account (the one you use most) as “living expenses.” Label your second account, “spend.” The spend account is fun money to enjoy. After you’ve already put enough into your main checking to cover your monthly expenses and after you’ve already paid into your retirement or other investment accounts, put the excess into your spend account. In essence, you’re tricking yourself into the habit of saving (or at least not overspending). The spend account is the maximum you can spend on anything non-essential at any given moment. The spend account is guilt-free and can carry over to the next month if you don’t spend it all. Get yourself into the habit of viewing one checking account as your responsible money and the other account as your fun money.
The right types of coverage are essential to a long-term financial plan. If you can get into the habit of paying for insurance, you’ll enjoy the peace of mind that comes with increased financial security. If you’re slowly and steadily climbing out of debt, the last thing you need is an unexpected event that causes you to backslide. The types of insurance policies you should consider are health, homeowner’s/renter’s, auto, term life, and income protection. If you already have insurance in one of these areas, ask your agent for a quote on the other policy types. If your agent does not broker insurance for the coverage you still need, he or she might be able to provide a reference for someone who does.
Getting out of debt is a great life goal. Not only does debt-reduction help you to secure a better future, but it also gets you into good habits right now. The three habits discussed above: reducing social screen time, using separate accounts for separate purposes, and ensuring your health and property are worth the effort required. Getting out of debt takes discipline, but the reward is beautiful - financial freedom!