https://zenhabits.net/fiscal-fitness-eliminate-debt-with-10-successful-diet-principles/

Fiscal Fitness: Eliminate Debt with 10 Successful Diet Principles POST WRITTEN BY LEO BABAUTA. Recently I’ve been studying the habits of successful dieters — people who’ve lost 30 lbs. or more and kept it off. And in reading a recent Get Rich Slowly article, I realized that the same successful principles these people follow are the same ones that will get you out of debt and keep you out of debt.

Debt dieting and weight dieting are exactly the same.

Personally, I’m doing both, and it’s striking how similar the two practices are. I allowed myself to get lazy and get into debt with bad spending habits, and now I’m trying to work it off (debt-free by early next year!). I also allowed myself to get overweight with bad eating habits (and a lack of exercise) over the course of several years, and now I’m trying to work it off (flat stomach by early next year!).

Let’s take a look at the 10 habits and principles of successful dieters — again, people who lost a lot of weight (at least 30 lbs., but many over 100) and kept it off (see National Weight Control Registry for one of my favorite sources of info on this).

Count calories. It seems difficult, but it’s not really, and it works. Weigh in weekly. Daily weigh-ins work for weight maintenance, but really you should weigh in once a week when you’re trying to lose weight. Exercise. Almost everyone who loses and keeps off weight incorporates more physical activity. Watch less TV. TV makes you fat. You can probably figure out why. Write down goals. If you put your goals down in writing, and make them specific, you’re more likely to actually achieve them. Log their eating and exercise. Writing down what you do really makes you more aware of it, and motivates you to do better. Public accountability. By telling others about your goal and your progress, either in some type of program or an online group or just your spouse and friends, you motivate yourself to do well. Baby steps. No one gains 100 lbs. overnight, and you don’t lose it that way either. Take small steps to eat healthy and get more active, and one step at a time, you’ll get closer to your goal. Lifestyle change. You can’t go on a drastic diet or exercise program and expect to sustain it. It has to be small, gradual changes that you can incorporate for life. You’re not restricting yourself, you’re changing the way you live. Rewards. You have to find (non-food) ways to reward yourself. Treat yourself without blowing your calorie limit. So how do these weight-loss principles apply to debt elimination? You probably can see by now that every single one will work in the same way. Let’s take a look:

Track spending. It seems difficult, but it’s not really, and it works. I’ve done it, and you can really see where your money goes. And it makes you more aware of your spending. Check-in weekly. You could actually do it monthly, but balancing your checkbook once a week really helps you to stay on top of your budget. And keep a graph of your debt elimination, updated weekly, so you can watch your progress. Income. Almost everyone who loses and keeps off debt incorporates an increase in income. It’s like exercise: you still need to diet (or control spending), but exercise (increased income) helps burn off the fat (debt) faster. Watch less TV. TV makes you spend. You can probably figure out why. Write down goals. If you put your goals down in writing, and make them specific, you’re more likely to actually achieve them. Budget. You really need to plan your spending, and log it to make sure you’re following the plan. Public accountability. By telling others about your goal and your progress, either in some type of program or an online group or just your spouse and friends, you motivate yourself to do well. Baby steps. No one gets into $30K of debt overnight, and you don’t lose it that way either. Take small steps to be more frugal and earn more, and one step at a time, you’ll get closer to your goal. Lifestyle change. You can’t drastically change your spending habits overnight and expect to sustain it. It has to be small, gradual changes that you can incorporate for life. You’re not restricting yourself, you’re changing the way you live. Rewards. You have to find (inexpensive) ways to reward yourself. Treat yourself without blowing your budget. If you follow these 10 principles of dieting to help you get out of debt, you’ll be successful, without a doubt. They’re working for me, and they work for many others.

