4 Steps to Reduce Debt

By July 20, 2012At Home

American Debt Burden

The average American household has $7,000 of unused stuff and $7,246 in credit card debt.  Funny how close those numbers are, right? (April 2012 revolving debt balance from the Federal Reserve divided by 2010 U.S. Census data of 119 million households. NPD Group estimated the value of our unused stuff in a 2011 report.)

Too Much Debt

Credit card debt, not to mention your home loan and other obligations, can overwhelm a family quickly.  The burden of financial hardship on a family is a heavy one.  Not only does the family suffer financially, but these money problems cause major problems in relationships.  Money and Sex have been called the main reasons for divorce these days.  I believe it.  Who is having sex after they argue about money? No one likes the burden of bills they can’t pay.  Money is complicated, and the more you owe, the more messy it gets.  Juggling payments and creditors and paperwork makes for a mess of your money and your life.

So, it would be better to have less debt.  Agreed?  I am not an idiot.  I know that families are struggling, making less money than they ever have or living with one less salary or none at all.  These times are tough.

Too Much Stuff

But, do you still have stuff?  Do you still buy things?  I bet that $7000 of unused stuff sounds high. Some have more, some have less.  I also bet if you haven’t done some major de-cluttering of late you can just picture those piles in your attic or the mess in your closet and let’s not even visualize the garage, okay? A 2010 report from the Department of Energy found that one-quarter of families with a two-car garage can’t park in it because of all their belongings. I don’t even have a garage, but if you do…can you park your cars there?

To be honest, this figure made me a little nauseous.  I know I have bought things we never used, rarely used and / or just plain old did not need.  Sometimes I get sucked in by those clearance shelves.  Sometimes I love a color so much I buy something I already have.  More often than not since I had kids, I forget my own rules.  I am not throwing stones.

We just don’t need all the products we buy.  They build up.  Debt builds up.  Life gets messy.  Let’s clean it up.

Shopping Rules

Shopping Rules

First, and this is obvious, if you can’t afford it, don’t buy it.  Don’t whip out the credit card.  Don’t rationalize this purchase by saying you won’t buy Starbucks for a month. If I am saving for something, the rule is to save for it first, then buy.

Second, before making a purchase, I visualize it in my home, in my life, being used by my family.  If I can’t really see using it, pass it by.

Third, if I really love something and I can totally see just loving it to pieces, is it replacing something I already have?  What will I do with the item already in my home?  I am supposed to have a plan before I buy.  Will I donate the item, sell the item, or re-use the item in a different way?

Fourth, if I still want it, wait.  Put the item on hold and sleep on it.  More often than not this results in me realizing I don’t actually totally and completely need that super cool bright orange colander simply because that is the accent color in my kitchen.  Who the hell cares what color their colander is?  Sadly, though it does make me happy, I bought that one, the moment I saw it.  My husband mocked me, with good cause.

These are totally good rules that would help us all.  Let’s stop bringing stuff into our homes that we don’t need.

Hindsight is 20/20 – I already have all this crap!

Ah, then you are in my boat.  Like I have done, you must begin de-cluttering your home.  This involves the whole family.  We’ve all seen the shows where you designate a spot for keep, sell, giveaway and trash.  This works people!  You can go room by room or do a giant power purge and pretend you are on TV and do the whole house in 4 days.  It is sad that HGTV won’t be there to re-paint and decorate the rooms you so brilliantly clean out, but hey, you will totally feel empowered enough to paint if you can purge!

The Easy Stuff – Stage One Purge

Give everyone in your family 30 minutes to tackle their own space.  Set a goal for each person to find at least 25 or 35 or even 50 things they do not need or use anymore.  Kids like this for some reason.  Mine just like to count that high.  Low hanging fruit is awesome.  You will find space you never knew you had and be embarrassed when you pull out that top you never wore.  It’s okay.  We are lightening the load here.

Sort those items into piles.  If items are in good condition and will bring money, put them in the sell pile.  If toys are broken or missing pieces, I usually offer them to neighbors first for free.  Kids just like to play with anything.  One piece missing might matter when selling, but not when giving it away.  Please sort trash and recycling.  Donate items that you don’t think you could easily sell yourself or that you feel would help someone else.

Here’s the thing.  No matter what, you are cleaning out your own space.  If you are doing this because you need to pay off bills, then by all means, put as many items as you can in your sell pile.  If you don’t need the money, you could consider donating many items to specific charities that are looking for them.  Suits, electronics, clothing and toys all can go to local charities.

The Nitty Gritty – Stage Two Purge

This where we tackle the hard things.  The ones we argue over.  The items we rationalize and swear we need even though we never use them.  The attic and the garage and any other rooms or closets you use to stash your stuff are on the block here.  Just think how much better you will feel with more space and less debt!  If you don’t have debt, consider saving this money and knowing you have funds available for future plans.  As in stage one, anything that is trash or donate goes straight to the dump or the car to be taken to a charity.  Do not let these items remain in your home.

You know how this works, right?  At this point you touch it, take a moment and make a decision.  This takes time.  I would devote a good few hours to each and every separate space you need to attack and a full day (or more) for attics, basements or garages that are crammed with stuff.  If you need to, you can break this up.  Hit those areas for low lying fruit and then come back for the hard stuff.

