4 Tips to Help You Get Out of Debt in the New Year

Written by Zachery Adam

December 30, 2019

4 Tips to Help You Get Out of Debt in the New Year

As the new year rolls into frame, you’re probably thinking about all those financial goals you had for 2019. Maybe you crushed them or maybe you missed them, but there is no point in rehashing what you didn’t do. Here’s your chance to make a fresh new plan with, pardon the soon-to-be overused phrase, 2020 vision. Here are 4 tips that can help you get out of debt in the new year.

Zero Balance Budgeting

Zero balance budgeting is not a new concept, but many people are embracing it right now. It’s also known as the envelope system based on the idea that you would have actual envelopes in which to sort your different money categories. Today, you don’t need physical envelopes as there are specialized apps for zero balance budgeting or you can use your own spreadsheet.

What it means is that every dollar you earn has a job. Every time you get a paycheck, you divide it between the various categories you’ve established like:

  •         Mortgage or rent payments
  •         Utilities
  •         Consumer debt payments
  •         Savings
  •         Entertainment

Once you’ve sorted your money and given every dollar a job, there won’t be anything left over. This can help you visualize your money going into the separate envelopes and help you avoid over-spending. For example, if you want to go out to dinner with friends but your entertainment budget is running low, you would have to pull that money from somewhere else. Just knowing that can prevent you from taking money away from important expenses.

Pay More Than Your Minimum

Another important step for getting out of debt is to assess your credit cards and make a plan to pay them off. Look at the cards you have, the total balances, and the highest interest rates. Start by sending more than the minimum to the highest interest rate card every month. Send as much as your budget allows, but always more than the minimum.

Once that’s paid off, you can transition to the next card and so on. If you just keep paying the minimum, the interest will compound and you’ll find yourself in a much deeper hole. If you can pay as much as possible every time, you’ll start noticing actual progress.

Create an Emergency Fund

You’ve probably heard the advice that you should have at least 3 months’ salary stashed away for emergencies. But this doesn’t always feel doable, especially in Asheville where many people work in the gig economy or service industry with varying incomes. 

Some experts suggest trying to start out with $1000, but when your income is variable this can feel daunting. If it’s too much, start saving a small amount every week or every month depending on when you get paid. Just $5 or $10 at a time will add up. Put this in its own envelope or account and don’t touch it.

Change Your Spending Priorities

Did you know that a simple change in your mindset can positively affect your relationship to money? It’s true, just thinking about your finances in a new way can help significantly. Consider how you normally phrase things. When someone asks you to join them in an activity or buy something they’re offering, your go-to phrase might be, “I can’t afford that right now.”

Consider this instead: “It’s not a priority for me right now.” The same is true when your gut instinct is to tell someone you’re “too busy” or “don’t have time.” It’s completely okay to prioritize things in your life based on what’s most important to you at this time. But reframing it in terms of a priority rather than something you simply can’t afford or don’t have time to do will change the way you approach things in your life.

Every time you consider what you’re about to spend, really take a step back and determine if it is a priority or if you can do something else instead.

Do you want to know more about wrangling out of debt and the healthy financial decisions that can help you buy a home in Asheville in 2020? Call Zachery Adam at GoPrime of West Asheville. Call us today.  


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