Every one of us has to eat, and one of the biggest expenses in anyone’s budget is food. Grocery stores and supermarkets take advantage of our need for sustenance by creating new ways of enticing us to spend more. In fact, supermarket chains have spent millions on research to get us to spend more money each time we go. Even coupons are designed to get shoppers to part with their cash.

So, return the favor: before heading to the market, arm yourself with these tips to help you understand the psychology of supermarkets and how you can avoid some of the more obvious traps.

Shop off of a list. Write down what you need before heading to the market. How many times have I walked into a store intending to buy just a few things? Inevitably, I come out with an entire grocery bag of food. Without a list, it’s much easier to wander around the store, creating opportunities to buy more than you needed.

Avoid shopping when you’re hungry. Everything looks tasty when you’re hungry. Filling up the grocery cart becomes a way of trying to fill up your otherwise empty stomach. Eat up before going to the grocery store, and it’ll be easier to avoid temptation.

Walk on the edge. Have you noticed that supermarkets place most of their fresh goods along the perimeter of a store? The middle aisles are full of processed and snack foods that are generally pricier. Stick to the edges and not only will you eat healthier but you’ll save money and you won’t be buying fake food that your grandma wouldn’t recognize.

Avoid end caps. End caps are the displays at the end of aisles. In supermarket terms, this is prime real estate for enticing shoppers. According to this article on supermarket psychology, end cap displays are for premium or key products with higher product margins. Many consumers also unconsciously assume items in end cap displays are on sale. Check carefully—end caps serve as teasers for the aisles.

Don’t look shelves in the eye. If you do find yourself in the maze of the middle aisles, don’t look at the shelves directly in front of you. When something is placed right at eye level in a supermarket, it’s because a company paid for its placement there to increase sales. Where do you find the real bargains and the store brands? Look along the bottom shelves.

Make it yourself. I’ve always loved cooking, but while living abroad in a developing country, I simply didn’t have access to many things that I took for granted in the United States. Many international foods were imported luxuries, with price tags to match. I learned to buy basic ingredients and make lots of my favorite foods myself. Hummus, chai, and pesto all became a lot cheaper and tastier.

Explore a new culture. Many items are often cheaper at a local market catering to specific communities. Chinese, Indian, Middle Eastern, and Hispanic markets are fantastic places to find staples in bulk. For instance, ounce for ounce, lentils and spices are bargains at my local Middle Eastern market compared to the chain supermarkets.

Shop in your fridge and pantry. According to Businessweek, Americans waste 40% of the food they purchase. Most of that goes to the landfill. Save money and go green by eating what you already have. You’ll also save a trip to the grocery store. As it turns out, the best way to save at the supermarket is to not be there in the first place.

By shopping at the supermarket/grocery store more consciously, we can avoid over-spending on food. What tips do you have for saving money at the store?

Image credit: iluvcocacola

But becoming debt free can be a long journey, and once you reach your goal you might be surprised about how you feel. Perhaps you feel deflated instead of proud. Perhaps your fear of debt turns into worry about not having more money saved. Or maybe you just don’t know how to feel. Thoughts focusing on your debt might have taken priority for so long that you hardly know what to do with yourself once you’re free from them. So how can you make sure you move forward from your newfound debt freedom into financial prosperity? Step one: recognize and then deal with your emotions.

Dealing with Your Emotions (Or Lack Thereof)

The variety of emotions that happen when you reach zero debt is never-ending and your own feelings may surprise you. That’s why it’s so important to quickly recognize what you’re going through and then figure out what it means. Only then can you turn those emotions into something positive and constructive.

Let’s start with an exercise. I’ll name a bunch of emotions and then you make a mental note of those that match your own. Here goes:

• worry/anxiety
• frustration/anger
• happiness/relief
• nothing

Here’s the quick diagnosis: whatever you answered, you’re normal! Remember that finances aren’t just about numbers – finances are emotional. That means whether your situation is good, bad, or somewhere in between, this will affect how you feel in your life. And just like everyone’s emotions in life are unique, so too are their financial situations and thus their emotions that follow.

