Last Updated on June 22, 2023
When you are focused on paying down debt, making lifestyle changes can help you pay down debt faster. The minimalism lifestyle encompasses practices that could help support your debt repayment journey. Here’s how financial minimalism could help you to increase your savings rate and pay down debt faster:
What is Minimalism?
Minimalism is a lifestyle choice to minimize not only your physical belongings but also to streamline your finances based on what you value. The focus of minimalism is simplifying your life, whether through fewer items in your home or changes in your finances.
To live a minimalistic lifestyle you may sell excess items you no longer need or want. A minimalist may focus more on experiences rather than physical items. Someone living a minimalistic lifestyle may also only have one credit card and keep finances streamlined at one financial institution. These changes may help to focus more on living and less on the clutter of physical belongings and stress of finances.
Minimalism and Money
If you’re wondering how to become a financial minimalist, here are a few suggestions to help you simplify your budget and accelerate your debt payoff.
Establish Goals
Save money with minimalism by setting financial goals, such as paying off all your debt or establishing an emergency fund. Once you settle on your goals, you can begin to streamline all aspects of your life to accomplish them.
For example, if you decide you want to speed up your debt payoff to be able to travel more, you may decide that living in a smaller home better aligns with those goals. A smaller home can equate to less rent or mortgage costs and smaller utility bills. This results in savings to help achieve your goals of debt payoff and traveling.
Downsize Your Space
Just as mentioned, not only does a smaller home equate to savings to put towards other goals, but downsizing can also help prevent you from acquiring possessions that do not align with your core values.
If you do not have the space for more items, you will not be able to acquire more items. At first, downsizing may seem impossible. But if you really consider your space, you may find you that living with less actually brings you more joy. Renting or buying a home with fewer rooms can equal savings and allow you to fully utilize your space instead of having unused rooms.
Cut the Clutter
Begin to embrace the minimalist aspect of less clutter in your home. Purge items that you no longer need or that do not make you happy. Try selling these items and put that money towards your debts. Making extra payments towards your debt is a great way to save on interest costs and speed up the time you can pay off your student loans.
Once you have eliminated items in your home, decide to not bring in items that aren’t things you genuinely need. That means if you receive a gift that you don’t love, try selling it or regifting it. When you are out shopping, keep your goals in mind and see if the prospective purchase aligns with your goals.
Look at Your Budget
Minimizing your expenses could help you to save money. Are there services you are paying for but no longer use? Can you combine your car insurance and homeowners or renters insurance through one company and get a discount?
Additionally, if you have multiple student loans, you could consider student loan refinancing. This would allow you to combine multiple loans into one and save some money when you qualify for a lower interest rate. Having fewer bills to pay makes managing your finances easier but can also allow you to save some money in the process.
Examine your recent months’ expenses to evaluate where you may be spending excess money you could be putting towards your debt.
Limit Payment Options
To action out a minimalistic lifestyle, you may want to consider your payment options. Having multiple credit cards goes against the notion of financial minimalism. Try to limit yourself to one credit card for purchases. This will likely make your cards easier to manage, and may also help keep you from spending more than you can afford.
Another great option is to use cash for all purchases. This can be a simple tactic where you withdraw all your budgeted money for the week or month and use it for all your purchases. This will help control spending and be simple to manage.
Examine All Purchases
When you are contemplating making a purchase, besides a necessity like food, you may want to consider asking yourself some questions to see if it is a purchase that you really need to make. If it is an item that is needed, examine whether you can borrow the needed item from someone or use something else to accomplish the same task.
Minimalism can help you save money by encouraging you to consider whether you really need an item. If the purchase is something you want, be sure it aligns with your values and goals.
Bottom Line
Trying out financial minimalism may help you to save money, generate less stress and enjoy an overall happier outlook. The first steps to start the minimalistic lifestyle may be hard in the beginning but remain focused on your results to stay motivated. You will begin to reap the benefits of minimalism when you feel less stress and see that you are closer to achieving your goals and paying down your debt faster.