Picture this: you’re living your dream life. You’re building your homestead, and it’s a wonderful day. The temperature is just right. The sound of chickens clucking in the morning starts the day. You can’t wait to start today’s list of projects on your to-do list. You couldn’t ask for more.
But there’s just one problem: behind this beautiful dream is the stress of debt. Collection calls constantly bother you. There are bills left unpaid. Looking at your life from the outside, it looks amazing, but there’s stress and tension underneath. Things are barely being held together. With just the smallest stroke of bad luck, things could get even worse.
Why Debt is a Problem
Of course, you can pursue your homesteading dreams while you’re in debt, but debt can hold you back along the way. How? Because debt takes choices from you. Debt is like a greedy taskmaster always placing unreasonable demands on you and cruelly telling you what to do. Unlike financial freedom that asks nothing of you, debt robs you from being able to make any choice that you want.
For example, do you want to take a job that requires fewer hours and less stress so you can spend more time at home on your homestead? Debt says no; you need the overtime pay and the high salary instead. Do you want to change jobs and try something different, instead of staying in a job that you don’t like? Debt says, “No; you can’t even think about it.”
While everyone needs money to survive, debt makes sure that you think of it first and foremost while making your most important life decisions. But there is a way out.
How Much Debt is Too Much?
As you try to get out of debt, you might be tempted to compare yourself to others. Comparison is always a trap and leads to no good. It’s important to be kind and honest with yourself when you think about your situation. You may feel tempted to keep up a certain image around others. After all, nobody wants others to know they’re struggling! But you might be shocked to know that many people have secret struggles with money, so you’re not alone.
In the privacy of your own thoughts, think about your situation. Give yourself the freedom to be candid with yourself, regardless of how bad things might feel. It takes courage to face the truth, even if you’re facing it with no one else around. When you do that, you’ll be able to figure out how to make a brighter future. Ask yourself:
- Could I handle a $500 emergency without going into debt?
- Am I dodging phone calls from collections agencies, or ignoring notices sent to me for debts that I owe?
- If I’m sick, do I avoid taking a sick day because I can’t afford to miss a day of work?
- Do I avoid seeking medical care when it’s truly needed, because I’m afraid that I can’t afford a co-pay?
- Is it a real struggle every week or month to handle the basics: food, rent or mortgage, utility bills, putting gas in my car?
- Am I spending lots of money on things that I truly do not need? If I tried, would it be easy for me to find a little bit of extra money to save this week or this month?
Don’t Dwell on Regret
As you look deeper into your finances, you may feel some regret about how you got into this situation. It may feel very unfair that you got into debt, and you might wish your circumstances were different. Maybe something bad happened to you that wasn’t your fault, and that’s how you got into this position. Maybe you got hurt or lost your job through no fault of your own. These situations don’t feel fair, but we can only do our best to try to get back on track.
You can feel your pain and regret, but don’t get stuck there. Try to focus on what you can do, rather than on what you can’t do. When you approach things in this manner, it gives you a better chance at creating the brighter future that you deserve.
The same goes for any financial mistakes you may have made. Perhaps you know that you could have done things a lot differently. Maybe you made some big mistakes that caused a big mess. Some people get off track because they get stuck in regret, and they decide on purpose to just keep repeating the same mistakes. They decide that they, themselves, are a “lost cause.” What the heck, they reason, it’s too late; I’m a what’s the point? Don’t let negative thinking keep you in a bad position. Decide that you’re worth it; you can have something better! You can clean up the mess and have a more peaceful life.
How Do I Pay Off Debt If I Live Paycheck to Paycheck?
Once you’ve faced the reality of your situation, you can take some steps to change things.
Creativity and open-mindedness can help a lot when you’re making your plan to get out of debt. Here are some things you may try:
- Handling a $500 Emergency: If you would not be able to handle a $500 emergency, set the lowest goal you can for opening a savings account. Make it so low that it’s laughable. Is one dollar not worth it? Make that your goal! Start somewhere! Some banks offer debit cards that will round up your purchase to the nearest dollar to encourage you to save. The change used when your purchase is rounded up will be added to a savings account. This is a very easy way to save money when funds are tight. When you make your goal so low that it’s laughable, you make it impossible to fail.
