This post is by our regular contributor, Erin.
Are you in credit card debt? Student loan debt? Medical debt? Do you have a car loan, or are you trying to pay off your mortgage quickly?
Paying off debt can be a lofty goal, especially as a young adult; there’s so much pressure and temptation to spend. At times, you might feel like you’re making compromise after compromise, all in the name of being debt free sooner.
If you have a lot of debt, you may be wondering how you can stick to your debt repayment plan for the next few years, as it’s normal to experience some loss of motivation along the way.
Since you’re reading this, I’m assuming you don’t want to fall off the wagon. Here are a few tips that will keep you going when paying off your debt.
Be Realistic With Your Plan
It’s great to start off super motivated and ready to conquer the world, but unless you have a low amount of debt you can pay off in a couple of months, your enthusiasm might wane with time.
That’s only natural. There are a few people who can keep the intensity going, but at some point, it’s likely that you’ll experience a lull in your debt payoff journey.
That’s why it’s important to be realistic with your debt repayment plan from the start. Of course, you can modify it as your financial situation changes, but you don’t want to set too extreme of a goal, only to get disappointed when you don’t reach it.
For example, say you have $10,000 worth of debt you want gone. After your expenses, you have $300 leftover each month to put toward debt. You shouldn’t state that you’ll pay off $10,000 of debt in 24 months, when realistically, it’ll take about 33 months.
That’s not to say you shouldn’t try to pay it off sooner, but be forgiving and allow room for error. There are many things that will happen along your journey that might cause a setback.
Avoid Swiping at All Costs
If you have consumer debt, then it makes sense to avoid using the tool that got you into debt in the first place. Even if you think you can trust yourself with plastic, I’d avoid it to be on the safe side.
If you can’t trust yourself with a credit card, then freeze it in a block of ice. Do what it takes to leave it at home. Swiping will only add to your debt, and it can lead to a slippery slope. It’s best to try learning how to use a credit card after you’re done paying off your debt.
Have a Cash Budget
Cash is one of your best options for making any type of purchase while working your way out of debt. If you use a cash envelope system, the amount you can spend is set in stone, which means you have to put more thought into what you buy and be intentional with your purchases.
This is a great option for those that need to gain control over their spending habits, but it’s also a good way to make sure you’re sticking to your budget. You’ll also be able to identify problem areas quickly, as you’ll notice when you’re running low on cash in a certain category.
Remember Why You’re Getting Out of Debt
We’ve talked about creating a strong financial why before, and it’s necessary when you have years of debt payoff ahead of you. While your “why” may change over time, it will always provide you with motivation.
Any time I’m feeling down about my student loans, I remember why I’m trying to pay them off in less than 10 years. Personally, it’s the only form of debt I have, and I’m tired of the mental weight it has put on me. I feel like it’s holding me back (even though it shouldn’t be), and I also want to put my money to better use elsewhere.
Get a Debt Payoff Buddy
I’ve seen a few bloggers team up to act as accountability partners with each other, which is a great idea. Having a partner (or some friendly competition) can help ensure you stick with your debt repayment plan.
Your “debt payoff buddy” doesn’t have to be someone, either. You can use an entire community as motivation! I mainly began blogging to hold myself accountable to my debt payoff plan, and it has helped to see so many of my peers succeed as well.
Maybe no one you know is on the same page as you are when it comes to debt repayment – at least tell someone about your plans (if you feel comfortable enough) so that you’re more inclined to “own” your progress. You can keep track of it on social media if you don’t want to blog about it!
Create a Budget and Plan to Save
These are two obvious tips, but I wanted to include them anyway. If you’re going to pay off debt, then you need to have a very good idea of where your money is going. Without that knowledge, you won’t know how much money you can send toward your debt!
Optimizing your finances is key to progress with any money-related goal, but it’s especially important when paying off debt. Any extra funds can help make a difference. If you don’t budget or track your spending, then you won’t know where you can cut back, or where you should be cutting back.
Having a budget while paying off debt also gives you a direction and purpose. These are all pieces of the puzzle that will work together to help you stick to your debt repayment plan.
Saving is a tricky one. Some people prefer to prioritize paying off debt first, but if an emergency comes along and you don’t have any money saved, how are you going to pay for it? More debt shouldn’t be the answer. Having an emergency fund in place is critical when trying to pay off debt so you don’t get sidetracked or disappointed by having to increase your debt totals.
Lastly, don’t let special occasions get to you. Whether it’s a birthday, a holiday, an anniversary, a baby shower, or a graduation, plan ahead as much as possible to avoid being overwhelmed by one-time expenses.
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Sticking to a debt repayment plan isn’t difficult in theory, but it does require an outline and filling in the blanks as they suit you. No two debt repayment plans are going to look alike – you have to do what’s best for you.
The only other piece of advice I can give is to not be afraid to change your plans if needed. Change doesn’t mean failure, it just means adapting to the situation.
Have you been in debt before? How have you stuck with a debt repayment plan? What do you think is the most important thing to remember when paying off debt?
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A cash budget is the best. I just start to care more when those dollars are slipping through my fingers than when I swipe my debit card. There’s something about holding it in your hand that makes it “real” to me.
