Saturday, March 03, 2007

Free from Debt...Practical Ideas

Don't be a slave to debt. Uncontrolled debt can cause financial ruin and place great strain on individuals and marriages. President Gordon B. Hinckley of the LDS Church said, “To satisfy our desires, we go into debt, dissipate our resources in the payment of high interest, and become as slaves working to pay it off. Debt can be a terrible thing” (Gordon B. Hinckley, “‘Thou Shalt Not Covet’,” Ensign, Mar 1990, 2).
Eliminating debt brings freedom and peace and leads to prosperity. Control your future by getting out of debt, spending less than you earn, and investing. As long as you're in debt, you're making other people rich by paying them interest. Instead of making other people rich, let other people increase your wealth by spending less than you earn and investing the difference.

The first step in gaining your freedom from debt, and the focus of this article, is to cut back on spending. The less money you spend, the more you can use to pay off your debt, especially if you're already living within your means. Most people would be surprised how much they spend and how easily they can decrease their monthly spending.

Here are some ideas for reducing your spending.

Quit Smoking. Give up smoking—or at least cut back! Cigarettes are a 100% unnecessary expense. If you average one pack per day at $4.00 per pack, giving them up will save you nearly $1,500 per year. In addition, if you stop smoking, your health will improve and your health costs will decrease. This goes the same for chewing tobacco.

Replace Alcohol and Soda with Water. Cutting back on beer and soda can save you hundreds of dollars a year—and cut inches off your waist too!

Cut Phone Costs. If you have both a cell phone and a home telephone, you may be able to save a lot of money by dropping one or the other. If your children have cell phones, ask yourself whether they really need them. Cell phone costs can be quite high especially if the kids go over their minutes or if you're paying for other things like text messaging. If you only have a home phone, decide whether you can live without services like caller ID. You may also want to shop around for cheaper long-distance companies.

Reduce Internet Costs. If you have broadband Internet access, consider dial-up instead which can be just a quarter of the cost of broadband or less. You can cut back on Internet costs completely by using free Internet access at your local library, or if you have a laptop with wireless capability, go to free hot zones to check your email.

Cut Cable Costs. Consider dropping your cable TV altogether. That can save you $40 per month or more for just basic cable. Not only will this save you hundreds of dollars a year, but it will be good for your family. If you can't live without the cable, consider a cheaper plan. For example, if you have digital cable, change to a basic cable plan. That could save you $20 or more a month plus the costs of a set-top box or DVR if the cable company charges for that too. You should also consider bundling your services with one company. You could save a lot of money each month if you consolidate your cable, telephone, and Internet with the same company. In many places, the local telephone and cable companies both offer all three services and will give you a discount for bundling. Finally, if you pay for TIVO or another service like it, consider eliminating it and just using your old VCR.

Eat out Less. Eating fast food and going to restaurants frequently may be adding thousands of dollars to your food bill every year. Cutting back even a little can save a lot. For example, if you spend $6 a day at lunch for fast food, consider making your own lunch at home for $2 and taking it to work. Eating your own lunch three times a week would save you $600 per year. In addition, your own meals will often have less fat and carbohydrates making you leaner and healthier.

Cut Your Grocery Bill. When shopping for food, reduce expenses by purchasing generic or store brands. Also plan your meals in advance so you know exactly what you need to buy at the store. Make as many of your meals as you can. Prepared meals like TV dinners will often cost you more than a meal made from scratch. Use coupons where you can, but watch those prices carefully. Even with a coupon, some name brand foods are still more expensive than the store brand alternatives. Finally, don't give in to impulse shopping. If it's not your list, don't buy it.

Sell a Car. If you have two cars, especially if you have two car payments, consider selling one car. This may be a sacrifice, but if you can coordinate your schedules and use public transportation, you can save hundreds of dollars a month in loan payments, gas, and auto maintenance fees. In many cities, commuting to work can cost half as much as a car payment. And in many places like Washington DC, you can take advantage of free alternatives such as carpooling or slugging.

Cut Up Credit Cards. Most people really only need one credit card. It makes sense to have and use one if used responsibly. Save the one that provides you the most benefits and costs the least, and cut up the others. Fewer cards will present less of a temptation to spend.

Make Do With What You Have. Do you feel like buying a new outfit? Try using your current clothes longer. Is your computer getting slower? Rather than buy a new one, consider adding more memory or cleaning it up with free antivirus and spyware tools. A low-cost solution could save you $1,000 or more on a new computer. Do you want a big new plasma TV? Hold off purchasing one another year if your current television works just fine. Many of our seniors remember the phrase, “Use it up; where it out; make it do; or do without.”

Cut iPod Costs. This counts for any of the new devices like MP3 players, Blackberries, etc. Do you really need them? For some, you may be paying monthly fees to download music, send messages, or access the network. Even if there aren't monthly fees, don't buy music. Buying ten songs a month can cost you an extra $10. If you have an iPod or other MP3 player, there are many free things to list to. Your public library may have free audiobooks you can check out. You can also find free songs at places like ( Many websites also have free podcasts.

Stop Buying Books and Newspapers. You can check out the latest books for free at your public library. Never buy a book again. Buying one hardcover book a month can cost you $250 per year or more. Stop paying for a newspaper, especially if you have Internet access. You can get a wide variety of local and national news on a host of websites like,, and Google News.

Pay Tithing. If you're a person of faith, pay tithing. This may seem counterintuitive, but paying tithing may help you eliminate debt in the long run. First, you can you often deduct the donation. Second, paying tithing helps you to learn to sacrifice—a key to reducing debt. Third, great promises are made to those who pay tithing. Malachi 3:10 reads, “Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it.” Many faithful tithe payers have found great financial blessings come to them in unexpected ways.

Conduct a Spending Inventory. There are so many other ways to cut your monthly spending. Take an inventory of everything you spend by recording all your expenses for one month. Review your expenses; you may be surprised where your money is going. Decide where you can cut back. Also do research to find less expensive alternatives to your current essentials expenditures. Some hard work can result in big savings.

Make a Plan. Set some goals and create a budget. If you've done your homework, you'll see how much you can save each month. Set a goal to limit your expenditures to those essentials you've identified and to reduce costs by through alternatives. Decide to live within your means and set aside a certain amount of money each month for savings or investments. Finally, commit to paying off your debts as soon as possible starting with those that charge the highest interest.

The benefit of becoming free from debt is greater than the savings in interest. You will have learned to enjoy life on a smaller budget, your future will become more secure, and you may be healthier and enjoy better relationships with your family.