Maintenance Phase Once you’ve lost the weight, or eliminated the debt, how does your life change? Well, I haven’t gotten there yet for either, but from my research, here are some things that others have found:

You should still track. Although you’re no longer in the intense weight-loss or debt-elimination mode, you don’t want to go back to your old habits. Tracking helps keep you aware of what you’re doing, and keeps you sticking to good habits. You have more leeway. Once you’ve lost weight, you can indulge in treats more. Similarly, once you’re out of debt, you can spend on indulgences a little more. But you can’t go overboard. Do it in moderation, and stick to your new, healthier habits. See also:

10 Lessons to Teach Your Kids About Money ]7 Things You Can Do Today to Prepare for Retirement The Cheapskate Guide: 50 Tips for Frugal Living Simple Finances: How and Why to Build a Cushion in the Bank 10 Ideas for Living a Life Without Credit or Debt 21 Strategies for Creating an Emergency Fund, and Why It’s Critical Enjoy Life Now, AND Save for Later The 12-Step Get-Out-of-Debt Program 73 Great Debt Elimination Tips 6 Great Free Alternatives to Quicken and MS Money 10 Habits to Develop for Financial Success How I Ended My Affair with the Credit Card Monitor Your Impulse Spending Urges How I Save Money What is truly necessary? A guide to living frugal Reward Yourself Without Spending a lot One Month Challenge: Tracking Our Expenses How to Stop Living Paycheck to Paycheck Baby Makes Eight: Raising Six Kids, Part 1 – Finances

POSTED: TUESDAY, OCTOBER 9, 2007

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https://zenhabits.net/eliminate-debt-with-the-snowball/

zen habits : breathe Eliminate Debt with the Snowball BY LEO BABAUTA Sometimes when we’re in debt, it feels like we’re drowning, trying to stay afloat, and yet we don’t know how to get out of the turbulent waters we find ourselves in. If you feel yourself being pulled under by the current of debt, there’s hope: by using a Debt Snowball, you can pull yourself out.

This article might seem too simple for those who regularly read about personal finances, but sometimes it’s good to review the basics, and for those who haven’t read much about debt elimination, this can be a life saver.

The basic idea of the Debt Snowball is that you apply an extra amount of money every month to your smallest debt until it’s paid off, and then take the amount you were paying for that debt and apply it to the next biggest debt, and so on until you’ve paid off all your debts. It sounds simple, but it’s very powerful, and it’s something that I’m using a modified version of it now to get myself out of debt. I’m about midway through — I’ve paid off a few smaller debts, I’m nearly done paying off my credit card (should be done this summer) and then hope to pay off my car by the end of this year and some medical debts by next year. Dave Ramsey is the biggest proponent of this method.

Here are the basic steps:

List all debts from smallest to largest. Commit to pay the minimum payment on each debt. Find an extra amount, on top of the minimum, that can be applied towards the smallest debt — this amount is your “snowball” amount. Pay the minimum payment plus the extra amount towards that smallest debt until it is paid off. Then, add the old minimum payment from the first debt to the extra amount, and apply the new sum to the second smallest debt — your snowball amount has just gotten bigger, and will get bigger after each debt is paid off. Repeat until all debts are paid in full. Alternate version: Some people advocate ordering the original list not from smallest balance to highest, but from highest interest rate to lowest. This way, you’re paying off the debts that are hurting you the most before the ones with low interest rates. Now, this makes some financial sense, and it is probably best for those who are already good at paying off debt. But I have two points to make: 1) the interest saved by this method isn’t really that much (many times we’re talking about the difference of $50 a year or so); and 2) for many people (including me), there is a big psychological boost in paying off that first, small debt, and you can ride the momentum of this boost to keep you going. This is the same reason I suggest starting any goal with baby steps — it might seem too easy, but there’s a lot of power in the sense of accomplishment that comes from achieving any goal, large or small.

