If you wanted to lose weight, you only need to do at least one of these two things: eat less, move around more. Sure, it may seem simple but losing weight really is that simple. When you eat less, your body will try to compensate for the lost calories by converting your body’s fat deposits into the energy your body’s cells need. You start getting thinner and you lose weight.
Alternatively, you can choose to eat the same amount of calories every day but you can increase the amount of activities you do every day. When you do this, your body burns more calories and since it can’t cover these calories with the food you eat, it will burn up your stored fat for energy. You can use this diet formula as an analogy for getting out of debt.
Similar to our daily intake of calories, we have expenses and liabilities. We spend money paying these off just like our bodies need to burn the calories we ingest daily. Going on a financial diet involves reducing the amount of financial ‘calories’ we obligate ourselves to. If we have less obligations, we have less debt to pay just like with dieting since if we take in less calories, we have less calories to burn.
How to go on a debt diet
The first step in going on a debt diet is to reduce our overall debt load by a comfortable and convenient amount immediately. Can your lifestyle afford a 5% reduction in expenses? Most people would say yes. Use that 5% you saved in paying off long-term debt. The next step is to ramp up your financial diet by reducing further. Can you go without 7% of your expenses? Keep ramping it up until you reach a point you can’t cut any further. Regardless, keep paying off liabilities.
When you implement this process, you are stopping new debt from forming while knocking out old debt. This is very similar to dieting where you reduce your calorie intake while boosting the amount of calories you burn. By attacking both ends of the debt equation, you are increasing the speed at which you get out of debt.
The importance of willpower
Of course, many things are easier said than done. While weight loss is easy to understand and explain, it is hard to pull off because the processes above need willpower and personal discipline to work. If you want to go on a diet and you want to be successful, you need to have willpower. The same goes for going on a debt diet-both require the key factor of willpower and self-discipline. You really have to push yourself to start and keep pushing yourself to keep going.
The good news is that once you start seeing your credit card balances getting lower and lower, the more you get excited. Eventually, you will develop momentum and you can completely knock out your debt in no time.