If you have debt – not counting a mortgage – you should be thinking about all the ways you can pay it down as soon as possible.
Credit card debt, credit lines, student loans, car loans, financed appliances, TVs, furniture are all game and should be considered a financial emergency!
People ask me what they should do when they have these type of short-term debt obligations. They say, “How am I supposed to save and invest when I have all this debt I need to pay off? Investing for my future isn’t even possible now. I can’t do it!”
I understand people are in that situation. And if it’s not ourselves, we have friends and family who are. I see it first hand. They complain to me that they don’t have any extra money to accelerate debt payoff.
But then we take a look at their lifestyle and we discover they live a much more fancy and consumer-centric life than Mr. Everyday Dollar!
I tell them there’s an easy solution but it’s not painless: cut expenses as soon as possible.
Then they tell me, “But everything is cut to the bone! There’s nothing left to cut! Am I supposed to eat cat food?!” One friend said this to me while we were in her kitchen, as I watched her fork $100 over to the cleaning lady!
With more prodding, I typically find these people have lives and homes bulging with unnecessary things. These are the things that suck the everyday dollars out of their wallets. And the same dollars that can be used to pay off those loans, start an emergency fund, and invest for your future!
What can we cut? Let’s start with these 10 things:
Young whippersnappers might not even know what a landline is. Older folks certainly do and seem to have a hard time giving them up, even if they have a cell phone. If we’re looking to pare down our lifestyles and our expenses, it makes sense to give up the landline.
If we own a landline and can not give it up, we should look into cheaper options.
If you have internet service, a solution like Ooma or OBi are sleek Voice over IP (VOIP) devices that offer free home phone service forever. You’re on the hook for the initial equipment costs – around $150 for Ooma and $75 for OBi – but then only pay local taxes so it pays for itself in a few months!
2. A smartphone
Before you go throwing things at Mr. Everyday dollar, first know that having a smartphone will cost you $16,000. And that’s just for phone service. What about the apps that we buy? Apple sold over $10 billion dollars of apps in 2012! Everyday dollars slipping out of our electronic wallets…
I understand the convenience and allure of smartphones because I had one. In fact, in keeping with my clutter-free lifestyle, I even salivate over the fact that a smartphone can replace multiple devices like an iPod, phone, GPS and digital camera.
But I also think smartphones can have a deleterious affect on our lives. The constant stream of information, emails, tweets and texts cause us anxiety and even guilt when we aren’t working or tapping away on our phones.
The devices that causes this hectic way of living aren’t a necessity, they’re a choice, financially and otherwise.
3. More than one laptop or tablet
Why is this necessary? I have a friend that has a laptop, a gaming desktop, an Ultrabook, two iPads and a Kindle. And I’m sure there are more devices, long forgotten, squirreled away in a closet or drawer.
We should be able to make do with one system. I have a MacBook and I use it for everything – reading books, recipes in the kitchen and streaming music and movies to the TV.
We should be able to decide what one device we need and then sell all the other devices.
4. More than one TV
Some of us have a TV in every room, bathrooms and kitchens included. We should be able to make do with one TV.
You know, the only thing our bedrooms should be used for is sleeping and doing the nasty.
5. Cable or satellite TV
Netflix, Hulu and an Over The Air (OTA) antenna should cover all our entertainment needs.
It’s called the library folks!
7. The morning/afternoon/evening Starbucks
You know who you are. This doesn’t have to be Starbucks either. Maybe it’s a Mountain Dew from the vending machine or a bag of Doritos from the cafeteria.
It’s not a dollar here or dollar is the end of the world, but it’s when we become dependent on buying these items regularly that it adds up to shockingly large amounts of money.
8. Meals at restaurants
We know they cost more money than preparing meals at home so let’s try scaling this back. I typically eat out twice a month: once for lunch and once for dinner. You know what happens? Eating out becomes a fun experience and not a normal everyday thing.
We can prepare great meals at home, like the famous Mr. Everyday Dollar pizza!
9. More than one car
Even with a family I think we should be able to get by on one car.
It might mean moving closer to work or choosing housing close to public transportation. The ultimate goal? Owning no vehicles. But even Mr. Everyday Dollar thinks that’s impractical for most of us.
The more cars we have the more of our everyday dollars go towards gas, oil changes, maintenance, car insurance and speeding tickets.
10. A house bigger than 1,500 square feet
A big house has all the traps of spending way more money than necessary so let’s find something around 1,500 square feet.
Bigger houses mean bigger everything: heating and cooling bills, property tax bills, mortgages, and maintenance and repair bills.
It means more furniture and crap we buy to fill it up with. It means we need to pay someone to clean it because it takes too much time to do it ourselves. So let’s not get trapped in a bigger house!