Have $5,000 or More in Debt? Here's How $5 a Day Could Make a Huge Difference
- Putting aside a little money each day to pay down debt can save you thousands of dollars.
- It is possible to cut expenses without depriving yourself.
With a little creativity, squeezing $5 a day out of your budget is likely possible.
A Stress in America survey conducted by the American Psychological Association (APA) indicates that money is the top cause of stress for many of us. And stress is not simply uncomfortable. Stress can lead to a host of chronic health conditions as well as impact personal relationships.
Here's the problem with being stressed about money, though: Anxiety can prevent us from seeing things clearly. It's easy to be discouraged when we're deep in debt, but there's no reason to lose hope.
As someone who's dealt with so much debt I thought I'd never find my way out, I'm here to tell you that you can do it.
One bite at a time
Whenever I believe I'm stuck in an impossible situation, I return to the words of the Nobel Peace Prize winner Desmond Tutu. "There is only one way to eat an elephant: a bit at a time."
In other words, anything in life can feel overwhelming (or impossible). But no matter how big a problem we face, the best way to approach it is by taking on a little at a time.
That "I'm not getting anywhere" feeling
Let's say you owe $5,000 on three different credit cards, for a total of $15,000. The average interest rate you're paying is 17%. You're currently making the minimum payment on each card. At this rate -- if you don't charge anything else on any of the cards -- the debt will be paid off in 63 months -- more than five years. The total interest you'll pay will be $7,719.
I tell you this not to discourage you but to let you know how $5 a day can change the entire scenario, offering you a greater sense of control.
$5 a day
Dedicating $5 a day means you'll have an extra $150 monthly to pay off debt. As simple as it sounds, here's how an additional $150 per month can help:
- Split the $150 between the three credit cards by making an extra $50 payment to each every month.
- Rather than 63 months, all three cards will be paid off in 39 months (two years, three months).
- Rather than pay $7,720 in interest, you'll pay just $4,504.
If 39 months still feels like forever, focusing on one card at a time is okay. By sending the entire $150 extra to one card each month, it will take only 23 months to pay off the first card. Then, you can focus on the next debt.
When $5 feels like a fortune
The idea of an extra $150 per month may seem impossible. In fact, the idea of coming up with $5 a day may appear daunting. If that's the case, look through this list of ways to make it happen. There may be one or two that haven't occurred to you.
Have a garage sale
I don't enjoy visiting garage sales, but man, I love to put one together. It allows me to go through every room of my house and get rid of the stuff I'm no longer using. Once I've decided what to sell, I borrow tables and neatly organize things into categories. I have a theory that some people will linger longer if everything is neatly arranged. In any case, I usually make $300 to $400 on the sales, enough to cover two months of extra payments.
It took me years to figure out how much I like generic foods. Now that I've taken the plunge, there are some generics I like far more than the name brand. According to Consumer Reports, most generic brands are as tasty as the "big names" but cost 20% to 25% less.
Comparison shop from home
I'm not fond of shopping, and searching around for sales is not my thing. Shopping apps like Flipp take the legwork out of shopping, telling me which stores in my area offer the best deals on what I'm looking for.
Rethink your morning drink
I refuse to be the person to tell you to give up your morning latte because, frankly, if I ever commit a serious crime, it will probably be due to a lack of caffeine. That said, buying a great coffee maker probably saves me at least $500 a year. Insider tip: Have fun finding a small(ish) coffee business that manufactures top-quality java. I'm currently obsessed with Parish Coffee out of Louisiana. Now that I can make a great cup of coffee (or a latte), I don't think anyone else's coffee is as good. The cost per pound is a bit steeper than I would pay in a grocery store, but knowing my coffee at home is better than any drive-thru saves me a bundle.
Check your subscriptions
If you subscribe to a premium channel to watch a specific show, cancel the subscription once the show has ended. I know many small subscriptions are only $5 or $6 a month, but every little bit helps. While you're at it, make sure you still want all your other subscriptions, including health and wellness boxes, newspapers, or satellite radio in a rarely driven car.
Carpool or buy a monthly pass
You can save on the high cost of gasoline by ride-sharing or buying a monthly transit pass. At the very least, download an app like Gas Guru or GasBuddy to help you find the gas station with the lowest prices near you.
Deprivation is no fun, and cutting out everything you enjoy is likely to make you feel more stressed rather than less. I can tell you that when I was getting rid of debt, I cut out big trips. Rather than spend $5,000 on a splashy vacation, I spent $1,500 on a more modest trip. That was an extra $3,500 to dedicate to debt.
While these suggestions may be helpful, you're likely to come up with even better ideas that fit your lifestyle and spending habits. However you come up with the extra money, remember that it's okay to pay down debt $5 at a time.
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