Can Frugal Living Help You Get Out of Debt?

Do you tend to buy any item on impulse? Do you face problems in repaying your credit bills? If yes, then you should practice frugal living, so that you can save more and repay your debts within a short time and lead a financially free life. 

What is frugal living?

Living a frugal life does not mean that you have to sacrifice all the fun of life and have to stop buying anything for yourself. It only means that you should buy based on your repayment affordability and control the temptation to spend lavishly on things that are not that essential to you. If you can practice living frugally, you can save more and repay your debts faster. 

Advantages of Frugal Living

The benefits of frugal living are :

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Repay debts: Frugal living helps you to save money significantly. With the extra cash, you will save each month, you can make more payments towards your debts, in addition to the minimum repayment amount, and thus, can eliminate your debts faster.  

Early retirement: Instead of spending extravagantly on things you don’t need, if you save more and deposit the money in a bank; when it will accumulate into a lump sum, you can take early retirement and enjoy life more.  

Mental peace: If by living frugally, you can repay your debts faster, it will give a feeling of mental peace.  

Save more money: If you can save more money by practicing frugal living, you will be able to invest more in shares and bonds and generate more income. 

How can you live frugally to repay debts?

Debt is an unnecessary evil that eats into your social and financial well-being slowly. Debt can be the cause of public humiliation when debt collectors call you at your workplace or a social gathering when you are with family and friends. Your financial well-being is also hampered by debt.

When you are in debt you won’t be able to spend money on things even if you need to. The curtailing of your expenditure in such a way can affect you worse financially.

Say you had to pay some medical bills and because of your debt payments you don’t have enough money, thus you have to borrow money again and fall into deeper debt. Thus it is a recurring problem and the quicker you get out of debt, the better it would be for you. 

The best way to get out of debt quickly and effectively is to live frugally. Here are some tips that can help you in following frugal life.

Budget your finances

You must plan out a budget and follow it properly. By chalking out a budget, you can list down the things that are necessary for you to buy, either for that week or for that month. Thus you don’t end up spending your cash on unnecessary purchases.

Budgeting is not about number crunching. It is not about living in deprivation. Budgeting does not imply that you have to live a miserly life that is devoid of fun, entertainment, movies, cable, and the internet but it is more about living smartly and securing a better future for you.

Income may include salary from your job, child support, alimony, etc. If you have a fluctuating income, take the average monthly income and keep that in the spreadsheet.

How can you set up a budget?

Most people think that budgeting can be a difficult task. The first step of budgeting is – knowing the total income. To formulate a budget, determine the expenses; make sure the expenses are your necessities like rent, auto loan payment, health insurance premium, groceries, utility.

Once you know the total expenses and total income, calculate the difference to see whether the result is a surplus or a deficit. If the result is negative, adjust the expenses. You may need to cut down any sort of unnecessary expenses. You can use a budgeting worksheet or budgeting apps that are available online.

Distinguish what you need from luxuries

Everyone likes to indulge in luxury once in a while. However, when you are in debt, you cannot afford such indulgences. You should remember that you are in debt in the first place as you haven’t been able to keep control of the luxuries you have spent. Thus now to get out of debt, you should recognize your needs and only spend on those.

Save on utilities

Try to save on utilities such as electricity bills, telephone bills, internet bills, and gasoline. In this way not only do you save money but you conserve energy too. The major reason for running into debts is spending more than you earn. You will find debt solutions if you start following these simple tips to save money.

Curtail your expenditure

Try to cut down on unnecessary costs. Shopping for clothes, shoes, jewelry, and accessories can increase your expenses a great deal. You should reduce your visit to the mall, in that way you will have less time to shop for these items and will also be able to save on the transportation costs. Also, try not to eat outside or order food at home. You may not be aware but a considerable amount of money is spent in this way.

Stop using credit cards

One of the main reasons for incurring debts is using multiple credit cards. Since you use different cards at different points of time for various transactions you are unable to keep a record of your purchases. As a result, the outstanding balances on your credit cards keep rising. The best solution for you would be to use cash or debit cards while making purchases. Even if you want to use credit cards have at most two of them with low-interest rates. 

Take a list while shopping

When you go out for grocery shopping make a list of things that you need to buy and take it along with you. Make a firm resolution to stick to the items on the list and not divert while shopping. Also, go shopping with very little time in hand. In this way even if you want to buy something else you won’t be able to as there wouldn’t be enough time after buying the items on your list.

If you can put into practice frugal living today, you will be able to save more and get out of debts faster and lead a tension-free life in the future. So, you should start to live frugally from this moment, to get back your lost financial freedom at the earliest. 

This post courtesy of: Valentina. Valentina Wilson is a writer. She loves to analyze personal financial matters and help others manage their finances in a better way. Traveling is also her passion. She follows more animals on Instagram than humans and her greatest achievement is her blog. She believes that transparency and conversations about money are essential in gaining control of finances. To connect with her, go to her LinkedIn or visit her blog bestdebtconsolidation.org

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