How to Pay Off Debt (and Still Have a Social Life)
Paying off debt is no easy feat.
You of course want to still have a social life, but every bit of discretionary spending becomes a source of guilt because that money could have been used to pay off debt (or save)! On the other hand, cutting out all the fun from your life is guaranteed to be a quick way to get discouraged and go back to ignoring your debt. So, how do you balance paying off debt and still manage to have a life? Here are 5 tips:
1. Create a Budget
First and foremost, if you don’t already have a monthly budget, now is the time to create one. And if you do, it may be time to revise it so you can make paying off debt a priority. Gather all your credit and loan documentation as well as your bank statements so you can figure out what you owe, what you’ve been spending, and where you can make adjustments. You can still make room in your budget for your social life and lifestyle expenses like eating out, new clothing, and the occasional concert tickets – but only after you’ve factored in money towards paying off your debts. If you’re currently spending about $200 a month going out for drinks, can you bring it down to $100 and put the extra money towards your debt? Consider trying out an online tool like Budget Jewel to help make it easier to track your spending against your budget.
2. Figure Out Your Priorities
It’s highly unlikely you’ll be able to tackle all of your debt at once. So where should you start? It can be tempting to pay off smaller debts first to get them out of the way, but it is generally a good idea to focus on paying down the highest interest debts first, as these will cost you more money in the long run. For example, putting $400 towards a $5,000 credit card bill with an 18% interest rate will save you far more than paying off a $400 bill at 6%. As far as how to prioritize your discretionary spending, there will have to be some sacrifices! Look at your past spending habits and decide where you can stand to cut back. If dining out on weekends is an important part of your social life, consider other sacrifices you can make like cutting back on your premium cable channels or take-out lunches during the work week instead.
3. Take on a Side Hustle
One of the best ways to get rid of your “fun spending” guilt is to take on a side hustle for extra income! By taking on a part-time side hustle, you free up room to use your primary income source for important things like rent and paying off debt. The additional income from your side hustle can be used towards your social life for things like eating out, trips to the movies, and the occasional shopping trip. Decide what kind of side hustle works for you – whether it’s blog writing, dog walking, freelance photography, or flipping furniture on Craigslist, there are many ways to find the perfect side hustle for your lifestyle. Creating a hustle out of something you love is important because, even though it’s extra money, it’s also extra work!
4. Get Creative with your Weekend Routine
There are many ways to still have a social life and enjoy your weekends on a budget! Host friends for a potluck BBQ or movie night. Go to the beach or hiking with friends. Attend free outdoor shows, festivals, or movies in your town. Peruse sites like Groupon for deals on everything from restaurants and theme parks to fitness classes and spa treatments. The possibilities are endless! Freeing up money you are spending unnecessarily on fun and entertainment can help you pay down debt faster.
5. Consider Seeking Expert Help
Depending on your level of debt, you may be feeling in over your head. If this is the case, you may want to consider speaking with a financial planner or an attorney that specializes in debt solutions. Personal finance is not a one-size-fits-all kind of thing, so they’ll be able to explain to you your best options and help you devise a plan to help you pay down debt that fits with your life and goals.
Budgeting and managing your finances responsibly is not about giving up everything you enjoy in life. The key to great budgeting is discerning needs versus wants so you can find a balance between saving, paying for living expenses, paying off debt, and having a little left over to treat yourself. What ways have you been able to pay off debt while still having a social life? Share your experiences below!