Hopefully by this point your sale pile is growing!  If possible, try to group like items.  It will make it easier to sell them no matter how you decide to make your cash.

Remember not to look back on these decisions.  If it’s going in the sell pile, it should stay there.

The Cold Hard Cash Need – Stage Three Purge

I you want to de-clutter and pay off some debt or start saving for something, you may be done.  However, if you are weighed down by huge bills and obligations and you need money to keep your family afloat, it is time to look at what you need versus what you want.  The goal is to get back on your feet and reduce or eliminate the complicated mess that owing tons of money creates.  So, things like a refrigerator are a need, while that gorgeous 60″ HDTV is a want.  It could bring a lot of money.  There are lots of items in your home that sell very well and could be the difference between having the money to start paying down your bills and continuing to build up more debt. Nice clothing, shoes and electronics are in high demand.

I think this stage 3 purge could take people past the $7k mark depending on how much shopping was done in the past few years.  Many Americans bought big ticket items, not realizing that their job situation would change or without fully considering the amounts they would eventually owe with interest.

Good luck to you. This step is hard but it will feel so good to be free of that debt!

Where to Sell Your Unused Stuff

eBay

If you want to make the most money for your items, I am going to lead you to eBay.  I am an eBay Parent Panel member and have spent the last year learning about what it has to offer.  I spent 2 days at eBay learning from all of their teams and taking selling classes.  We learned from the best.  I was inspired to start my own sale pile.  I am learning that I get more from eBay than anywhere else.  This week I sold a pair of Keen sandals for $20.50.  That is so much more than I would have gotten from a yard sale or consignment shop!

I met families like Tristen’s who did just what I am suggesting.  Tristen lost his job the week he and his wife had their first child.  Looking around their home, he saw their large television and started with that.  Going through closets and rooms, he located other items to sell and he kept his family afloat.  You can how Tristen supported his family with eBay here.  If that doesn’t show you that you can do this, I don’t know what will.

I was inspired by all of the tools eBay has to help both buyers and sellers.  It is easier than ever to list items and now, shipping is actually as close to simple as it can get! Not only do they have tools like the inspiration room to give you ideas of what to sell throughout your home, but you can easily check what similar items have sold for to get an idea of what your stuff is worth.  I love it!  These days I am also listing from my phone with eBay mobile.  You check the right boxes, snap your photo, pick a tine to list and voila!  You are done.

I am telling you about eBay because I am assuming there are people out there like me, who didn’t know how much more you could make there and were unaware of all the changes the Company has made.  I love that I am working with eBay and learning about what they have to offer so that I can share it with you.  Sure, it is fun to talk about selling stuff so we have more money.  However, I think using this as a tool to reduce debt and provide your family with some freedom might be the best thing eBay could do for you.

Other Selling Options

Of course you could have a yard sale.  In my opinion they are a lot of work.  You get up at the crack of dawn to have people already waiting to tell you they only brought $20 and would like to purchase your $100 antique.  Or you must have a whole box of items listed at $1.00 or $3.00 that are really worth much more.  At the end of the day you are left with a lot of stuff you wanted to sell and having to drag it all back into the house.  I have never made very much money at yard sales.  The obvious advantage is that the actual selling event is done with in one morning.  I simply find that the amount of time it takes to set one up and market it and take it down and figure out what to do with the remnants takes too much time.

If you have a large neighborhood group, it’s a great idea to send an email with the larger items you have for sale that you might not want to ship.  Usually in my neighborhood items are gone within a day.  You trust the group of recipients and can get a fast sale.  While you can’t charge quite as much, it is very easy.

You could also look into other online alternatives.  Please be careful where you list your items and make sure you  trust the site and its users.  Please be very careful if you have items for pick up.  Overall, just be careful.

One of the reasons I like eBay is their commitment to the safety of both buyers and sellers.  I like seeing the ratings.  I like the long history the site has.

At the end of the day, you should sell wherever it makes the most sense for you and your family.  The point is to reduce the burden of debt.  I would encourage you to explore eBay and see if your items can bring more than you thought.  This is the case for me and so many others.  I am here as is the team at eBay to answer whatever questions you have.  Please feel free to share them in the comments or by emailing me.

Four Steps to Reduce Debt

4-Step-Debt-Reduction-ProgramAre we ready?  Let’s do it.

Stop buying, de-clutter, start selling and pay off that nasty debt.

It takes time, but it is worth it.  So, do you have anything you think could sell?  Any unused items?  Would it change your world to live without those bills?  I hope I gave you some hope and one idea to lighten the load.

Please share your experiences and let me know if you have any questions or words of wisdom for others.

Disclosure: I am a member of the eBay Parent Program and am compensated for my work.   I am proud to be a part of this group and could not be more excited to help families put some more money in their pockets.  Whether it is to pay off debt or pay for schools or camps or college, I am huge fan of taking the bull by the horns and saying hey, if you want more money, I know there is a away to make it. All of the opinions on this blog are my own.  I really think eBay rocks.

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