1. Calculate monthly expenses
The best way to minimize debt is to calculate how much of your money is going where. Determine your monthly income, along with your monthly bills and expenses to figure out how much money you can invest into savings, debt repayment, and leisurely activities.
2. Avoid living paycheck to paycheck
If you have a job or extra income, don’t depend on every check to survive. Establish a savings and contribute a certain amount to it every time you get paid. That way, if you accidentally overspend and are short on a bill payment, there is a backup plan available.
3. If you don’t love it—don’t buy it
Try not to purchase anything when you see it for the first time. Compulsive buying is something that can lead to buyer’s remorse and wasted money. Give yourself a couple days to decide if the item is really worth the cost. Unplanned shopping sprees are a quick way to accidentally spend money you need or increase credit card balances.
4. Remember, you can’t avoid reality
Debt isn’t going to be something that magically disappears and it’s nearly impossible to survive paying the minimum balance on your bills each month. If you have debt, don’t avoid it. Set up a plan and cut back on other expenses to focus on your financial future.
5. Be careful about big purchases
This includes cars, housing, and students loans. Although a fancy car or apartment may seem urgent in college, it isn’t always the best choice. If you choose to make a large purchase, be aware that the cost could take away from your leisure budget.
6. The little things add up
Not keeping track of small purchases on a credit card can lead to large amounts of credit card debt. Monitoring your expenses and setting a daily spending budget can help you avoid unwanted and unexpected financial situations.
7. There is light at the end of the tunnel
If you’re a college student, you may already be stressing about student loans. If you have student loan debt, know that it isn’t going to last forever. Soon enough, you’ll be paying your bills and looking at a debt-free future.
8. Live below your means
They key to eliminating debt is living below your means and getting ahead on loans, payments, and bills. A raise at work shouldn’t mean increasing the amount you eat out. If you receive a raise, continue living like you did before it and watch your debt dwindle.