paying off debt

Staying motivated while you get out of debt: A 12-step guide

You can only fix a financial problem by fixing yourself”   

Nancy Levin

Not all debt is bad. I thought I would start from there just so we are clear that I am not anti-debt. There is the good debt which I encourage people to get, in moderation. This could be debt you have to acquire an asset that will add to your cashflows. Also, debt that allows you to get appreciating assets such as a home or rental property. The key thing is to be able to afford its repayment, hence the moderation.

I do know that sometimes debt can literally enslave. Especially where it is misused to fund a lifestyle. This kind of debt is a no-no and as much as possible please take to the hills when you face such temptation.

There is nothing as disempowering in life as being weighed down by debt. And the danger is most of us slump off, and think we are failures just because we find ourselves in overwhelming debt.

So how do you get to keep your mojo as you try to get out of the mess, you created?

I have a couple of thoughts, so read on.

1. Get your big why! 

Your mind frame when getting into debt will not help you get out of debt. You’ve got to shift it to where you understand that nobody, but you should really care what car you drive, what neighborhood you live in, and which schools your children, attend.

But don’t stop there, get a goal you want to run towards, something big that matters to you, maybe it could be saving enough so that your children can attend university debt-free, going for the annual vacay debt-free or just being accomplished enough that you can also support your favorite charity while living a financially abundant life.

All these are legitimate Whys. However, get one that resonates with you, and then get on with it!

2. Have short-, medium- and long-term goals

 I am a big fan of short-, medium- and long-term goals. I have seen them work for me and others around me, so I am fairly confident of the same for you. Break down your goals so that you do not get overwhelmed and then include them in your budget.

Also, please remember the fact that if a goal is long-term it does not mean you do nothing about it today. Have a trigger to kick start actioning the goals along the way so that you do not land into a crisis again in the future because putting it off too long.

3. List down all your debts so you have a clear visual of what you owe

Write down how much you owe alongside who you owe. One of the causes of frustration in debt repayment is not knowing exactly how much you owe. Most of us operate on memory which tends to forget some things, or we have a fear that we would do not want to stare and confront the actual amounts we owe.

When they remain in our memories, we believe it is easier to deal with them since you can operate as though the debt does not exist. Of course, nothing could be further from the truth. You cannot conquer what you do not confront. When you write down your list, you then have a true picture of your debt situation.

4. Create a debt repayment plan, starting with the smallest

So here is where you roll up your sleeves and get into serious work mode. Create a debt repayment plan considering interest rates and penalties. I advocate you pay the smallest debt first while paying the minimum debt for the rest.

 After you finish paying one debt then put that money to go towards the next debt, this is the debt snowball where after clearing one debt you apply that amount to the next smallest debt until you clear all your debt.

Starting with the small debts helps give you motivation as you see yourself conquer each debt.

5. Keep talking to your creditors and update them

 If it will take some time to clear your debt take to those you owe, keep them in the picture of what you are doing. Most will appreciate this and they may turn out to be your biggest cheerleaders because when you succeed it means they will also succeed

6. Set up a Reward system

Getting out of debt is not an easy task and will usually take some time I would guess for consumer debt probably between 1-3 years, with a razor-sharp focus. To keep your spirits up as you work your way out of debt it is important to have a reward system where, when you finish paying off a debt you reward yourself.

It does not need to be anything over the top, but it needs to be important to you. Maybe an easy lunch out with a friend, some time out in the country, a road trip. Something you value but inexpensive.

7. Get a side hustle to help you pay down the debt faster

A side hustle helps you create more muscle to work on your debt. Nowadays there is no shortage of part-time hustles. From Uber driving if you have your car, to food delivery services, to freelance writing and virtual assistants. There is no shortage of ideas, just plugin into one.

8. Get an accountability partner or group that keeps you going

It is so easy to give up especially when you see it is taking you longer to get out of debt. If you can, get a partner or a group of people that are on the same journey as you. Many Facebook groups have people that have similar interests and you can join one as an accountability group. Tell a friend as well, to help keep you in check as well as to cheer you on as you make progress.

What you don’t want to do is to be on this journey in complete isolation because it becomes so easy to give up on the way.

9. Journal and keep a record

 Journaling has a cathartic effect for me, because sometimes for you to keep going you only need a reminder and an appreciation of how far you have come. Looking back allows you to see what you have accomplished, sometimes things even you thought were impossible at the time. Documenting your journey is definitely a plus.

10. Have a positive mindset, keep your spirits and avoid unnecessary expenses

Do not keep putting yourself down. You may have made some mistakes in the past, however, do not allow those mistakes to define you. Sometimes we get into ” retail therapy” to lift our spirits. By all means please avoid this.

11. Avoid temptations

As much as possible if you have a problem with borrowing excessively or even gambling, please delete those apps from your phone because you will remain in that vicious vortex if you do not. If you cannot handle the credit card payments just repay them off and give them back to your banker. Also, avoid those friends who you know will persuade you to get deeper into debt.

12. Lastly, Create new habits and traditions to avoid being idle

Most of us engage in mindless shopping, online or even in the malls out of boredom. You are bored so you whip out your credit card and start browsing for something to shop for.

Get something active and positive to engage in, go for the run or walk, so by the time you get home you are too tired for anything but rest. Volunteer your time to charities that you identify with. Save some money and build up an emergency fund.

In conclusion, the only way to conquer indebtedness is to pay what you owe. Keeping your creditors in the loop and working your way out of it is the honorable thing to do.

Remember, when you find yourself in a hole, stop digging! 

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