Most people don’t plan to go into debt. We tell ourselves that we’ll pay our credit card bill in full every month and do so. Until one month, the bill comes and we can’t afford it. We resolve to pay it off next month, but life happens and we creep a little bit further into debt. The descent into debt isn’t always one big mindless or frivolous expense. It is often times lots of little things that we justify until we get to the point where we slide our credit card without a second thought.
Debt is one of the greatest illusions. This small, innocuous plastic card gives us the ability to enjoy things we couldn’t otherwise afford. We think it gives us freedom. Until one day, something shifts. Maybe we maxed out all of our credit cards or the minimum payments we once so easily made are now becoming increasingly hard to pay. Or perhaps, someone we know got out of debt and their story made us take a hard look at our own situation.
Now that you have the motivation to eliminate debt, you need to also find a way to keep your resolve when obstacles present themselves. Because whether your debt is big or small, there will also be speed bumps and temptation in your journey to financial freedom.
I’m going to share 6 steps that will help you stay focused and keep your eye on the prize as you eliminate your debt.
This may sound strange but you should feel proud. Facing your debt and deciding to eliminate it is a huge step and one not every person has the courage to face. So start by acknowledging you made a mistake getting into consumer debt and are grateful to have the chance to undo it and move forward in control of your financial life.
You will likely feel a variety of emotions about debt — fear, anger, shame, guilt and frustration — but do not begin the journey with those negative emotions as your guiding light or the basis of how you make decisions. Let gratitude be your beacon, so you can start from a place of power.
Tip: When you find those other emotions bubbling up (and they will) find your gratitude. Be grateful that you are diligently chipping away at your debt, rather than continuing to create more debt. Be grateful that a life of financial freedom is within your grasp.
There is no magic pill that miraculously eliminates debt overnight. It will take time. Some days will be easy and others will be hard. You will want to throw in the towel and give up. Simply knowing this gives the bad days less power. To combat those days, you need a clear picture of what financial freedom means. Why does it matter so much to you?
Do not skip this step. Slow down and outline what life will look like when you have financial freedom. When you can truly afford to do the things that matter most. What will those things be? Make that picture vivid and crystal clear for the whole family.
Tip: Create a Family Financial Freedom Motto or mission statement together. Keep it to one or two sentences and have everyone memorize it. Create a vision board based on your motto or mission statement with all of the things you plan to do when your debt is gone. Regularly update it to keep everyone focused and motivated.
It doesn’t matter if your debt is a few thousand dollars or $100k+, it will likely feel overwhelming and impossible to eliminate. While you can’t lose sight of the big picture, make it feel more manageable by setting small goals to benchmark your progress, rather than one humongous goal.
Your overall goal may be to eliminate $25,000 in consumer debt, but you might break it down by credit card and/or set a debt repayment goal for every 6 months. Ultimately, you still reach your overall goal, but it becomes less intimidating. Too big of goals can often paralyze people, so if you find yourself unsure or constantly doubting yourself, creating smaller, more obtainable goals can help you move forward.
One common trait I notice among people working towards financial freedom is that they rarely give themselves enough credit. They tend to put themselves down and compare their debt repayment journey to others. Please don’t. Those are two big barriers to reaching your goal and ones created by you.
While you do need to take responsibility for it, debt does not make you a bad person. Don’t allow it to play head games with you. Instead, recognize how far you’ve come. Once upon a time, you wouldn’t have given a second thought about how you spent your money and now you are making mindful choices to create your best life. Be proud of your growth.
And finally, don’t compare your debt payoff to others. Everyone has different financial circumstances and different pain thresholds, meaning one person may be willing to sell everything and eat ramen noodles every meal in order to pay off their debt as fast as possible. While another may prefer to keep their home and eat a more varied diet. Let their success motivate you, but focus on taking the steps you need to make and celebrate your successes.
There are a multitude of reasons why people choose to remain in debt and having to tell friends and family “no” when they always said “yes” before is one reason that holds many back. Well, I’m here to tell you that fun isn’t completely off the menu.
You just need to reframe fun. No, you can’t spend thousands of dollars on vacations and entertainment, etc. But you can still have fun. You just need to get inventive and look for low-cost and no-cost options. Most importantly, give yourself permission to have fun, to smile and to laugh as you work towards financial freedom. If you make it all doom and gloom, it will actually be much harder to stay motivated and achieve success.
Tip: Involve the family on deciding how to use the entertainment budget. Beforehand, you and your spouse should determine the total annual entertainment budget (for fun, excluding gifts, etc). Now give your kids some options. You could plan one big outing that uses the entire budget or split it up for monthly or quarterly outings. Give them ideas on how the money could spent and ask them for suggestions.
As I mentioned earlier, debt brings out many emotions and most are not positive. It can feel incredibly lonely as you work towards financial freedom. The good news it doesn’t have to be that way. There is a huge online community of people working towards or who have achieved financial freedom. They are ready and willing to rally around you on the bad days and celebrate your victories. You still have to do the work but surrounding yourself with like-minded people makes it easier.
Additionally, if you feel overwhelmed and don’t know where to begin, do not be afraid to seek help. From debt counselors to financial advisors, there are people who can help you create a debt repayment program and help you stay on track too.
Never forget why financial freedom matters to you. I can’t promise you that it will be pain-free and easy, but I do know it’s worth it. Being in the driver’s seat of your financial life is an incredibly powerful and exhilarating feeling and one I wish for all of you.
The Heavy Purse Store is now open! My new downloadable Money Club Workbooks are now on sale. Each workbook provides five targeted lessons to help you raise Financially Confident Kids. Please check them out in The Heavy Purse Store.
SHANNON RYAN, CFP®
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