Go Big or Go Small?

Another interesting article from The New York Times discussing the pros and cons of making little budget adjustment (i.e. the latte factor) or deeper cuts to one's finances like selling the house or car.

I have written about this topic before and I can go both ways on this issue. First, it is easier to make smaller budget adjustments, things like reducing eating out (bring your lunch each day), scaling back on one's cable, Internet, or cell phone package, etc. Second, those small savings are nothing to sneeze at. If you can capture $5-$10 a day in savings, you could end up with $300 a month to direct to either paying down debt or savings as long as you are diligent and consistent.

Obviously, if your mortgage or car payment is killing your budget that is a much larger problem than the $10 a day you spend on lunch out of the office. But it is difficult and painful to walk away from a home, sell a car at a loss, etc. You have issues like credit rating, contracts, legal implications to deal with. I agree with the premise of the article that it is better to avoid getting yourself into a too expensive mortgage or car in the first place.

We really went the third route, we paid off $55,000 in debt in just over a year by making big adjustments to our day to day spending. We got on a very strict spending plan and directed all money not going to overhead (expenses with a bill, i.e. mortgage, taxes, utilities, etc.) to debt.