Jean Chatzky
Debt is probably the one four-letter word you didn’t learn until adulthood. It’s also likely the only one your parents won’t scold you for using. If recent statistics are any indicator, chances are, they’re dealing with it, too. In the first three months of 2017, total U.S. household debt reached $12.7 trillion — a new peak, according to the Federal Reserve Bank of New York. So now is as good a time as any to start paying it down — and if you’ve been discouraged or given up in the past, it’s time to give it another go.
That’s because getting out of debt isn’t a matter of extraordinary intelligence — or even a soaring credit score — it’s a matter of adopting the right habits. Here are four to add to your roster:
Automate as much as possible.
There’s nothing like making a good decision one time and letting it pay off for years. That’s exactly what happens when you automate your bill payments. You can set this service up via the website of any company you pay regularly — for example, credit cards, student loans, utilities, streaming services and more.
Stop shopping impromptu sales.
Buying something on sale can make your brain feel like you’re both winning a game and saving money to boot. But here’s the hard truth: If you weren’t already planning on purchasing that item, you’re not saving anything. And it may be counter-intuitive, but research shows some people spend more money when they hunt for bargains. It’s the thrill of the chase. The fix? Keep a handy list (on paper or on your phone) of things you need — groceries, clothes, home goods, etc. Write an item down whenever it comes to mind during your day-to-day, but when you’re out shopping, don’t stray from that running list. It’s also a good idea to unsubscribe from retailer emails to protect yourself from tempting sale offers.
Remember you have the power in your financial life.
Say it with me: “I am in control of my financial destiny.” Now, keep on saying it until you believe it. Research suggests people who believe they control their own financial destinies are better at managing their money, regardless of other factors like income, age and education. One fix is to come up with a sort of mantra, like, “My money, my choices,” and say it to yourself in the mirror every morning. When you feel like you own your money, you’ll own your financial life, and feeling in control is vital to taking the necessary steps to pay down debt — and steer clear of racking it back up.
Give yourself some pillow time before purchasing.
Shopping has gotten exponentially easier over past decades. We went from cash to cards to mobile payment, where you can make a purchase without even opening your wallet. The problem? We’ve almost completely eliminated the pause between when you decide to buy something and when you pay for it. One money-saving fix? Leave the item in your cart — or on your mind — and see if you still want it as much after 24 hours (or even two days) have passed. Before pulling the trigger on the purchase, calculate the number of hours of work it would cost, then decide if it’s still worth it. Another tip is to delete saved card information in browsers and apps — not only is it probably more secure, but it’ll also make you think twice about making a purchase when you have to input that string of numbers beforehand.
With Hayden Field
Chris O'Shea