Some suggestions for following the Debt Snowball method:

Find as big a snowball amount as you can afford. Notice I said “afford” — don’t put a larger amount than you can afford, or you will end up stopping the snowball method. But try to find as much extra money as possible — cut your spending in other areas. Bring lunch to work. Stop going to the movies or expensive restaurants. Cut out cable TV. Stop drinking those fancy coffees. See How I Save for more ideas. Resist temptation to spend your snowball. Often there’s a strong urge to spend the extra money you have once you’ve paid off one debt. But think of it this way — you’ve been living without that extra money just fine so far. It may have taken some penny-pinching, but you’re surviving. Keep going without it, and pay off your debt as soon as you can. Maybe once you’ve finished off your debt-elimination plan, you can take a small amount of that and add it to your spending amount. Keep the end in mind. When things are tough, just visualize what it will be like to be out of debt. For many of us, debt is a huge stress on our lives. Getting out of debt will be like lifting a burden off of your chest, and will feel wonderful! You can do this. Think about what a huge amount you pay towards debt each month, and how nice it will be to have that extra money once you’re done. You can save for a vacation, or a new home, or retirement. It will be a godsend. Some debt snowball resources:

Get Rich Slowly: In Praise of the Debt Snowball The Simple Dollar: The Debt Snowball Concept: How I Made It Work for Me Debt Snowball Calculator Mr. Peanut’s Debt Snowball Calculator

POSTED: THURSDAY, MARCH 22, 2007

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https://zenhabits.net/no-debt/

zen habits : breathe The Way of No Debt BY LEO BABAUTA In 2005, one of the low points of my life, I had 5 kids, crippling debts, and was barely making it from paycheck to paycheck.

I would shove my bills in a drawer, envelopes unopened, so I didn’t have to deal with bills I couldn’t pay. I would avoid the calls of collection agencies. I was swimming in debt, and didn’t know how to get out.

The real low point, though, came when we didn’t have enough money to buy some milk and cereal for the kids. My bank account had a negative balance. So I stole money from my kids’ piggy bank to buy the food. Yeah, that didn’t feel good.

Things went on like this for awhile before I finally decided it was time to face the fears, see my situation clearly, and start doing something about it.

Here’s what I did:

I finally faced the problem: I took the bills out of the drawer, and make a spreadsheet with all my debts, the amounts, and the minimum monthly payments. I took a look at our spending, and realized we needed to stop the bleeding before we could start healing. We were spending more than we earned, or at best, all of what we earned. So we cut out all kinds of expenses: cable TV, one of our cars, magazine subscriptions, daily lattes, going to the movies with the kids, buying new things other than actual necessities, going to the mall for entertainment, eating out, buying convenience food. Many of these things we cut out gradually, a month at a time, but some we cut out right away. We started a spending plan — most bills were put on automatic payment, and a few discretionary categories (food, gas, etc.) I started an emergency fund. I started paying off the debts, one at a time. I renegotiated with some of our creditors. We found other fun ways to have fun as a family. I started earning more as a freelancer, to bring in extra income. I started this blog, and sold my first ebook 11 months later, to make more income. Then we got out of debt. And stayed out. We haven’t been in debt one single minute since then. It’s wonderful.

The Way of No Debt The first part of the Way of No Debt is getting out of it. The steps I took above are how I did that. It’s the hardest part, but definitely worth it.

The Way is then a transition from being in debt, to living debt-free.

First, we kept living frugally for awhile — we didn’t really loosen up, and that meant we put a lot of our income to savings. We grew our emergency fund to the recommended 6-month cushion, which was important to me as a self-employed business owner.

Then I started looking to invest, and invested in index funds, which are pretty basic but low-cost and low-worry investment vehicles. Then I learned about tax-advantaged investment vehicles like IRAs, and got me some of those. I’m still learning about all of this, but the important thing is that I got started.

The Way is now just a philosophy, of not going into debt. I use credit cards now, but pay them off completely every month (for awhile, I paid them off weekly, then just set up autopay). I don’t have a car, but the last time I did, we bought it used, with cash. We don’t have a mortgage. We live within our means, and spend less than we earn.

This means we don’t worry about finances, for the most part. It means we don’t pay interest. We earn interest. We aren’t tied to a house, we don’t have anything expensive we’d need to sell, and we live lightly.

This is the Way of No Debt, and I recommend it highly.

POSTED: MONDAY, SEPTEMBER 30, 2013

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