Now let’s go through these emotions one by one and discover what they might mean:

• Worry/Anxiety: You’re probably already looking into the future and realizing that you have many more goals that you want to reach besides debt payoff. Those goals could include saving for retirement, a home, travel, or simply having extra money set aside. Whatever the goals, take a minute to be proud of yourself for the great feat you’ve accomplished. Then buckle down and use the skills that got you there to help you reach your next goals.

• Frustration/Anger: You’re probably realizing how much better your life could have been if you’d never had to deal with debt – or how much money you’d have saved right now if you’d never had to make all those monthly payments. My advice: let the past remain where it is – in the past. We ALL make financial mistakes but dwelling on them will only lead to future mistakes. Recognize what you’ve done and keep your eye on the forward prize.

• Happiness/Relief: Pretty self-explanatory. Paying off debt is a major pain in the neck, both financially and emotionally. Having those monthly payments gone and the balances no longer hanging over your head can be like taking a mountain off of your shoulders. Enjoy this feeling and make sure that you take the right steps to address the cause of your debt and make sure you never have to deal with it again!

• Nothing: As mentioned, debt payoff is a long and hard journey. By the time you reach the end of it, you might be too exhausted to feel much of anything. That’s okay. Give yourself some time to rest and regroup. When the realization of your great accomplishment sinks in, you can then begin to rebuild and move on to your next goals.

Celebrating Your Success – Without Going Back into Debt

Now that all that emotional stuff is done with, it’s time to celebrate! You should recognize your hard work and realize that you deserve a celebration for reaching this momentous goal. But that doesn’t mean you should celebrate so much that you go back into debt. Now this is unlikely to happen in one day, but it’s easy for the budgeting skills you developed to become debt free to slowly go down the wayside now that you have less bills to pay each month. Wouldn’t it be so much better to keep the budgeting goals exactly the same and “pay” your savings with the money you were paying into debt each month?

Okay, maybe it doesn’t sound much fun, but it is a good way to ensure that you never get back into debt – and that you build financial prosperity. So go out and give yourself a pat on the back, a nice dinner, or whatever makes you feel special and commemorates this accomplishment. But just make sure the celebration doesn’t last for the next few months to come…

Figuring Out What’s Next

Once you’re getting acclimated to life without debt, you’ll want to set some new goals. Without goals, it’s very hard to move forward! Do you want to buy a house, travel the world, change jobs? Maybe you need an emergency fund or a better retirement plan. No matter what the case is, set goals and check in with them regularly.

Life after debt has its ups and downs, just like life before debt and life with debt. That’s why it’s so great that there are so many resources out there to help you navigate this terrain and reach happiness and financial prosperity! So don’t forget to check in to this page often to remind yourself of what you want moving forward. Then you can ensure that you remain debt free forever – and that your financial freedom turns into financial prosperity and wealth!

Image Credit: Image 1, Dan Hamp and Image 2, derekskey

The author of this post is Catey Hill, a writer for the real estate website Zillow.com.

Have you ever wondered what is a good credit score for buying a house? If so, you’re not alone. Many buyers are entering the housing market right now to take advantage of current low mortgage rates, some of which are even below 3 percent. But before you decide to buy a house, you need to not only figure out if you’re financially ready but also make sure that your credit score is in good shape, especially if you want to qualify for the lowest interest rates.

While many people think that an additional percentage point or two on their interest rate won’t make much of a difference, it does. Consider this comparison: Consumers who borrow $200,000 over 30 years at a 5 percent rate pay more than $186,000 in interest to the bank over the life of the loan. Compare this to consumers who borrow the same amount over that same time period but at a 3 percent rate pay just over $103,000 in interest – that’s more than 40 percent less.

Plus, a lower interest rate can significantly lower monthly mortgage payments, freeing up cash for homeowners each and every month.

That’s why it’s essential for home buyers to know their credit scores and restore their scores before applying for home loans. Here’s what potential home buyers need to know about credit scores.

What is a “good” credit score?

