The Best Way to Pay Down Debt – Try a Spending Freeze

Many thanks to everyone who read my post on Business Insider last week. I so appreciate all the support. In the midst of all the excitement, I've gotten a lot of questions from folks who read the piece and were inspired to start paying down debt by doing a spending freeze.

“What kind of salary were you working with in order to pay down that much debt?” Was a big one. Got several emails asking why I decided to “leave that out” of the post. First of all, I was working full time in a corporate office, and knowing how much one of your colleagues makes is never a great recipe for success.

Second, how much I took home in salary is irrelevant, because the majority of the money I used to pay down the debt came from my side hustle efforts.

The Spending Freeze + Why It's the Best Way to Pay Down Debt

I don't make six figures or anywhere close to that and my salary was, by and large, about average for what marketing copywriters can expect to make in Atlanta. Much of my “salary” money went toward building up my emergency fund so I could leave my full-time job.

I also received numerous emails about my spending habits. The only way I was able to both super save and rocket through my debt payoff by following Anna Newell Jones' “The Spending Diet,” which is what I want to talk about today.

I've been following Newell-Jones for YEARS, and her blog And Then We Saved has long been a favorite of mine. And while frugality isn't something I preach, write about often, or even enjoy, I'll admit being uber-frugal can come in handy when you're in a pinch.

Since I wanted to be aggressive with my debt payoff, I knew I'd need to get super focused with both my side business, and my spending. Having wanted to try the Spending Diet for a few years, I figured now was as good of a time as any. The basic gist of it is that you only allow yourself a SUPER SMALL amount on “non-needs” spending each month. Like Anna, I gave myself $100 on non-needs spending a month.

That is $25 dollars a week for “fun money.” For comparison, and to demonstrate what a DRASTIC cut this was for me, I'm used to having around $350 in my budget template each week to play with after expenses.(Yes, I know that is a lot by most standards.)

So Here Is What I Liked About a Spending Freeze

It really clarified to me what I could and could not live without. Most of the things I considered needs were really just wants that if I took a moment to focus on something else, the desire quickly passed.

  • Not to sound all cheeseball, but when you only have $25 to spend a week on going out, you start being very selective about how you spend your time and money, and it makes what you do choose to go out and do more special in a way. You learn to savor the experience and feel like more of a “treat.”
  • I was so busy busting my ass with all the side work that I really didn't have time to go out like I usually do, so I didn't feel the Spending Diet “pinch” as much as I would, say, now when I've drastically cut back on my work hours.
  • Allowing myself planned indulgences (i.e. $25) went a long way to help me stay on track with my spending.

Back in 2010, my first year out of college, I made $12,000 as an actor, and the three months I did the Spending Diet reminded me of those days. In a way doing the diet reminded me of the value of a dollar and how when I shell out for something, I'm shelling out my time in order to earn that money to get it. When you look at it that way, certain things just don't seem worth it anymore.

When you look at it that way, certain things just don't seem worth it anymore.

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Here is What I Didn't Like

  • Because I cut back so drastically, when I came off “The Spending Diet,” I felt incredibly guilty once I started spending again. Everything felt like a guilt trip, even when I was indulging guilt-free. This hasn't been fun at all. Leaving my full-time job and budgeting irregular income hasn't helped with this either.
  • You do put off buying things because you're like, “oh I'm on the spending diet.” Then it's been three months since you bought anything and you're out of all your make-up, hair products, and lotions at the same time. Not a huge deal, but it was an irritating day when I realized how depleted my supplies were.
  • I don't think for me, my needs, my lifestyle, I'd be able to keep up the $25 dollars a week spending unless I absolutely had to. I didn't like how “crazy” I felt about watching every dollar while I was on the diet.

Why I Feel a Spending Freeze is the Best Way to Pay Down Debt

I think anything is sustainable for 30-90 days. I wanted an aggressive approach and knew I needed to take one, so that is what I did. Anytime I felt extra out of control or frustrated by my lack of funds, I just reminded myself it was for a good cause (being credit card debt FREE) in the end.

Also, it was a great way to get competitive with myself and see if I could restrict my spending. When you only have $25 to spend on non-expense items, the gray area disappears and everything budget-wise becomes black and white. This is great for people like me who tend to overspend when it comes to those gray areas.

I encourage everyone trying to pay down debt to test out The Spending Diet and see how it affects their pay off goals!

 

 

Thinking about doing a spending freeze? Make sure you read this before you start! Learn the pros and cons of this controversial saving strategy before going in, so you can set yourself up for success down the road!

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  • Lisa
    May 1, 2015 at 8:54 pm

    I did a spending fast for a month and, like you, I felt incredibly guilty for spending after the fast was over. That was definitely something to get used to.

  • Sylvia @ Professional Girl
    April 28, 2015 at 7:45 pm

    I was thinking about doing a “No Spend” Summer to see how disciplined I can be. But now, I think it can be use to help me identify my needs versus my wants.

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