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Jun 26

Here’s Why You Shouldn’t Cut Your Budget to the Bone to Get Out of Debt – HuffPost

How to lose weight quickly Comments Off on Here’s Why You Shouldn’t Cut Your Budget to the Bone to Get Out of Debt – HuffPost

By Abby Hayes, Credit.com

So you have some debt that you need to pay off. If you listen to the advice of many get-out-of-debt gurus, you should pay it off as quickly and intensely as possible. They say you should never set foot in a restaurant, go on vacation, or do anything extra until the last credit card and student loan are paid off.

This seems like a good approach. If you can just cut out all your extra expenses and maybe bring in some additional income youll get out of debt much sooner, right?

In fact, becoming debt-free may be quite similar to getting to and maintaining a healthy weight. The intense, fast options may seem like a good idea, but they can actually have negative consequences.

Paying Off Debt & Yo-Yo Dieting

Intense weight loss strategies can often result in whats called a yo-yo diet. Its when you lose a bunch of weight quickly only to gain it back quickly after your intense efforts are done. Even Biggest Loser contestants arent immune to this problem.

If you cut calories dramatically for three weeks before a big event, sure youll lose weight. But you havent made sustainable changes that will help you stay healthy over the long term.

This is similar to getting out of debt. Sure, you can cut your budget to the absolute bare bones to pay off credit cards in a matter of months. But does this approach really help you build sustainable habits and a sustainable budget for the long run? Maybe not.

My husband and I struggled with this early on in our marriage. We wanted to pay off our student loans and car loan desperately. So for a few months, wed cut everything extra out of our budgets. No restaurants. No fun money. No nothing.

It would work for a bit, and wed make some progress. But eventually, wed get to the point where we felt so restricted, we just had to break free. And break free we did. Usually to the tune of a couple hundred dollars or more of unnecessary spending.

We went through this cycle for literally years until we learned to take a more measured approach to our debt diet. We still keep a close eye on our spending and try not to waste money. But we each have a monthly allowance for things like new clothes, our hobbies, and other personal items. And we have a date night fund so that we can enjoy each others company out of the house at least once a month.

This extra spending means were not paying off debt as quickly. But it also means that we avoid those splurges that used to throw us completely off track.

You Should Still Enjoy Life

Whats the main point of losing weight on a diet? Sure, you want to look good in a pair of jeans. But you also want to be able to move more freely, have more sustainable energy levels, and just enjoy life more.

Whats the main point of getting out of debt? Sure, you want to stop paying ridiculous interest rates on your credit cards. But you also want to free up money in your budget so that you have more options financially, so that you can enjoy life more.

So whats the point of dieting or paying off debt if youre miserable for months or years while youre doing it?

When youre dieting, you could cut out everything but salads with dry grilled chicken and probably lose weight very quickly. Or you could learn to make delicious, healthy meals that you love. And you could give yourself tiny splurges once in a while. You might see slower, steadier weight loss progress, but youll enjoy life while working towards your goal.

The same applies when paying off debt. You could spend on only the absolute necessities food, housing, utilities, and transportation to pay off debt more quickly. Or you could create a reasonable, sustainable budget that allows for frugal vacations, occasional meals out, and entertainment options you love. Again, youll see slower, steadier progress, but youll actually enjoy life while getting to that debt-free goal.

Your Approach Depends On Your Situation

Are there some times when a quick crash diet may be appropriate? Sure. Bodybuilders who are already in excellent shape will often cut calories dramatically right before an event. Theyre just taking their everyday discipline one step further for a few days or weeks.

Similarly, what if youre generally good at managing your money but just had an unexpected emergency a broken-down vehicle or a medical emergency, for instance that bloated your credit card debt? In this case, a few weeks or a couple months worth of cutting your budget to the bone to pay off the debt may make sense. Since youve already got good money management habits in place, youre unlikely to rebound into more unnecessary spending.

But if youre staring down a scale that says you need to lose 50 pounds? Research shows that slow and steady is the way to go.

And if youre staring at massive amounts of debt? Slow and steady may work better for you, too.

So how do you get started with a slower, steadier approach to paying off debt? Here are some tricks weve swiped from the diet world:

Make smart swaps on things you eat every day. When youre trying to cut calories, its amazing how much progress you can make just by switching to a lower-calorie salad dressing or sprucing up your breakfast routine. The same goes for your finances. Try refinancing your mortgage or auto loan, renegotiating or even eliminating your cable bill, or revamping your insurance policies for painless ways to save money month after month.

Also keep in mind that your credit can impact how much you pay in mortgage and auto loan interest, and even increase your insurance costs if itisnt very good. You can keep track of your credit by checking your credit scores regularly right here on Credit.com.

The quality of your calories matters. More and more research is saying that calories in, calories out isnt the end-all-be-all of dieting. High-quality foods, especially healthy proteins and fats, can keep you satisfied for longer, making cutting calories easier. Similarly, not all spending is equally satisfying. If you only have a few extra bucks a month to enjoy life, spend it on what really makes you happy. (Hint: Experiences are usually a better bet than more stuff!)

Track your progress. Weekly weigh-ins are an important part of many weight loss programs. Weighing in often helps keep you motivated and lets you spot problems quickly so you can correct your course. When paying off debt, keep track of your debts each month. Consider using a line chart to get a visual representation of your debt dropping each month over time.

Budget calories for enjoying. Many successful weight loss programs operate with the idea of a cheat meal, cheat day, or set number of cheat calories per week. This means you know how much and how often you can splurge. Do the same for your budget. Set aside some fun money each month, and youll reap the benefits of staying on track without feeling miserable.

Paying off debt isnt exactly like dieting, of course. But you can draw plenty of parallels. So when youre trying to get debt-free, think about ways to make your progress steady and sustainable over the long haul.

This article originally appeared on Credit.com.

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Here's Why You Shouldn't Cut Your Budget to the Bone to Get Out of Debt - HuffPost

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