Everyone takes a different approach to paying off their debts. Some people are fine carrying some long-standing debt as long as their monthly cash-flow is manageable. Others see any kind of debt as a constant thorn in their side and their only priority is to get out as fast as possible.
The math is simple: The higher you prioritize getting out of debt, the faster you will.
For this reason it’s impossible to just throw a list together of what count as needs and what count as wants, but let’s talk about how you can go about making some tough decisions.
What is a Need?
Again the definition will be different for everyone, but we can loosely define a need as something that is essential – the basics of life that you couldn’t live without. This is:
• Shelter – Tough choices would include selling a home and renting a cheaper place, or moving back in with your parents if necessary.
• Food and water – You don’t need restaurants, wine, or fancy cheese. You need the cheapest foods that provide the nutrients you need.
• Health – Laser eye surgery is a luxury. On the other hand, don’t take a look at a cracked tooth and think you can just walk it off – dealing with that is a need.
• Clothes – The latest Nike’s or a bespoke suit are wants. Dressing appropriately so you don’t get fired from your job is a need.
• Transportation – Don’t but a new car because it’s ‘reliable’. If you can, take the bus, ride a bike, carpool, or, if absolutely necessary, buy a cheap used car.
What is a Want?
A want is everything in your life that’s not a need. This includes:
• Cable – or a TV for that matter
• New Car
• Home Renovations – A new bathroom/kitchen/basement can wait. And no, the fact that your home will go up in value doesn’t matter unless you’re putting a for sale sign up as soon as the reno is done
• Cell phone – You used to live without one, some people still do.
• Entertainment – concerts, video games, magazines, sports, movies, etc.
Making The Tough Choices
Most of you will have had one thing on this list that jumps out as being a need instead of a want. Maybe you ‘need’ a cell phone for work, or your sport’s team is how you socialize with work people and you’d be ostracized if you didn’t participate.
The real question you have to ask is:
How serious am I about getting out of debt?
While some people are okay with the ‘balanced’ approach to paying off debt, it’s been our experience that being completely focused on that goal is a powerful attitude that will greatly accelerate your debt freedom.
This is where the tough choices come in. Every excuse you make and every item that moves from the wants list to the needs list is a step backwards in your path to being debt free.
Weigh every choice carefully. That short weekend away that you ‘deserve’ because you’ve been working so hard can set you back months. Wouldn’t it be better to be debt-free two months sooner so you can go on a real vacation then – completely guilt-free?
People who are dieting use the expression: Nothing tastes as good as being thin feels.
Adopt this attitude in your spending. NOTHING you buy now will make you feel as good as being out of debt will. Make the tough choices – cut, cut, cut – and keep track of how much faster your goals are coming up.
Taking control is the single most significant step you can take to becoming debt-free, so make the hard choices and accomplish your goals!