Fix Those Numbers!

Fix Those Numbers!

Tulsa Oil Field Photo Credit: http://www.tulsaworld.com

My dad was born in a tent in the oil fields of Oklahoma in 1917. His family was, literally, dirt poor. My dad purchased the only home that my grandparent’s ever owned. He was in his thirties at the time.  You are starting down a road that includes living debt-free and having a healthy stash of money put away.  You are not dirt poor. You are just living above your means. You can fix this.

Evaluate your monthly after-expenses balance from my previous post. You have to create positive cash flow and increase that balance as much as possible.  You can’t pay down debt without wiggle-room.  You can do it on paper- right now- in 30 minutes- and you’ll also raise that $500 emergency fund, fast!

Look at your monthly expenses, and start trimming where you can. Start with the most bang for your buck. Do you contribute to a 401K or other retirement plan? If so, guess what I recommend?

Pause your contributions to your retirement plan UNLESS your employer offers a matching contribution. In this case, scale it back to the minimum to receive the match (it’s free money, after all). This is a temporary move to help increase your paycheck while you’re in debt-reduction mode.  Do not pull out of your plan. Do not ever borrow from it. Just cut it back to free up more cash flow.

Now, look at the last group of items on your expense list and see what you can live without. Start adding those numbers back into your leftover balance.  If you are still in negative territory after eliminating luxury expenses, you need to step it up!

Look at the items in the top group of your expense list. Can you get rid of cable TV and just use internet to stream Netflix, etc.? Perhaps you can switch to a simple antenna and watch free channels, only.  Check out the 2018 cord-cutting guide from The Simple Dollar. Call around for cheaper auto insurance.  Find a more affordable cell phone plan.  Get rid of the landline.  Maybe there is wiggle room in your grocery expenses. Consider shopping at Aldi to lower your monthly food dollars.  Yes-you really will save a lot of money there.

If you are still in negative territory after eliminating or reducing extraneous living expenses on paper, you need to ramp it up.

Consider a job change, working overtime, or working a side gig. Can you move to a cheaper place? Do you need to sell the house and rent a more modest home for a while? I know several people who rented out their homes and moved to cheaper rentals. I might even be one of them.

Make hard choices in order to live below your means. Remember, for this step, your goal is to fix those numbers. You need to create positive cash flow and increase your leftover monthly balance as much as possible BEFORE tackling that consumer debt.  Remember-this is a short-term effort, for long-term gains.

And, while you’re at it, it’s time to say goodbye to a few old friends. Pull out every one of your credit cards EXCEPT for your bank debit card, bundle them together with a rubber band, and put them in a drawer or somewhere safe.  Do NOT cancel or close them. Leave them alone. Your debit card is your only plastic going forward. If you want to be debt-free, you can’t continue accumulating debt.  Now let’s kill that debt…    (next)