How to Pay off Debt: It’s About More Than Budgeting
Paying off debt is, for most of us, much more complex than drawing up a budget and tracking spending. At least, I know it is for us. We had committed multiple times to tracking our spending so we could find out where all of our money was going. But in our previous attempts, we wouldn’t last more than two or three days before we’d thrown in the towel. So why is it that this time we’ve been able to stick with our pay off debt program? I think I’ve figured it out: along with learning the basics of budgeting and spend-tracking, we’ve conditioned our hearts and our heads for this journey.
How? Well, boys and girls, it’s your lucky day, because once again I’m going to talk your ear off in hopes that I can help you begin your own journey to pay off debt. 🙂
Here’s how we conditioned our minds to be motivated enough to stay the course.
1. Get a true perspective of the problem. One of the reasons it took us so long to begin walking our road to debt free (my husband and I are 43 and 46, respectively) is because we would continually convince ourselves that everything was ok. We would use tricks like:
– compare ourselves to people worse off financially instead of better off financially. We would look at others’ financial mistakes and tell ourselves “Well, at least we didn’t…….(go to Hawaii on a credit card, buy a $50,000 vehicle, fill the house with new furniture, etc.) We would appease ourselves regarding our situation by finding people more financially irresponsible than we were, and thus, our debt load got bigger and bigger.
– convince ourselves that wants were needs. Our kids “needed” sports. And after all, they weren’t in as many sports as most kids, so it’s ok. Our kids “needed” new clothes, when in fact, they didn’t. Thrift store and garage sale clothes would’ve suited them just fine. Or, we “needed” to go out to eat, buy a new this, that or the other thing for the house, or spend way more for birthdays for the kids than we had in the bank.
– tell ourselves that things would get better. We’d say things to ourselves like “After the mortgage is paid off in 25 years”, “After Rick gets his raise”, “After the car payment is gone” things will get better. We had no plan, and just assumed that when more money was coming in, it would be better. But it never was.
Denial and convincing yourself that it’s okay when it’s really not okay will get you nowhere fast. It’s time to really sit down with yourself and face facts such as:
– your total debt load
– your debt-to-income ratio
– the number of years it’ll take you to pay off your debt if you continue making only the minimum payments.
If you really want to be debt free, you’ve got to choose to face the facts about your spending and your situation and take a good, honest look in the mirror.
2. Prepare for the role. Once we took a good honest look at how much debt we had, we were shocked. And terrified. And that’s not a bad thing. When looking to pay off debt, it’s good to have that image of just how bad things are etched into your mind for a good, long time.
When a good actor prepares for a role, it’s not just about being able to read the lines with life in them. A good actor/actress studies the character they’ll be playing for months before-hand. They convince themselves that they literally are the character so that they can react with the same emotions as if the storyline is truly happening to them.
If you’re looking to pay off debt, you need to prepare for the role of a driven, determined and often desperate man/woman. One of the ways we do this is by studying poor people. We read a ton about people from the Great Depression. We imagine what it must have been like searching desperately for food for your kids, or coming home after a long day of looking for some work – any work – and finding your belongings and your wife and kids on the sidewalk, crying, and a foreclosure sign in the yard. We envision our life in those desperate circumstances, imagining literally what it would look like and what we would do if we didn’t have money to feed the kids or a place to live.
We prepare for the role of poor and desperate people, because if we’re truly honest with ourselves, that’s what we are when we have a boat load of debt that needs to be paid off.
This kind of studying of the poor, role-playing, and “what if?” mindset helps us to stay on track with our plan.
3. Imagine life better. Another huge motivational too for us as we pay off debt is that we imagine what our life will be like when we “owe no man”. (Rom. 13:8). We make serious goals, such as having everything paid off and having a 6-12 month emergency fund, and then we imagine what it would be like if Rick got laid off, and instead of “Oh no!” we could say “WOOHOO!” We imagine what it would be like if he didn’t have to trot off to work for someone else everyday, but instead could make his own work schedule. We imagine what life would be like if we could do things like take month-long globe-hopping vacations (something our super frugal neighbors just did) and buy things without freaking out about the impact on our budget. Or be able to take the kids to the doc without fearing the pending medical bills.
We put our heads in an “We don’t want to live this way anymore!” mindset, and we remind ourselves that we deserve more than being able to spend as we please. We deserve to handle our money in a wise manner that will enable us to live in a financial situation that provides our family to be able to do the things we love, yes, but without fear of not being able to pay the electric bill next month. We deserve to not have money and the earning of it rule our lives anymore. And so do you, so choose to get your mindset on board and pave your own way to debt free!