Credit scores range from 300 (poor) to 850 (excellent). Credit scores are calculated by looking at the following five factors:

1. Past payment history (35 percent of a score is determined by this; the more bills consumers pay on time, the better their score).
2. Amounts owed (30 percent; consumers who have used up a large percentage of their available credit will likely have lower scores).
3. Length of time a consumer has had credit (15 percent; a longer credit history tends to be better)
4. New credit (10 percent; consumer who open up a lot of new credit at once may hurt their scores)
5. Type of credit (10 percent; a variety of different types of credit like installment loans, credit cards and retail accounts tend to boost credit scores)

In general, the higher a consumer’s credit score, the lower the interest rate he or she will get, though other factors besides the credit score — like down payments (20 percent of the home price or more is preferable) — are used when determining interest rates.

What kind of credit score do you need to buy a house?

While it used to be that consumers with a credit score of 720 or above could qualify for the best rates, these days consumers will likely need a credit score of 740 or above.  A credit score of 620 is typically the minimum score that lenders require to give out conventional home loans (most people get a conventional loan; these loans can be obtained from almost any bank or mortgage company and aren’t backed by the government). People with scores in the 600s may pay a percentage point or more in interest than those with higher credit scores.

Fannie Mae, a government-sponsored entity, requires a minimum score of 620 (though many Fannie Mae loans require a 660), and the Federal Housing Authority (FHA) — a government agency offering loans with a low interest rate and down payment — requires a minimum score of 580.

How can consumers find out their credit score?

Consumers should find out their credit scores before they apply for a loan: This way, they can take the necessary steps to raise their scores and thus get the lowest rates possible. Aspiring home buyers should visit AnnualCreditReport.com to get a free copy of their credit reports from all three of the major credit bureaus (Experian, TransUnion and Equifax). The credit reports contain the information that your credit scores are based on. Keep in mind that each bureau may have slightly different information on file for you and may have a different credit score for you. Make sure that all the information on the reports is accurate; if it isn’t, go online to the credit bureau’s website to figure out how to dispute the inaccurate information.

In order to get your actual credit score you’ll need to use a website like CreditKarma.com which gives you one of your three credit scores for free.

How can consumers raise their credit score?

If a consumer finds that everything is correct on his or her credit report, but the score is still less than stellar, there are steps to take to boost the score. Because the bulk of a credit score is determined by payment history and amounts owed, consumers can improve their scores by making sure they pay their bills on time going forward (consumers may want to set up automatic reminders or automatic bill pay with a bank to ensure they don’t forget to pay on time again) and by paying down large debts like credit card bills, especially if these credit cards are nearly maxed out. Plus, consumers should refrain from taking out a bunch of new credit lines at once. These tips will help you improve your credit score.

But don’t try to buy a house just because of low interest rates or any other market trends. Especially if you are working to pay off debt and need time to save up money, then it may not make sense for you to buy a home. For those that do want to, proceed cautiously and keep this information about how credit scores affect the house-buying process in the forefront of your mind.

Image credit: iriana88w

Paying off debt is probably one of the hardest financial struggles you’ll ever face. It’s right up there with losing your job and not being able to pay all your bills. Why?

Because getting motivated to pay off debt (and staying out of debt) goes against what’s normal in our society. The normalcy of having debt is enough to keep you in debt for your entire life, and is even encouraged as a way to afford the “American Dream.”

So once you get over the initial decision to repay your debts, and you’ve created a solid game plan, the real work starts when you’re in the midst of putting your plan into action.

As someone who paid off over $14,000 of consumer debt in just over a year, I have firsthand experience with finding ways to stay motivated for long-term debt repayment. Here are a few tips and tricks to help you stay on track for the long haul.

1. Harness the Power of Good Peer Pressure

Even without the support of my friends and family, I was able to stay on track thanks to the support of other like-minded debt slayers.

You might not have the luxury of leaning on your siblings or best friends for help while paying off debt, and in fact they might be your biggest sources of discouragement since they won’t understand why you’re “going against the grain.”

If this is the case, you can be sure there are lots of other places you can find good peer pressure to draw encouragement from. They come in the forms of:

• Personal Finance Blogs
• Private Forums
• Local Meetups
• Facebook Groups
• Twitter Chats

Thanks to the internet, there are endless ways to connect with people online who are going through similar situations like you — especially when it comes to long debt repayment.

2. Reward Yourself When You Reach Milestones

As you know, paying off debt involves a lot of hard work and sacrifice. So of course, it’s a big deal when you hit a financial milestone you’ve been working towards — like sending in a final payment on one of your credit cards.

