If everyone’s debt were as obvious as their waistline, debt diets would be a common occurrence. Just like body weight, most people’s debt climbs a while and then falls a while. Resolutions are made to be debt free, and they fall by the wayside. The phrase debt diet may seem a little strange, but it is a good description of what needs to happen with your debt.
Decide why you want to put your debt on a diet.
Weak reasons to start a debt diet will doom the effort before it gets started. You need to put more into it than lip service. Look forward a decade or two and see where you will be if you stay on the same course. Decide to make the adjustments today to be debt free and prepared for retirement when that day comes. Without becoming debt free, most people will never really retire. Early retirement is a fantasy if you choose to continue to wallow in your debt.
Set a goal for an amount to reduce your debt.
If your debt is large, you may find it daunting to even consider going on a debt diet. You do not have to eradicate your debt right away. The idea of a diet is to reduce not eliminate. Debt free may be a long term goal, but a debt diet is aimed at looking at your debt and determining how much of it you want to lose. It is just like weight loss. Whether you choose a few hundred or several thousand, the key is to set a goal and work as hard as you can to reach it.
Set a time limit to achieve your debt reduction goal.
Debt reduction that stretches on forever is no fun. Set a time limit. Depending on the amount of debt that you want to lose, go for time frame from six months up to about two years. It needs to be long enough to be realistic, but not so long as to become laborious.
Choose to live for a period of time with no new debt.
When you diet, there are certain things you usually try to cut out of your menu selections. Items like bread, sweets, and other things that you eat too much of when you dine are good candidates. On a debt diet, you need to cut out deficit spending. Make no new debt during the diet.
Adding new debt is like gaining weight on a diet.
It can reduce your enthusiasm and incentive to continue. If you do have to add debt due to unforeseen unavoidable circumstances, try to limit the amount and duration of the debt. Stay on course with the diet and work to reach as much of your goal as possible.
Force yourself to not buy anything that you can live without.
During World War II, ration coupon books had a saying in them: “If you don’t need it, don’t buy it.” Follow this guide on your debt diet. Never buy on impulse. If you have trouble controlling your spending, give someone you trust all of your spending tools. These are your checkbook, cash, debit cards, and credit cards. Force yourself to ask their permission to spend your money. A word of caution-you need to find someone who is reasonable and will not force you to live like a hermit. Make sure your bills get paid.
Choose your plan of attack on your debt.
A random approach to a debt diet is a waste of time. Prioritize your debts in some meaningful way. You can line them up from smallest to largest. Another choice is to line them up in ascending interest rate order. You may want to arrange them in the order of your opinion of your creditors. Put the most disliked one at the top. Or, if you want that one to wait the longest, put it at the bottom. Work to get rid of the first debt and make your way down the list. Arranging them from smallest to largest can give the quickest feeling of progress.