This one is where the rubber meets the road. This is where we see how bad you want to be out of debt.
The sacrifice is only temporary!
The most important thing to remember as you are reading this is that it is ONLY TEMPORARY. By making a sacrifice you are not condemning yourself to that for the rest of your life. You just need to make up for all the overspending that has taken place in the past
If you have done some of the things mentioned in the last few articles, you are on a better financial footing than you were. But, if you expenses are still greater than your income, then we are going to have to take a few more steps.
Sacrifice your stuff and sell it!
Like we mentioned before, your balance sheet is the true indication of whether or not you are progressing financially. But, if your expenses are greater than your income, it is highly unlikely that you are increasing your net worth. So, in order to move forward you either have to cut expenses or increase income.
So far we have mostly been focusing on the less painful ways of cutting expenses in order to increase our net worth. Depending on how deep in debt you are, you may need to take drastic measures to get yourself back on solid ground.
What do you have that you owe money on?
Take out a piece of paper and write them down. Do you have loans on your house, car, boat, living room set, or anything else? The goal is to minimize our expenses, so what better way than getting rid of some of the stuff we owe on? Don’t worry, you will be able to get it again later, but now your goal is to break free from the bondage of debt!
You have to open your mind to things that you might not have wanted to do. This is probably one of them.
Cars are terrible investments!
Like we talked about yesterday, we pay a lot of money for them and they basically only go down in value until they to car heaven. In my opinion cars get people into financial trouble more than anything else. Most people don’t spend tens of thousands of dollars on something that knowingly goes down in value.
The way to defeat this of course is to drive older cars (older cars have already suffered much of the depreciation and therefore lose a whole lot less in value each year).
What is good about this is that if you have a car that you paid $25,000 for and it is now worth $17,000 you can sell it, take the $17,000 and use $6,000 to buy an old car and use the remaining $11,000 to pay down your debt. Just think about this for a second. You can knock out $11,000 of debt just by making one sacrifice: driving an older car.
Now I know not everyone is in that situation, but the principle still applies. So, if you have a boat that you owe thousands on still, or a couple cars, it doesn’t really matter. If you are making payments on it, you should consider getting rid of it.
And come to think of it, if you do own it and it is still worth a decent amount, you can sell that too!
“But if I get an older car, it will be expensive to maintain.”
Not necessarily. Go to Consumer Reports and give them $5.95 for one month of access to their website. They have, hands down, the best and most useful information for buying a used car. The rate just about every car in the book for all kinds of criteria. Not the least of which is reliability.
What you will find is that over the years Honda and Toyota (on average) have consistently made the most reliable cars. If you were looking for the single best old car that is cheap & reliable, I would say it would probably be a Civic. But, do your own homework at Consumer Reports.
Sacrifice your time and get to work! Again.
Yep, if everything up to this point isn’t getting you into the black, then you may need to think about getting a second job. The good news is that second jobs aren’t what they used to be. I remember when I was younger I would put in a hard day’s work at the grocery store and then make my way to the restaurant for the completion of about 12-16 hours on my feet.
Needless to say those days were very tiring, but it doesn’t have to been that way. There are many work-from-home opportunities that you could get involved in as you work to knock out the debt.
Ask your boss if he/she has anything extra you can work on to pick up some extra hours. This will likely be the best paying additional income you could find.
Sell on Ebay
This is probably the most popular method these days for people looking to supplement their income. The greatest part about it is that you can start with stuff laying around your house. If you have not sold on Ebay before, I highly recommend it as a way to generate some extra income. For more info you can read the earlier article I wrote for beginners called 7 Steps to selling on Ebay.
Do you have a skill that you could make some money on the side with? If so you can post an ad in Craigslist for free. You can check out elance.com or one of the millions of Freelance job sites out there. Google “Freelance work” to get a small sampling of what is available.
What sacrifices are you making or have you made to get out of debt?