I was bored and got browsing through a forum the other day and was astonished to realise that there were 3.4million people online talking about one subject: Debt.
One of the top recurring reasons for why people are struggling to get rid of their debts in due to their inability to stick to budgets.
Most people struggle through debt in silence and it can be quite depressing.
Breaking free of debt is entirely necessary for Financial Independence.
A friend who had struggled with debt once told me: “…debt makes you blind. It makes you blind to opportunity”. This really stuck with me.
Borrowing from my experience in business, the major way in which businesses prevent bad things (e.g. fraud or running out of cash) from happening is by looking at its finances from the lenses of Systems & Controls.
Now let's take a look at how this can be applied to our personal financial lives and used as a tool to help us achieve our debt goals.
Systems are tools that help us understand our numbers better. E.g. A budgeting spreadsheet or a budgeting app or a savings app or a grocery list.
These are daily steps taken to make our systems effective. These steps give life to the tools mentioned above.
Shopping with only a fixed amount of cash, say, £50 a week is a control because it stops you going to the shop and spending more than £50 at the till by presenting your contactless card.
More importantly, it helps you stick to Budget (i.e. reinforce the System) above.
For absolute success in being able to stick to your Budget, you need both Systems and Controls in your Life. Having a budget alone is useless.
Systems and Controls can be applied to every aspect of our lives. Pick our relationships. Here's an example I hope most people can relate to:
Let's say you have an ex-boyfriend/girlfriend who you know you should never speak to any longer for some specific reason.
Your phone from which you could possibly call or text them is the System.
Taking the action of deleting their number from your phone is the Control to stop you possibly behaving badly.
Below are some thoughts on various money related Controls that anyone in debt can apply today and daily going forwards in order to actually start sticking to their budgets and get themselves out of debt.
Other related posts:
- When you get paid, Pay yourself first. Join the Master Your Money course at the bottom of this post to learn a tonne more about how powerful this is.
- Only ever do your grocery shopping in cash. This way you take exactly your budgeted amount to the shops and shop accordingly.
- Have designated bank accounts for various things. Name them all and use them as silos for your spending.
- Never shop online from your current account. Use an account with no money in it and literally transfer only what was budgeted into that account.
- Cut up your credit card immediately. Save the card details somewhere safe in case you need it to book planned spending online such as flights. Cutting it up stops you flashing it if you have a shopping urge.
- Review your debt list every week and not only take note of your balance but also the cost of debt I.e. the interest rates. The highest interest rate is the one to pay off first.
- Create budget owners at home. You and your partner should own various expense categories and report back to each other weekly on how you have remained within your budget areas. This creates accountability.
- Have no spending days at home weekly. E.g. Choose not to spend Mondays (sad days), Fridays (euphoria days) and Sunday (monday blues day). Particularly avoid spending on your payday.
- Limit socials to half what they were at most. For example, if you usually go out 2 times a week, cut it down to one.
- Leave all bank cards at home when going work. Only hold say an emergency £10 and make sure you have your I.D. and can visit a bank if there is an emergency.
- Put a cap on all birthday presents. For example, I have 10 nephews and nieces. All children aged from 0-5 will get at most £20 spent on a present. Any child aged 6-15 will get at most £30 spent on a present.
- Decide on a Sunday night what expenses you anticipate going out for the entire week. Businesses do this via a cash flow forecast. By doing this you know exactly what to do when you have an urge that is not budgeted for. Say no!
- Run every single expense or anticipated expense past your partner. So that even if you are weak, they can hopefully be strong and talk you out of it.
- Delete emails from your favourite shops immediately they land in your inbox. I would go as far as saying mark them as spam and unsubscribe asap.
- Automate all recurring savings and expenses. This not only ensures you actually pay yourself by saving something, but it also ensures you meet up with paying down your debt in time.
Final bonus tip – If you're about to make a fairly significant purchase, write it down on a post-it note today and don't make that purchase for 3 days. This helps you contemplate whether you really need to spend.
Some of these tips are quite aggressive, but as I heard someone once say, “you can't go to a sword fight with a spoon”. So if your debt is making you miserable, you need to make some serious changes asap.
What tips will you implement today? What's working for you? Please comment below
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.