When we were paying down debt, I tracked it religiously. That’s part of what kept me on track. I loved seeing our progress. It definitely kept me motivated.
The most important thing that helps me stick to my debt repayment plan is the reasons why I’m doing it. I always use my ‘why’ to help motivate me when I’m feeling discouraged or want to give up. Tracking my progress really helps me as well and I tend to put too much pressure on myself so I have to constant;y remind myself to keep my goals manageable and realistic.
I tracked my debt like crazy when I was paying it off. Seeing the progress is one of the things that kept me going. I also used a cash budget which helped a lot – it’s that mental aspect of seeing your money be spent that can really help.
EverydayMoxie It makes sense! We can directly see the consequences of our spending when we’re using cash. Numbers going down on our account don’t have as much of an impact.
Holly at ClubThrifty Yes! Having a graph so you can look back at how far you’ve come is a nice way to maintain motivation and perspective.
Chonce I hear you with putting too much pressure on yourself. I’m guilty of that, too. It really helps to be realistic and know that you might not be able to pay so much extra each month because life happens!
FrugalRules Yep, cash works really well that way. Plus, it forces you to be more conscious about where you’re spending your money. It’s easy to look in your wallet and go, “Where did $50 of that $100 withdrawal go!?” With credit/debit, that doesn’t really happen.
Despite our debt, we haven’t completely stopped using credit cards. We have one that we continue to use because of the rewards. However, spending on that credit card is scrutinized and we pay off the entire balance every month. We use it to pay for daycare, gas, cell phones, car insurance, groceries, and maybe one trip for fast food. The key is that we changed our spending habits, by no longer buying things we don’t need, so the balance stays about the same every month.
Thank you for mentioning the importance of an emergency fund! Though I still have student loans, I keep that emergency fund at a number I am comfortable with, and it has saved me from using credit cards multiple times. It’s so tempting to use my emergency fund for debt repayment, but protecting yourself from potential financial disaster is ultimately more important than making an extra debt payment.
Being realistic is incredibly important and something that I sometimes struggle with doing. But it just sets you up to fail (or at least feel like you did) when you set impossibly high goals. I also like you point about being adaptable and making changes as needed. I’m pretty laid back but sometimes I get it stuck in my head that making any change is failure and it’s not. We don’t know what works and the person who will get themselves out of debt is the person who adapts to what works. Great tips!
As Chonce said earlier my why is the reason that I am sticking to my debt repayment. The why is so much bigger than procrastination and laziness.
With Tim’s various health issues, we were constantly taking two steps forward and one back. Sometimes one and a half. Heck, sometimes two and a half.
We did manage it eventually, but it took a very long time because of unexpected expenses, him losing his job while I was on disability, and so on. My readers definitely kept me going to an extent. Another thing is to just celebrate the victories. If you’re able to pay off more than expected, celebrate that. Get psyched. Brag to the PF community. I’ve also heard that (small) celebrations at certain milestones can keep you going. So, once you get 2/3 of the way done with your debt, you’ll take yourselves out to a nice dinner, or do a quick staycation or… whatever.
My motivation is for my kids. I don’t want to see them burdened by student loan debt and that is going to keep me focused on my debt repayment plan. The sooner I’m out of student loan debt, the sooner I will be able to help keep them from obtaining those nasty things as well.
Making it realistic is very important. If you make your repayment plan too much of a stretch, that is a great was to fail. It can seem like running in place at first but eventually, the balances start to go down and sticking to the plan gets easier, at least it did for us.
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Harmony@CreatingMyKaleidoscope Yes, that’s a great example of how you should be using credit cards. As long as you can trust yourself to continue with that, then you’re golden.
Rachel Foxwell I’m glad to hear that! I’m a huge fan of having an emergency fund. I know what you mean by being tempted to use it, but you just have to keep reminding yourself that if you lower your emergency fund balance, you become more vulnerable to debt if something does happen. In that way, it protects you as you won’t have to take on more debt, which is in line with becoming debt free!
MindfulMigrate You’re so not alone! It took me a while to become comfortable with changing my plans, especially when my peers seem to be so successful with sticking to their debt free date. None of our paths are going to be the same, though. We just have to roll with the punches.
Jason @ The Butler Journal Yep, that’s the key! Your reason has to be something you want more than anything to keep going.
AbigailP Our community is pretty darn awesome! I love having such a support system (which definitely helps). Also agree with celebrating. I’ve been guilty of being so focused on getting down to the next thousand that I never give myself time to enjoy it when I reach it. I’m already focused on getting to the next thousand. But that’s not fun, and it can lead to burn out.
lifeandabudget Aw, that’s a great why! I’m sure your story will help inspire them to do everything they can to avoid student loans. I didn’t realize how much of a burden they would be as only my older cousins attended college before me. They never really spoke about them. I made sure to warn my younger cousin before she went off to college!
Eyesonthedollar Yes, just getting started is probably the hardest part, along with the first few months. As you said, you’re not really seeing a direct impact just yet. But if you stick with it past that, you start to gain momentum!