It is extremely helpful for you to be intentional in your debt reduction efforts if you have the means to do so. Budgeting should also be considered. For Perez, this was applied by eating out less and meal prepping from the comfort of her kitchen, cutting cable, and being very mindful of keeping the rent costs as low as possible.
Per Fidelity Investments, you should strive to spend no more than 50% of your earnings on necessary expenses, 15% should be allocated for retirement savings, and 5% for short term savings.
“If you have the privilege to be able to budget, that is one of the easiest ways to figure out where you’re being wasteful and where you can get extra money from,” Perez mentioned.
Practical tips to consider is the cash envelope system. Perez told Good Morning America she would categorize envelopes and write the budget on the outskirts. She would then only pull the exact amount needed for the bank.
“For example, if my budget for food was $400, I would go down to the bank every two weeks, pull out $200 and use that for the next two weeks until I got paid again. And that was literally the only money that I used, in these cash envelopes. That really helped me tackle my debt in a meaningful way because I wasn’t overspending,” Perez told Good Morning America.