This guest post was written by Jeff Kosola from DeliverAwayDebt.com.
Over the past year, there has been an explosion of frugality-centered information in the media and in the blogging community. The current economic state has forced many families to save money and focus on even the pennies leaving their wallets.
Turning to frugality seems like the perfect tool to keep more money in your pocket and help to reduce your consumer debt load. But is frugality the best way out of debt?
Frugality can only get you so far. Clipping coupons, counting loose change, buying generic and returning bottles ($0.10 here in Michigan–think Kramer and Newman), can only help a little. If you are serious about destroying your debt then you need to take swift action to accomplish it. Budgeting and extra income are the two best ways to become debt free.
Reduce Debt by Budgeting
Having a written budget is the key to understanding how your money is being spent. Have a family meeting with your spouse and get all of your bills and expenses on paper. Add these values up to make sure you are not overspending the amount of money coming into the household.
If you are overspending, then you must decide which sacrifices are going to be made. Are you going to stop eating out as often? Are you going to limit the amount of activities the kids participate in? Are you going to cut out the weekend shopping trips? The list can go on forever. You need to make some choices about how you are going to spend your money.
If you have a balanced budget but are still in debt, you still need to make sacrifices. You need to figure out where you can cut back in order to free up money to apply toward the debt. Focus on the smallest debt first and use all the extra money to pay it off. Then combine the extra funds with the smallest debt’s payment onto the next debt. Keep this going until you are debt free.
Reduce Debt with Extra Income
If budgeting isn’t working quickly enough, it’s time to ramp up your game. Go get a second job. If you are serious about getting out of debt, you need to increase your income to be able to pay off the debt as quick as possible.
You can deliver pizzas, mow lawns, sell Mary Kay, design websites, tutor kids, become a handy person and work at McBurger Whopper. Whatever it is, you’ll be adding money to your bottom line. This money must then be used to reduce your debt load.
A second job takes time, and that time is usually away from your family. Isn’t your family worth it though? Imagine not having any more money worries, imagine not having to argue about money ever again. With a little extra work now, you are giving yourself extra time in the near future.
So to answer the question above–NO, frugality isn’t enough. You need to get out there and make the sacrifices to get the hell out of debt.
“Go get a second job. If you are serious about getting out of debt, you need to increase your income to be able to pay off the debt as quick as possible.” Exactly. I know people who struggle with loan debt but only work part time. Yes the economy is slow, but in southern California I know there are ways to make SOME extra cash. Delivering pizzas, waiting tables, whatever it takes. My brother pays his NEIGHBOR $150 a month to take care of his lawn and garden. Maybe your next door neighbor has some spare change too. Getting creative and rolling up your sleeves can pay off big time. But even so, for some, it’s just “too much work.”
Budgeting and extra income gets you on the highway to debt-freedom, indeed. I totally agree with you. It was not until I wrote down my budget and started earning extra income that my finances got better. A second job helps for sure, but creating passive income is what gets you out of debt in light speed.