When this happens, don’t be afraid to celebrate! Give yourself a little extra motivation in the form of a reward when you hit a big or small financial goal. Why not get a little foretaste of things to come when you’re completely out of debt, by going out to see a show or staying in and renting/streaming your favorite movie?

And it’s not just about feeling good in the present, studies have shown that small rewards encourage change in behavior, and that’s the key to staying motivated to reach long term goals.

3. Read Other People’s Debt Stories

Many writers and debt-haters (myself included) document their journey to paying off debt on blogs and other public platforms as a way to keep themselves accountable. It’s another way to harness the power of good peer pressure.

Some of the best communities I’ve come across, that helped keep me motivated while paying off debt, have been from personal blogs.

Some of my favorites are Enemy of Debt (check out Travis’ story), ReadyForZero’s own success profiles and Blonde on a Budget (who is currently mere days away from celebrating complete debt-freedom).

It’s amazing what surrounding yourself with positive stories and personal experiences can do for your motivation — it got me through the lowest point in my debt journey when I almost gave up.

Image credit: subbotina

The Ultimate Guide to Student Loans (Credit.com)
The world of student loans can be confusing to say the least. Here is a list of just about everything you need to know.

5 New Rules on Federal Student Loans (Daily Finance)
To make matters more confusing, student loan laws always seem to be changing. Read here to find out what’s new this year.

How the Student Loan Fairness Act Could Affect Borrowers (Graduating from Debt)
Have you heard of the Student Loan Fairness Act? Read on to see what it is and how you might benefit.

3 Reasons Paying Off Student Loans With Credit Is A Terrible Idea (Business Insider)
Have you ever thought about paying off your student loans with a credit card? This article explains why this may not be a good idea.

5 Ways to Pay Back Student Loans Faster (Moolanomy)
There are plenty of other ways to pay off your student loan debt faster! Read on to find out what you can do to get rid of this debt.

After you’ve taken a look at these posts, don’t forget to take a peek at our guest posts from the past week…

Good Financial Cents – Couples Finances: What to Do if You Don’t Agree
Military.com – Four Last-minute Tips to Sell Your Home
Military.com – Making a Military Move on a Budget
Ms. Career Girl – Money Makeover Series: Future Financial Leader

…and to look at some of the websites who’ve recently mentioned us!

Free From Broke
Lifehacker
Positively Smitten
Reach Financial Independence
The Frugal Toad
The Heavy Purse

Kristen Hawley is a freelance writer with a personal interest in student loan debt. She blogs here to help others understand exactly what’s happening in the student loan universe.

“Should I do forbearance?” It’s a question many of us have asked. If you’ve read the fine print on your student loan paperwork (or have been in the dire straights of needing to figure this out for yourself), you’ve realized there are a few options to postpone payments. Deferring your loans while engaging in some sort of approved activity (like getting another degree or become unemployed) isn’t too tricky. And during a sanctioned deferment, interest won’t accrue — so you don’t end up paying more than you would otherwise.

Unfortunately, though, just not having enough cash to cover your monthly payment isn’t a valid reason for deferment. But depending on your lender and situation, you may be granted a forbearance: a temporary suspension or reduction of loan payments. Of course, unlike a deferment, interest will accrue during this time period.

Each loan is different, so check your individual terms before starting the forbearance process. There are two types of forbearance: discretionary (which means your lender decides whether or not to grant the forbearance) and mandatory, which applies to certain situations like medical and dental residency programs, teacher loan forgiveness, and others.

For purposes of this post, I’m talking about those discretionary forbearances, which you are often able to request due to financial hardship. For private loans, terms vary depending on your specific loan and lender. My private loan offered up to two years of elective forbearance. Thanks to the few months it took me to find a full-time job post-college (and the paltry salary it carried), I used nearly one year of this elective forbearance as soon as I could. After a year, I struggled to make payments, and at times considered using it again. My bank allowed forbearance in three-month increments, so when I decided to move into my own Brooklyn studio apartment, I elected to stop payments. “Just for three months until I pay back the security deposit into my savings,” I assured myself.

