“You have a population all of whom are in debt, and who are essentially renting themselves to employers to do jobs that they almost certainly wouldn’t want to do otherwise, to be able to pay those debts.”
– Andrew Nikiforuk
Some minimalists choose to limit their liabilities to “good debt” (debt that is an investment, like a reasonably sized business loan, mortgage or student loan). Others say there’s no such thing as good debt and vow to be completely debt-free.
Whichever category you’re in, odds are good that before you became interested in minimalism, you got farther into debt than you’d like. If this is true for you, don’t just bury your head in the sand and hope everything works out. You’ll need a plan for debt reduction or elimination.
“There are but two ways of paying debt: Increase of industry in raising income, increase of thrift in laying out.”
– Thomas Carlyle
I’m not a financial advisor, but it doesn’t take one to recognize that there are only two ways to reduce what we owe¹:
- Spend less.
- Earn more.
Minimalism primarily helps with the first, though if you have a lot of unused stuff, you may be able to make quite a bit of money selling it.
When we were decluttering, I decided to offer for sale only items that I thought I could get at least $50 for pretty easily, and we did get a few thousand dollars selling these items (big-ticket items like a canoe and a bike raised the total pretty quickly).
Depending on your situation, you may find it worth your time to sell smaller-value items. You can have a garage sale or offer them for sale on Craigslist as a bundle (for instance, you could sell all the old baby clothes and toys together).
“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.”
– Ogden Nash
You may find spending less to be easy as you continue your journey to simple living. Perhaps you’ve downsized a lot or discovered a number of monthly expenses you can cut because, once you began spending more mindfully, you realized these expenses don’t make your life any better.
If this isn’t true for you, make a list of the stuff you feel you “should” eliminate, but really don’t want to. Go through the list and see if you can cut back instead of eliminating a much loved product or service all together. Alternatively, maybe you can find a more affordable substitute.
Maybe you can cut your latte-before-work to two days a week instead of five and reduce the data plan for your phone by a gigabyte a month. Perhaps you’d enjoy Netflix as much as cable or bike rides as much as your gym membership.
Mindful spending not cutting it for you? Need some serious help? Visit your library for some money-management books.
If you haven’t yet read the excellent Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez, start there.
If you’re interested in a plan like Dave Ramsey’s, grab several books from different financial gurus. You may find that while Ramsey worked great for your best friend, Suze Orman’s approach feels like a better fit for your lifestyle. You may also prefer to create your own plan using the knowledge you gain from reading a variety of opinions.
These books are often recommended for learning the basics of money management (I haven’t read any of these):
The Money Book for the Young, Fabulous & Broke, by Suze Orman.
How to Get Out of Debt, Stay Out of Debt, and Live Prosperously, by Jerrold Mundis.
Get a Financial Life: Personal Finance In Your Twenties and Thirties, by Beth Kobliner
If you’re more into technological tools than books, see Simple Dollar’s suggested websites and apps for reducing debt and meeting financial goals.
¹ Of course, bankruptcy or debt settlements can reduce what you owe, but these damage your credit and should be used only as a last resort. If you can’t see your way out of the mess you’re in, consider a credit counselor. Many of these companies can make things worse than they were before, so be sure to read the FTC’s suggestions for finding a reputable credit counselor before beginning your search.