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How to Break Up with Your Debt

Are you stuck in a relationship with your finances – or lack thereof – and often thinking about whether you should break up? Ending a relationship with debt can be tricky. 

But, with the right strategy, determination, and planning, you can make it happen. Here are practical tips on how to get started.

6 Ways to Breaking Up with Your Debt 

1. Stop going out to eat.

It can be much easier to buy a meal from a drive-thru or a restaurant. But, if you do it too often, it can be costly. This habit puts a heavy strain on your debt.

According to the latest statistics, the average American household spends almost 50% of its food budget on eating out. So, if a family spends around $6,000 on food annually, roughly $2,700 is spent on eating out.

Don’t worry. That doesn’t mean you should stop eating out to make debt payments. Many Americans eat commercially-cooked food around 4 times a week. If you cook 2 of these meals at home, you can save about $900 a year.

 You can save even more if you buy groceries on sale or use coupons, loyalty programs, and grocery rewards cards. This amount of extra money can come in handy in building up your annual savings.

Besides, home-cooked meals are often healthier and contain less sugar, salt, and fat than fast-food meals. You can control the type of ingredients you use and pay much less than eating at an exclusive restaurant.

2. Break up with your barista.

Another hard breakup may be with your coffee barista, especially when you want to get out of debt.

Why? A single cup of coffee has gotten more expensive. Last year, the average price for a cup of coffee in American shops was $4.90. That’s 7.6% more than the year prior in the summer.

If you buy coffee at a café, you can spend from $5 to $25 a week. This means $20 to $100 per month, or $240 and $1,200 a year. Brewing it at home can save you a lot more. 

Those who order coffee beans in bulk can spend about $45 a year on coffee. Now that’s a HUGE difference.

Of course, you may be unable to replicate your favorite vanilla latte, strawberry Frappuccino, or chai latte. But you can save some cash along the way, which you can later use to take care of the credit card balances.

3. Plan your grocery trips.

If you have debt, you can make some saving strategies to keep the grocery bill lower. But how much money are you spending?

Inflation is a serious problem. Based on reports from the U.S. Department of Agriculture, in 2021, families spent 10.3% of their disposable cash on food. 

In 2020, the spending was manageable but still reached 8.6%. As inflation continues to increase, the numbers are estimated to get worse.

However, having a food budget can set you on the right track. The budget can vary based on your income and overall expenses. 

You can come up with a target amount of money you can spend on food. You can do that by:

  • Creating a shopping routine. A spending pattern can help you manage your savings and cover debt payments. For example, pick one day of the week to shop for groceries and go to the same store. This can save you time and money.
  • Establishing a meal routine. Routines make food shopping more predictable and easier to manage. For example, Monday is chicken night, Tuesday is taco night, and Wednesday is spaghetti day.
  • Sticking to the shopping list. Don’t fill your shopping cart with things you don’t need. Instead, write down only the foods you have to buy and stick to the list. This can help you manage the monthly payment for food, snacks, and drinks. Then, while browsing the aisles, use a calculator app to ensure you are not going over your budget.
  • Using coupons. Sales and coupons are excellent ways to save money. For example, Valentine’s candy is much cheaper the day after Valentine’s Day. So, use this to your advantage and get some excellent discounts. 

4. Ditch the gym membership.

You can cancel your gym membership and save cash to pay your personal debt. You can still go for a run or walk outside – for free. 

Once you stop going to the gym, you can see how much cash you can stash away. There is no commute, which means no traffic, gas mileage, or paying for parking to get to the gym. 

Plus, there are different ways you can exercise for free. You can plan to:

  • Run or walk.
  • Build your workout routine.
  • Take the stairs.
  • Try cycling.

Another way to boost your fitness and get the desired results is to use outdoor gyms. Outdoor gyms are open to everyone. The equipment is in the fresh air, and people can use it for free.

This is a brilliant way to tone up, work out, and get fit without the price tag of an indoor gym. If you need motivation, you can socialize with friends and get them to join you on your fitness journey.

5. Find free entertainment.

As the nation got used to a new normal after the pandemic, entertainment expenditures in 2021 skyrocketed, increasing by more than 22.7%. As a result, people were spending a lot more on things like plays, movies, theme parks, entertainment equipment, recreational vehicles, and so on.

Putting a spending freeze on your entertainment costs is best if you want to take care of the credit card debt. At least for a little while. 

You can stop impulsive shopping, collecting items you don’t need, or going to expensive events that you can’t afford. Another way to enjoy free entertainment is to check out museums nearby. 

There are no-fee museums you can enjoy. These include the Smithsonian Museum, Natural History Museum, American History Museum, and Air and Space Museum. There are free museums in Chicago, Baltimore, Los Angeles, New York, and other places as well.

They have a vast collection of exhibits to learn about. 

6. Cut down on streaming services.

Streaming isn’t cheap. This might sound difficult, but it can help you start paying off debt. First, cancel services like Amazon Prime, Hulu, and Netflix. 

You can pause them temporarily or cancel your least-watched subscriptions. Last year, Disney Plus, Netflix, Sling TV, and Hulu increased their rates. 

Of course, this was expected with all the other prices going up. The problem is many American homes have multiple subscriptions to these services. 

So, odds are, you, too, are paying for HBO Max, YouTube TV, cable, and more. So, it’s best to reduce these streaming costs to start saving money. 

Pick the one that you use the most and drop the rest. Then, if you want to keep the streaming services but still save money, you can share subscription rates with family and friends.

Paying Off Debt

Paying off debt, such as credit card debt, before the interest rates get too high is highly recommended. 

To make the debt less daunting, you can start by trying to decrease the debt by a small amount, such as $1,000. That $1,000 reduction in credit card debt can save you $150 to $200 a year in interest. 

But, of course, you can save even more if you are paying high-interest rates or penalty fees. To put yourself in a better financial situation, consider renegotiating terms, and consolidating and refinancing debt. 

The debt negotiation process can offer changes, such as extending the maturity date, changing the interest rates, etc. Consult with the right debt settlement companies for more detailed information. 

If you are stuck, and can’t pay off debt, consider getting debt consolidation. This means taking out a new loan to cover other debts or liabilities.

You also can use a 0% balance transfer credit card to pay off debts. Ideally, you should concentrate on your credit report and daily spending habits and avoid buying things you can’t afford. 

Instead, pay the bills in full and try to avoid late charges. This is a practical strategy for mitigating your expenses.

Moving Forward and Saving 

When you face significant debt and poor credit scores, it can be daunting to save money. But if you have debt, it’s important to pay it off and start saving. Then, you can save with a purpose, such as for retirement, college expenses, travel, or renovations, and have better odds of financial bliss

When You Need Advice

Paying off debt and saving is hard because it requires constant effort, planning, and dedication. This isn’t easy to achieve for anyone constantly getting bombarded with ads for goods and services they don’t need. 

If you buy things on impulse, you spend much more than you can afford. 

Plus, even when you are done paying that debt, you might get right back into it. So, when you feel stuck and not entirely in charge of your financial situation, it is best to seek expert help. 

There are many things to consider when you pay off debt. First, consider consulting with a licensed financial coach when you feel overwhelmed with your responsibilities and budgeting tactics. You can also use a financial platform such as Credit & Debt to help you manage your money and create a customized plan to get your finances back on track.

Bottom Line

The sooner you break up your debt, the better you will feel, and the more you can save. 

You need an excellent budgeting plan, commitment, and dedication. A financial budgeting platform such as Credit & Debt is an important first step toward that goal. 

Madison Ervin

financial coach with clipboard

Get financial freedom! Talk to a financial coach for free!