In this article we are going to discuss how you can get out of debt quickly by using cash.
To get out of debt you need to be aware of your current debts, income and expenditure, if you have not done so already make sure you read: How to Get Out of Debt and Stay Out of Debt this will give you the essential starting points.
One of the key areas to getting yourself out of debt and staying out of debt is to keep a close eye on your expenditure. The best way to do this is by going back to paying everything using cash.
If you find that at the end of each month you have run out of money and you cannot understand where all of your money goes, using the cash method will help you to regain control.
Before Credit Cards
Imagine how things worked before credit cards became available. If you wanted to make a purchase you had to pay by cash. If you did not have the money on you at the time you had to go to the bank to make a withdrawal or go home to pick up the money. This would mean that there was a delay between the initial thought of wanting to make the purchase and actually being able to purchase the product. Because of this, every single purchase involved planning and consideration and it would make you think, do I need it? Can I afford it?
Credit cards have now removed the planning and consideration steps, if you see a product and you would like to buy it, all you have to do is hand over your credit card and you instantly have it, "this is not real money."
Use Cash for a Month
This is your challenge to get out of debt quickly, only use Cash for a month and do not use your credit cards.
Leave your standing orders and direct debits unchanged, those can go through your bank account as normal.
At the beginning of the week, work out how much money you need just for this week, go to the cashpoint and withdraw the full amount of money for the week in cash (this is important as it is easy to lose track of cash withdrawals if you make regular trips to the cashpoint).
Take the cash home and separate it into categories of spending, such as £50 food, £20 for travel, £30 for socializing, place this cash into separate marked envelopes.
Throughout the week only use the cash from the envelopes to pay for your various living expenses.
If you wish to make a purchase, this will now force you to think if you can afford it. If you do make a purchase that you have not budgeted for you will then have to sacrifice some of the money from one of your categories.
For instance, if you decide to go out to a restaurant which costs £45, this money will have to come from your food and socialising budget, so it should make you think twice, or, you could save some of your socialising budget this week to go towards the socialising budget next week so that you can go out to the restaurant next week.
This exercise is designed to help you think about your daily spending and if it is really necessary to make the daily purchases that you are currently making.
Clear Your Debts
Once you have got your spending under control, you should find that you have spare cash available and this spare cash can then go towards paying off your debts more quickly. Make sure you now read: Which Debts to Pay First?
In this article we are going to discuss how you can get out of debt quickly by using cash.
To get out of debt you need to be aware of your current debts, income and expenditure, if you have not done so already make sure you read: How to Get Out of Debt and Stay Out of Debt this will give you the essential starting points.
One of the key areas to getting yourself out of debt and staying out of debt is to keep a close eye on your expenditure. The best way to do this is by going back to paying everything using cash.
If you find that at the end of each month you have run out of money and you cannot understand where all of your money goes, using the cash method will help you to regain control.
Before Credit Cards
Imagine how things worked before credit cards became available. If you wanted to make a purchase you had to pay by cash. If you did not have the money on you at the time you had to go to the bank to make a withdrawal or go home to pick up the money. This would mean that there was a delay between the initial thought of wanting to make the purchase and actually being able to purchase the product. Because of this, every single purchase involved planning and consideration and it would make you think, do I need it? Can I afford it?
Credit cards have now removed the planning and consideration steps, if you see a product and you would like to buy it, all you have to do is hand over your credit card and you instantly have it, "this is not real money."
Use Cash for a Month
This is your challenge to get out of debt quickly, only use Cash for a month and do not use your credit cards.
Leave your standing orders and direct debits unchanged, those can go through your bank account as normal.
At the beginning of the week, work out how much money you need just for this week, go to the cashpoint and withdraw the full amount of money for the week in cash (this is important as it is easy to lose track of cash withdrawals if you make regular trips to the cashpoint).
Take the cash home and separate it into categories of spending, such as £50 food, £20 for travel, £30 for socializing, place this cash into separate marked envelopes.
Throughout the week only use the cash from the envelopes to pay for your various living expenses.
If you wish to make a purchase, this will now force you to think if you can afford it. If you do make a purchase that you have not budgeted for you will then have to sacrifice some of the money from one of your categories.
For instance, if you decide to go out to a restaurant which costs £45, this money will have to come from your food and socialising budget, so it should make you think twice, or, you could save some of your socialising budget this week to go towards the socialising budget next week so that you can go out to the restaurant next week.
This exercise is designed to help you think about your daily spending and if it is really necessary to make the daily purchases that you are currently making.
Clear Your Debts
Once you have got your spending under control, you should find that you have spare cash available and this spare cash can then go towards paying off your debts more quickly. Make sure you now read: Which Debts to Pay First?