This article first appeared on The Good Men Project.
As a writer interested in love and relationships, money woes are a well-established relationship killer. If you have large amounts of debt, you are not alone. From student loans to credit cards to unforeseen layoffs and salary reductions, people everywhere are financially leveraged.
When I graduated from law school, I carried 6-figure debt. Although it was not easy, I paid off my loans within 10 years. In writing this article, I reached out to my friend, Kim Allman, a banker and financial educator. Similar to me, she paid 6-figure debt within a decade.
We both work hard, but neither of us are wealthy. We do not have trust funds. Despite a disparity in income (one of us was earning a low 6-figure salary and the other half as much), we both share a vision about money.
Were there habits that enabled us to become financially solvent? The answer is yes.
The tips below were key in our ability to pay off our debt:
1. Get a handle on your finances.
Many people bury their head in the sand when it comes to money. We encourage you to make a list of all the debt you currently carry. Then, rank each loan in descending order with the highest interest rates first. This process may feel overwhelming. Take a break if you need it. But, to make a viable plan for the future, you'll need to face it head-on.
You'll want to develop a plan of attack that feels doable and is easy to follow. Make it a goal to put any extra money towards the high interest loans first, but don't forget to keep paying down the other debts as well.
Use any large financial windfall towards your loans. Big bonus? Inheritance? Tax refund? Pay down those loans! You can buy a little something for yourself, but use the bulk of it to make headway and get ahead of the curve.
Also, make a commitment to assume no more new debt. Refuse to buy anything that you cannot pay for immediately in cash.
2. Create a vision for the future.
Dreaming of future goals will keep you on target when debt elimination feels daunting. Kim wanted the flexibility to pursue other jobs and change careers. I wanted to backpack across Asia. Both of us wanted to purchase our own apartments.
What kind of dreams are possible once you are debt-free? Want to visit Bali for a month? Spend a year writing your novel? Redecorate your home? Once you have a future goal that has higher value than the latest gadget or toy, you’ll be motivated to stick to your plan.
3. Live below your means.
For as daunting as debt may seem, managing money is pretty straightforward. Every month, you bring in money (i.e., income) and you spend money (i.e., expenses). The key is to pare down your expenses as much as possible, while still maintaining a life that feels fun, dynamic and vibrant.
Take one week to track your expenses. Are there places where real savings can be realized?
For example, if you pay high rent, can you take in a roommate, move to a smaller apartment, or relocate to a less expensive neighborhood? Can your daily Starbucks treat be replaced with home-brewed coffee? Can you carpool or take public transportation to save on fuel and car-related expenses?
Small indulges add up over time. The next time you make a purchase, think about whether it's really worth your hard-earned money. Is that splurge something you need or merely a want? Do you spend out of boredom or laziness?
Make sure that your spending reflects your values.
4. Re-frame your mindset.
Albert Einstein said, "The most precious things in life are not those that you get with money." Studies continually show that experiences and relationships have more impact on our long-term happiness than possessions.
Eliminate activities that cost a significant amount of money and do not contribute to long-term well-being. We both ditched cable television (saving hundreds of dollars per month). Kim enjoys must-see TV through a Netflix membership; I gave up television altogether. With less time on the couch, we both have more time to ride bikes, take picnics, meet friends, and attend outdoor concerts—activities that keep us physically active and socially engaged.
Be open with your friends about your new goals. Improvise ways to spend time together, while also saving money. Brunch and lunch dates are much cheaper alternatives to dinner. Meet at book clubs, movie matinées or free museum nights. If you're up for a group vacation, explore off-the-beaten path locales (Thailand, anyone?) to save money.