- Paying Your Mortgage: If you’re having a hard time paying for your mortgage, know that help might be available. Can you ignore debt collectors? If they’re calling about your house payment, it isn’t wise to do this! You can ask about homeowners assistance or hardship programs. If you’re at risk of foreclosure, these programs can help you get back on track. However, if a repayment plan is offered to you, you must pay as agreed. Do not be late! Communicating with your mortgage company is a must if you don’t want to lose your home.
- Cars Are Expensive: If your family is struggling to keep up with the costs of car payments, insurance, gas, and maintenance, you might want to consider becoming a one-car family. While this doesn’t work for everyone, some people find it’s the money-saving solution that makes all the difference.
- Been Sick? If you’re facing a stack of bills from a hospital or a doctor’s office, ask to speak with the financial counseling department. They can usually set you up on a payment plan that is reasonable and within your budget. If your doctor has prescribed you medication that you can’t afford, search online for “patient assistance” and the drug name. There are many websites that will offer information for coupons, discount codes, and other information, depending on the prescription.
- Adding an Income Source: For some people, this is the one thing that makes a big difference. All the budgeting in the world cannot make up for a lack of income. If there isn’t enough money, there simply is not enough money. A new income source could be something fun that you’ll love. Would you enjoy coaching your child’s sports team, or reselling things online? Maybe there are seasonal jobs in your area that you could work for a few hours and have some fun.
Enlarge Your Vision
If you’ve been stuck in debt and just struggling to get by, enlarge your vision. Think about what you really want other than to just get out of this mess. Write down what you want, and you will increase your chances of achieving it.
Everyone’s financial picture is different, and comparing yourself to others will not help you. You might ask yourself, how bad is $50,000 in debt? How bad is $2,000? $10,000? We are all blessed with different skills, abilities, and talents, and applying these to our lives can help us seek out different types of jobs, side gigs, and ways of generating income to pay off our debts and make money. So start with some small steps and think about how you might want your life to change. Are there any talents and abilities you would like to use, any new jobs or endeavors you would like to explore that might help you earn more? Keep your eyes open for any new ways to make money.
Very often, money problems are one of two things: it’s either an income problem or a spending problem. And these days, many people find that their job simply does not provide enough income to pay for their everyday expenses and the debts they have. So, with a little brainstorming, think about how you envision your future, and if there’s anything you want to do that could generate new income for yourself.
Pay Down Something Small
While financial experts may tell you to first pay off the bill with the largest interest rate, it’s important to keep in mind that your mental motivation helps you get out of debt. As someone who’s been in debt, I know paying down your smallest bill first can build motivation and give you that “I can do this!” feeling.
This method can also help you stay organized. I remember having multiple creditors and feeling so overwhelmed with the due dates. It was so difficult and confusing to just keep track of it all. But you will feel a sense of victory when you pay off that first small bill. It feels so good to say, “I did it! I paid that off!”
Your confidence will grow, and your feeling of being able to handle things will grow when you keep going and pay off that second, larger bill. It will take a little longer, but when you have your second highest bill paid down, you’ll feel even more pride in yourself. It’s exciting!
Enjoy the Journey
Depending on your income and your amount of debt, your timeline for getting out of debt may vary. For some people, it might take only a couple of months or just a year to get out of debt. For others, it may take years to get out of debt. To stay motivated, you can reward yourself with small things along the way. Remember that you still deserve to live a happy life while you’re going through this process. Don’t put your life on hold while you’re digging out of debt. Find ways to have fun, even if it’s on a smaller financial scale. For example, maybe a week-long, out-of-state vacation is out of the question. You could decide to take a trip to someplace local to have fun without spending as much money.
Finding free or cheap things to do can also help you stay motivated to spend less money. This can become a lifelong hobby even when your biggest debts are paid off. It becomes very gratifying to have your debt paid off, and to have multiple hobbies you can enjoy that do not cost a lot of money. This becomes a lifestyle change that has many benefits.
Financial Freedom Pays
Nothing feels as good as financial freedom. Once you’ve put in the work of getting out of debt, you’ll feel incredible as more of your happiness, joy, and peace of mind exists simply because you do not have to worry about a lack of money. Many people simply give up because they find the work on this journey to be too hard. However, if you can commit yourself to starting with a clear vision, taking small steps, and staying committed, you can achieve more than you ever thought possible.