You can probably figure out how this turned out. Three months turned into six (I needed new curtains. New furniture. New stuff!) Six to nine. After nine months, I panicked. I now had just three months of elective forbearance left. What if I lost my job and couldn’t pay? My savings account wasn’t any healthier, and I didn’t exactly score a large enough raise (or miracle) to make up the difference in loan payments and continue my lifestyle.

This type of forbearance isn’t awful, and – real talk – sometimes you might need to consider using it. But before you get caught up in the siren song of not having to pay on your loan for a few months, consider these pros and cons:

PRO: Elective forbearance is there to help you in times of need, and you should use it if you need it. That said, make sure you’ve exhausted all other options. If you’re unemployed and receiving unemployment, you may qualify for a deferment. Read your loan documents and apply for any deferment you think you might be eligible to receive.

CON: There is a limit to how much forbearance you can use. Think about the life of your loans and your future. Use it when you need it, but don’t drain what could be a sanity-saving option a few years down the road.

PRO: Although choosing to use voluntary forbearance may feel like a last resort, this is one of the few facets of student loan repayment that you, the borrower, control. You choose when to use your elective forbearance. Use this as an opportunity to be smart and savvy.

CON: This is also a tempting option. If you’re like me, you’ll be tempted by that new couch, curtains, dress, shoes, or vacation to use “just one more month” of forbearance. Generally, this is not worth it. It’s there for emergencies only.

PRO: You can still make payments during this period. So, if you find yourself in a better financial situation one month, you can throw some extra cash toward your loans for a feel-good mood boost.

CON: Interest will accrue, and if you don’t pay it monthly, it gets tacked onto your principle at the end of the forbearance period. Pay the interest — or at least part of the interest — monthly, if you can.

Paying your loan bill is always better than not paying it — no surprise here. But if you are in a bit of trouble, considering these facts (as well as understanding your options) may provide a small bit of relief.

Have you used forbearance (or thought about it)? Share your experience in the comments below.

Image credit: shawnhempel

This is something I’ve learned while working on the Money Makeover Series. Sometimes simply setting a budget or a spending plan isn’t enough. There are times when your income may be lower than your necessary expenditures and things like food and shelter simply can’t get cut from the budget. So what can you do to reverse this and make sure your income > bills? Develop a new strategy!

How to Strategize Your Finances: Consolidate Your Debt

First things first. If you have multiple debt accounts then it can get quite difficult to manage them all. Between the multiple due dates, minimum payments, and interest rates, you’re losing out on both time and money. But if you can consolidate them all into one bill, then you’ll have a more manageable monthly payment, you won’t have to worry about forgetting to pay a bill, and you won’t lose so much money to interest.

Remember, you don’t need a company to consolidate your debt. You can do this on your own! Some popular debt consolidation methods are credit card balance transfers, home equity lines of credit, loans from a local credit union, and peer-to-peer loans. How it works is you would take out one loan, credit card, or line of credit and use that to pay off all of your consumer debt such as credit cards, loans, or other lines of credit (student loans should be done separately and mortgages should only be refinanced). This should leave you with a lower interest rate and only one bill. Final tip: don’t charge any new debt after consolidation.

How to Strategize Your Finances: Choose Your Debt Payoff Method

Once you’ve consolidated, you still may have more than one debt type (or you may not be able to consolidate due to your credit score). If that is the case, then it’s time to choose a debt payoff method. The two most popular debt payoff methods are the debt avalanche and the debt snowball:

• Debt Avalanche: This is the mathematically fastest way to pay off debt. How it works is you would pay off your highest interest rate debt first (typically a credit card). Once that’s paid off, you’d apply that same monthly amount to the next highest interest rate debt, and so on until you’re debt-free.

• Debt Snowball: This is when you pay off your lowest balances first and that same monthly amount to the next lowest balance, and so on until you’re debt-free. You’re likely to pay more in interest doing this method, but some find the small “wins” to be more motivational and thus find this easier to maintain.

No matter which method you choose, the most important thing is that you maintain this strategy of targeting one account while paying minimum on all the others. This will allow you to keep a laser sharp focus on your debt payoff and to see results faster!

How to Strategize Your Finances: Boost Your Income

Finally, if you need to switch the balance of income and bills, finding ways to boost your income – even a little bit – can make a big impact! With the convenience of the internet, there are even more opportunities to earn extra money on your own time without having to leave your house.

