Thursday, March 8, 2018

Staying Motivated When You've Got a $%&@load of Debt

When you're looking at months or even years of debt repayment, how do you stay motivated?

The scenario: You're saddled with tens of thousands of dollars of debt. That's the bad news. The good news: you've conducted an honest audit of your debts, figured out how much you can repay per month, and mapped out a responsible long-term repayment plan. (Massive kudos if you've done this: those are not easy steps to take.) 

The bad news, part two: It's a three-year (or four-year, or five-year) plan, because you've got a boatload of money to pay back.

In other words, you're going to be forking over your hard-earned money - money that could otherwise be padding your retirement, travel, or savings accounts - to your creditors for a very, very long time.

The $76K family first assessed its debtload and made a repayment plan in April of 2017. We've calculated a payoff date of November 2020. One year down, 2.5 years to go. It's a long road, and there are no shortcuts. Every month it takes a kick of determination to stick to the budget and make the payments we planned to make instead of sending in the bare minimum and using the rest for something fun and tangible.

So how do we stay motivated and committed to our plan when we're not even halfway there?

Although our path has veered somewhat, the following strategies have helped us generally stay the course:
  • We constantly remind ourselves that the faster we pay off our debt, the sooner we can deploy that money for things we really care about. At present, we devote about $2000 a month to debt repayment. That's a lot of cashola - almost $24K a year! Once our credit cards and student loans are gone, we can use that money to increase our retirement contributions, bolster our emergency savings fund, and (my personal carrot) plan some amazing trips to other parts of the world. That enticing vision keeps us going.
  • We want to set up our kid for success. The Kiddo is a major and constant source of motivation for us: we never want him to have to take on our debt, nor do we want our debt to hinder his opportunities in any way. By being open about our debt, we hope to instill in him the importance of financial responsibility so that he doesn't end up in our shoes later on. And by sharing our financial goals with him, we're allowing him to hold us accountable: if we tell him we're going to be out of debt in 2.5 years, we'd better make sure we're out of debt in 2.5 years. 
  • We're addicted to smashing debt. Every time we've met a goal - paid off the car loan or a credit card, or reduced our total debt by a certain amount - it's been a huge rush. That feeling is addictive, and we're always looking for our next opportunity. It's like climbing a peak, standing on the summit, basking in our success, catching sight of an even higher peak on the horizon, and immediately wanting to charge on so that we can do it all again.
  • We've built up momentum. They don't call it the Debt Snowball for nothing! When we first started paying off debt, our progress felt sooooo sloooooowwwwwwww. But once we obliterated our first credit card balance and applied that money to our car loan, we felt our pace accelerate. With every payoff, we're able to devote more and more money to our remaining balances, which means we see bigger and bigger chunks of debt fall away every month. It did take some time to get to this point, but it was worth it because that momentum carries us even when we feel ourselves getting tired of this entire process. In this sense, debt reduction gets easier with time.
  • We've got a whole community behind us. Are you following #personalfinance on Twitter? No? Go do that right now! Whereas the rest of Twitter is a raging dumpster fire of despair, the personal finance community offers support, advice, and encouragement. Every time I have a question, every time I want to throw in the towel, someone is there to help or share their own story. That makes a huge difference. You can have this community, too!
Yes, 2.5 years is a long time, and yes, we sometimes feel intimidated by the road ahead. But our motivation is strong and multifaceted, and I'm confident it'll propel us to our ultimate goal. 

What about you, fellow indebted people who are in the process of obliterating that debt? What keeps you going? 

2 comments:

  1. I am 22 months into what I believe will be a 36 month journey. In addition to everything you listed above, another key thing for me was to figure out a timeline that would be achievable without feeling significantly deprived along the way. I know I could have mapped out a more aggressive payoff plan, had I been willing to sacrifice more (vacations and other fun stuff), but I was afraid I couldn't sustain that level of deprivation for an extended period of time, and would fall back into bad habits to compensate. Instead, my budget includes a reasonable amount for fun stuff and extras, rather than throwing every spare penny at debt.

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    1. Oooooh! So you are nearly 2/3 of the way there!

      I agree: for long-term debt repayment, there has to be some room for fun. We now allocate a few hundred dollars a month for meals out and family activities. Makes the long-term repayment a lot more palatable.

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