6 Lifestyle Changes That Will Help You Pay Off Debt

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When it comes to paying off debt, sometimes, as the saying goes, "Drastic times call for drastic measures." If you're not drowning in debt, it may work to chip away at it, cutting back and kicking in an extra payment here and there. Sometimes, though, it requires a major lifestyle change to move a mountain of debt. You may have to step out of your comfort zone, at least temporarily. But with a concerted effort, you can pay off your debt and settle into a new life of financial freedom sooner rather than later.

If you're overwhelmed by what you owe, consider these six lifestyle changes:

1. Drop a Vehicle

Having your own car makes life so much easier, but the cost of owning a vehicle is significant. Becoming a one-car household—or even a no-car single person—may not be as difficult to manage as you think. If anyone in the household works from home (or close), one could drive while the other walks, bikes, or uses ride-sharing or public transportation to get around.

Getting rid of a vehicle will drastically reduce your transportation costs. There is also the added benefit of exercise if you choose to walk or ride a bike. Perhaps you can even cancel your gym membership. Even if you can't drop a vehicle, you might still be able to downsize. Consider selling or trading for a less expensive or more fuel-efficient model.

2. Take on a Roommate

Sharing a significant part of your housing costs is a great way to free up cash to pay off debt. And, yes, even couples or families can consider this. Getting a roommate can be a big change, though, especially if you're used to living alone or you've never had success living with someone else. Whether you're leasing an apartment or house together or you're renting out space in a home you own, agreeing to live with someone is a commitment not to be entered into lightly.

Here are a couple of tips on choosing a roommate:

Don't assume that a good friend will make a good roommate. You don't want to lose a good friend over incompatible living habits. Unless you know how someone functions around the house, don't assume it's a good fit. You can put the word out with friends, family, and co-workers, or use social media to find a roommate.

Vet potential roommates as if you were hiring them for a job. You might check for references, verify their employment, or even review their credit history to be sure you've found a good match. Make sure you abide by the applicable laws, particularly when it comes to discrimination.

3. Move to a Smaller Home

If you maxed out your housing budget with your last home purchase, moving to a smaller home with a lower mortgage payment will free up cash to pay down debt.

You might have made your purchase with the mindset that bigger is better, but do you really need as much space as you have? Could you make the sacrifice and downsize even for a short time? A smaller space could mean big savings: Not only will you have a lower mortgage payment, but you'll have lower maintenance costs, lower property taxes, and insurance, and you'll need fewer things to fill up your home.

While moving to a smaller home has its financial benefits, it is a major lifestyle change. And if you have a family, you're not the only one who has to adjust. For a time, it may feel a little cozier than what you're used to. Friends and family may not approve of your decision, especially since house size is often tied to success and social status. Remember, you're bucking the trends to buy a debt-free future.

4. Adjust Your Social Life

A social life gets expensive, and it's one of the easier areas to trim. You don't have to ditch your friends forever, unless, of course, they're only your friends when you're spending money on a night out. The goal is to scale back on the amount of money you spend on nights out, traveling, eating out, etc. Look at how often you're doing those activities and see if you can cut it in half. If that's too easy, then cut it in half again.

Downsizing your social life may sound depressing, but there are a few benefits. First, you're moving closer to getting out of debt. Second, you'll have a lot more free time to invest in something productive. Don't spend those free hours sulking around the house—find free things you enjoy, or use that time in a way that will help you pay off more debt.

5. Redirect More "Free" Time Toward Making Money

There are endless ways to make extra money these days. Previous generations probably would never have imagined you could make money by giving people rides, renting your house to vacationers, or reviewing products online.

Still, coming up with ways to make money takes a significant change in thinking. You may be used to spending your free time watching television, reading books, or pursuing a hobby—and you shouldn't give up those enjoyments. To pay off your debt, though, you have to embody the belief that "time is money." Every spare minute you have is a minute you can use to make more money to pay off debt.

Look especially for the options that bring in more money. For example, you can pick up some overtime at work, take on a part-time job, or start up a serious side business. The harder you work, the shorter this lean season will be.

6. Get Obsessed With Your Debt

Up to this point, you may not have paid much attention to your debt. Maybe you spent a few minutes each month looking at your bills, or maybe you set up the online payment and forgot about it. To pay off debt quickly, though, you have to have a healthy obsession with the numbers.

Let go of the “not good at math” excuses and commit to making progress. It may take spreadsheets, lists, or smartphone apps to keep the numbers in front of you. You might spend hours each week plugging in payments, adjusting your balances, and recalculating your payoff timeline. Doing the work will help you stay on top of your debt and keep your target front-and-center.

Major lifestyle changes can be challenging. Stay focused on your goal of financial freedom and celebrate milestones along the way. Today's sacrifices will bring major rewards before long.