The best way to boost your income is to evaluate your talents and hobbies and find out if there’s a way to earn money doing them. For example, if you’re really crafty then you can start your own Etsy page. If not on the internet, you can still use the internet to find a part time job. Love kids? Check out websites like Sittercity to see if you can nanny after work or on the weekend. Great math skills? Tutorspree can match you with someone to tutor in your free time. If you get creative and follow your passions, you can earn money while having fun at the same time (and maybe even boost your current career)!

At the end of the day, creating a budget or spending plan can turn into more of what feels like magically stretching numbers rather than simple math. If that’s the case for you, then follow these steps to strategize your finances! By approaching your finances with a more creative point of view and “cleaning” things up wherever possible, you’ll soon have a financial situation that you can manage and control!

Image credit: ivelinradkov

Being human in the modern world involves making some tough decisions. Everyday in life we have to do things that we wouldn’t normally choose to do in our jobs, at our homes, in our relationships, and in other areas of our lives. Let’s face it, if we were given the choice between cleaning the bathroom or watching a favorite movie, most of us would choose the favorite movie.

Who but a select few among us would choose to fill out their tax forms instead of going to a barbecue with friends? Likewise, when it comes to our finances, we often find that the things we should do are not the same as the things we’d like to do (all else being equal). If long-term consequences could be ignored, most of us would rather not spend all of our extra cash towards paying off debts and instead would prefer to spend it pursuing our own whims and dreams.

However, if we were to make our choices based off of pleasure alone, then chores like cleaning the bathroom or completing our taxes on time would go by the wayside. The reality is that we do live in a world with long-term consequences. Which means that only choosing to do the things that we find pleasurable can actually get us into trouble.

With that said, shouldn’t it be true that we can find a good balance and give ourselves pleasurable rewards during our debt payoff journey?

Why yes. Yes, it is. Below, I’ll outline some ways to make the journey a little less painful.

The Psychology of Rewards

Have you ever heard of Operant Conditioning? This is a phrase coined by behavioral psychologist B.F. Skinner to describe a method of learning that occurs through rewards and punishments for behavior. Through positive and negative reinforcement, a person learns that there are consequences to their behaviors. Positive reinforcement increases a certain behavior, and negative reinforcement decreases a certain behavior.

Why not use some psychology on yourself? The type of financial restraint needed during debt payoff mode is not as hard to achieve if you know you have a reward coming down the pipeline to positively reinforce your good behavior.

Rewards Along Our Own $59,000 Debt Payoff Journey

You may have read my own $59,000 debt payoff story on this blog. What I did not include in that initial story were the little splurges that my husband and I allowed ourselves to take in order to maintain our motivation. We sat down and had a fun discussion about how we would reward ourselves along the way.

Since we were packing all of our breakfasts, lunches, and making each of our dinners at home, any time we were able to eat out it was a huge treat for us. In order to maximize the money that we could put towards the actual debt payoff as well as our other goals (down payment on a home and paying cash for our wedding/honeymoon), we chose to reward ourselves beginning on the cheaper side and ending with a moderately expensive restaurant once all of our debts were paid off.

For example, after paying off the first of our debts, we grabbed two turkey barbecue sandwiches from our favorite barbecue restaurant for under $15. Later, to celebrate our third and final debt payment, we decided to splurge on a nice, moderately-priced restaurant to savor what we had accomplished.

Leaving Yourself a Trail of Cookie Crumbs

Rewarding yourself at various checkpoints along your debt payoff journey can really help you to stay motivated. Before deciding on what the reward will be, you need to decide when you will reward yourself.

Measurable wins (deserving of a reward) might include reaching a certain amount of debt that was paid off (for example, the $5,000 mark, then the $10,000 mark, and so on), or perhaps after a certain time period of living within your budget (the one-month mark, then the six-month mark, etc.).

From our own example, we had three debts to pay off (a student loan, a car loan, and an engagement ring), and decided to treat ourselves after the successful final payment for each of these loans. This little trail of cookie crumbs is a small price to pay to keep you motivated towards reaching your next milestone. Fortunately for all of us, using this psychological trick does not even need to cost much.

