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How to Stay Motivated when Paying off Debt

November 7, 2015

Motivated Payoff Debt

I have been an avid listener of the Dave Ramsey show for a couple of years and I’ve always been intrigued at how people on his plan stay motivated on their debt payoff journey. Getting out of debt is tough. You need to completely change your bad money habits and replace them with new ones. Below I will list a few tips to keep you motivated when paying off debt:

GET CLEAR ON THE OUTCOME

The first step to take when paying off debt is to make the decision that you no longer want to live this way. “You get sick and tired of being sick and tired.” Once you realize that you need to make a change, you need to clarify the reasons why you have decided to become debt free.  Some people dream of the things they will be able to do, others think of a number of people they will be able to help, and others want that sense of financial freedom. Whatever it is that has inspired you, it is important that you are clear on what that is so that when you start to get discouraged you can go back and remember why you started.

BE CLEAR ON WHAT YOU OWE

Once you have decided to be debt free, you need to list all your debts so that you are clear on how many loans you have and how much money you owe. Sometimes we get overwhelmed because our finances are not organized and we just see the bills coming in the mail. When you sit down and list your loans, you start to get clarity on how much you owe, how much you have to work with and how you are going to pay off this debt.

TRACK YOUR PROGRESS

To track my progress, I have an excel spreadsheet that I am constantly updating with my debt information . Once a month when I sit and pay my bills, I also open up the spreadsheet and enter all of my payments so my debt balance is always up to date. I can then look back and analyze the progress I’ve made month to month. Being able to do this actually challenges me to see how much more I can pay each month.

There are other ways to keep track of your progress. You can use a whiteboard to write your current debt and update it as you make your payments. Hang this in your bedroom or somewhere where you will see it every day so that it will be a constant reminder to keep going. When you don’t keep track of your progress, you can start to lose interest in paying off debt since you don’t see any traction in your plan.

START WITH THE SMALLEST DEBT FIRST

Two of the most popular methods of paying off debt are the Snowball method and the Avalanche method.  The Snowball method says you should start by paying off the debt with the lowest balance first and the Avalanche method says to pay off the debt with the highest interest rate first. Although it does make more sense mathematically to pay off the loan with the highest interest rate first, I agree with Dave Ramsey when he says that you are more likely to stay on your debt payoff journey if you start with paying off the smallest debts first. When you experiencing multiple small wins at the beginning of your debt payoff journey you will stay motivated to continue the process.

If on the other hand you use the Avalanche method and  you start by attacking the debt with the largest interest first. The loan with the largest balance can also be the one with the largest interest rate and it will be a while before you start feeling like you are making any progress, you will not gain momentum and lose motivation.

CELEBRATE SMALL SUCCESSES ALONG THE WAY

Although you are on a journey to pay off your debt, this doesn’t mean you can’t enjoy yourself along the way. Celebrate the small successes, budget some money for these special occasions. Celebrating these milestones will break up your journey into smaller goals and will keep you motivated to make it to the end.

LISTEN TO OR READ FINANCIAL TOPICS

One of the thing that has kept me motivated is listening to the Dave Ramsey show.  He has a 3-hour show that I listen to while I am at work. I think listening to everyone’s story and hearing people do their debt free scream is a constant reminder of why I want to become debt free. Dave Ramsey has an app you can download where you will find all 3 hours of his daily show which you can then stream whenever you want.

I hope some of these tips helps to keep you motivated to continue on your journey to becoming debt free.

Have you found any tips to keep you motivated on your financial journey?

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