Frugal Rewards that Will Not Break Your Bank

While finding a reward to motivate you is based entirely on personal taste, I would like to share some ideas to get you in the mindset that a reward or splurge does not need to cost a lot of money.

• Dessert Out: If you are like Paul and I, then you probably do not get to eat out much now that you are on a strict debt payoff diet. While you may not wish to splurge on an entire dinner or lunch at a favorite restaurant, why not splurge on a really nice dessert? This means that you will still get to go out, but for under $10.
• A Signature Drink: Is there a particular signature drink that you have been craving? Personally, I love a green tea frappuccino (with whipped cream, of course). It’s something that I do not drink often, but when I do, it feels like such a treat.
• A Personal Day: Do you have a vacation day that is calling your name? Why not use it and just relax all day long? If you do not have an entire day, taking a half day on a Friday is always very nice as well.

Have you ever used this psychological trick to get you motivated? What sort of rewards or splurges did you grant yourself?

Image credit: StarsApart

“I’ve got a debt problem.”

This is something that many of us have heard — and probably have even said. I remember when I used to refer to my own “debt problem.” After awhile, though, I realized that debt wasn’t my problem at all.

No, consumer debt isn’t the problem. It is only a symptom of the problem.

Debt is an Indication of a Larger Money Management Problem

When you are loaded down with high-interest consumer debt, from credit card spending or other types of spending, it’s an indication that you have a larger money management problem. In this case, debt is a side effect of your true financial problem, which is that you are spending more than your income.

Instead of trying to solve your debt problem, you need to look to the underlying cause of debt. Are you spending too much money on things that you don’t need? Do you make purchases on impulse rather than waiting until you have saved up (or budgeted) for them? Has your lack of an emergency fund led to an inability to meet with unexpected expenses?

Take a step back and honestly evaluate your financial habits. In many cases, the problem has to do with money management and the debt is just a symptom of that. Once you see what behaviors are resulting in debt, you can begin making changes.

Change Your Behaviors

At the same time you begin a plan to get out of debt, you need to also recognize any problematic financial behaviors and change them. If you are spending too much on things that don’t matter, prioritize your spending and cut out the things you don’t care about.

If you want to be able to do more things, but you don’t have the money, find a side gig for extra income rather than pulling out the credit card. There’s nothing wrong with acknowledging what you want from life, and then figuring out how to get it. But you need to figure out how to get it without going into debt if you want to achieve financial freedom.

Make an effort to change the habits that are at the root of your financial problems. Once you change the way you relate to money, and stop the money management mistakes that result in debt, you are ready to begin a debt paydown program in earnest.

Stay Out of Debt

Changing your behaviors is so important because you will need to stay out of debt once you pay off your obligations. Sometimes it can be hard to keep making progress, and instead people find themselves right back in debt within three or four years after first becoming debt free.

Often, this relapse comes about because nothing about the way they managed their money changed. If you treat debt as a problem, once you eliminate it, you will go back to the same practices that resulted in debt in the first place. If you recognize your money management issues as the problem, you will change the outcome.

By tackling the problem of poor money habits, you change the way you deal with money on a more permanent basis. After your debt is gone (the symptom subsides once you cure the underlying disease), it stays gone because now you are engaged in healthy financial practices.

Bottom Line

As hard as it is to pay down debt, it’s even harder to change your financial habits. However, if you want to pay off your debt, and avoid going into more debt in the future, you need to assess and change your behaviors. Make lasting changes to the way you handle money, and you can ensure that debt never troubles you again.

Image credit: Images_of_Money

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After you’re finished reading these great posts, don’t forget to check out some of our latest guest posts…

Bible Money Matters — 4 Tips for Paying Off Credit Cards
Credit.com — How to Pay off a Mountain of Credit Card Debt
Credit.com — Quick Fixes to Help Your House Sell for More
Forbes — How to Build a Trusted Online Financial Services Company
Ms. Career Girl — Money Makeover Series: Ready to Launch

…and some of the websites and blogs who were kind enough to mention us in the past week!

Confessions of a Finance Flunk
Lifehacker
MSN Money
Reach Financial Independence
Yahoo! Finance