How To Stay Motivated When You Are Paying Off Debt

How To Stay Motivated When You Are Paying Off Debt

No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it.

Hebrews 12:11 NIV

How To Stay Motivated When You Are Paying Off Debt

I had written earlier how 2018 was the year that changed our personal finances forever. It was the year we took control of our finances and educated ourselves a lot about personal finance. It was hands down the best financial year of our lives. A lot of things happened in just one year and we consider ourselves lucky to emerge debt free at the end of 2018.

As wonderful as if feels to be debt free now, I wanted to take a moment here and recollect how it felt to pay off debt. I wanted to document what it felt like while I was in the middle of our debt free journey. What were some of the things we did to kept ourselves motivated? This will serve not only as a reminder for us but hopefully help others too. I hope it gives you the necessary motivation to stay the course and pay off all of your debt.

1. Listen To Debt Free Stories

The first time I started reading about personal finance, I wasn’t even sure if I wanted to be debt free. I didn’t wake up one day and say, “I wanna become debt free.” I was just a curios person trying to understand why I wasn’t getting ahead with money. I wanted to know how money worked. Hence I started reading about personal finance. I started with a few books like I’ll Teach You To Be Rich, The Automatic Millionaire, The Richest Man In Babylon, etc. But these books seemed to fall on the extreme ends of the spectrum of personal finance. They either talked about money in very tactical terms or were too philosophical in nature. I still had a lot of questions unanswered. I felt they all lacked something.

Then one day while I was on YouTube watching some random videos on personal finance, I came across the Dave Ramsey Show. I didn’t have any specific intention or agenda and I just enjoyed listening to his rants and the debt free screams. I found Dave’s principles resonate with my own beliefs. I had always felt that credit cards were a bad thing for me yet I had somehow managed to get sucked into the world of credit cards. I was really busy building that elusive excellent credit score. I knew credit cards make you spend more than you want to and yet I had managed to stack up 8 different credit cards.

I am a fiscally conservative person. Before listening to Dave, I always felt I wasn’t handling my money in the right way. No matter how much I earned, it always felt less. I thought I could somehow outearn my stupidity. In a world where borrowing money is the norm, Dave Ramsey was the first guy that made me feel that it’s OK to not use leverage to build wealth. It felt good to know that I wasn’t the only one who felt this way about borrowing money.

Listening to Dave Ramsey, helped me reaffirm my own belief system - Borrower is Slave to the Lender. Click To Tweet

Before listening to Dave, I used to frequently run into people who told me that you need to use other people’s money (OPM) to build wealth. Everyone I met seemed to have over-leveraged or living a life of excess. It wasn’t that I earned less, I made a really decent 6 figure income. Yet I felt inept at managing money. You can imagine how screwed up my own belief system about money must have been. Besides this, I felt being in debt was an inevitable part of my life. I have often felt panicked about all the things that could go wrong and how ill-prepared I was to face it. I didn’t really feel comfortable to borrow money in order to build wealth. It was simply a very unnatural idea for me. I was fighting my own beliefs and those which the society tried to tell me, as the normal way of life. I needed someone to tell me I wasn’t wrong in thinking the way I did.

Thanks to Dave Ramsey’s book – The Total Money Make Over and his radio show, I finally found someone that echoed my sentiments and belief systems. I know there are a lot of people who think Dave Ramsey has taken an extreme stance on debt and not everyone needs to go that way; but for me, I liked his teachings and I was able to connect with his ideas. For the first time, I felt at home. I owe my debt payoff success to his teachings that have caused me to become debt free with a short period of time. I learned from him how to be Gazelle intense and pay off all our debt. Thank you, Dave!

2. Make Every Single Dollar Count

I still remember that day in January of 2018 when I was looking at my credit card statement and noticed a recurring charge of $18 that I didn’t recognize. It was the first time I had actually bothered to go over my credit card statements and I couldn’t thank myself less for doing that. This one incident changed my life for ever. I got really angry when I noticed that I was being charged for the last 12-14 months and I hadn’t bothered to notice it. It was some stupid service I had signed up for and hadn’t bothered to cancel. I have written about this in my debt free journey series – My Debt Free Journey – Part I and My Debt Free Journey – Part II and how it sparked my interest in personal finance and how I decided to change things around forever.

Related:  2018 - The Year That Changed Our Personal Finances Forever

After listening to Dave Ramsey, I decided to start budgeting. I didn’t start off with Every Dollar App, instead my first step involved just tracking my spending and I used apps like Mint, Personal Capital for tracking my spending. I was really motivated by Dave Ramsey and decided that I have had it with credit cards and wanted to simplify my personal finances. Having 8 different credit cards wasn’t the way I wanted to run personal finances. I needed to keep it simple. So I decided to close 7 out of 8 credit cards and just retain only 1 card.

It was also during the same time that I decided that I will not use credit cards for my day to day purchases. It was only reserved for bigger purchases and I had to have money to pay off that transaction immediately. With those ground rules, my wife and I started using debit card for every transaction. At first we had to make a conscious effort to pull out our debit cards and pay for all our purchases. But as time went by, it became second nature to us. We felt a sense of contentment and joy in knowing that we only spent money we had in our accounts and weren’t just spending money on credit. It impacted a lot on how we spent our money.

During this time, we also noticed a huge decline in our online shopping purchases on Amazon, Walmart, Macy’s or JcPenny. We simply thought through every purchase we made and bought stuff only if we felt it was absolutely necessary. Switching to a debit card really helped us keep our budget in tact and control our spending.

We eventually switched to budgeting using the Every Dollar App. We used to budget every single month, before the month began and stuck to our budget. The first 90 days were the most difficult ones but we eventually got better at it. Like Dave often says, we felt like we got a raise when we started budgeting. I really felt in control of our money after a very long time. I love budgeting and I am very thankful to Dave for teaching me how to budget.

3. Remind Yourself Why You Are Doing This

When I first began reading about personal finance, becoming debt free was never on the cards. I was just trying to figure out how this money stuff works and I was pleasantly surprised to discover that being debt free was something I really wanted to achieve. So I said to myself, “If this is so important, I really want to do it.” But it still wasn’t the main reason why I started reading about personal finance.

One of the biggest motivation for me to learn about personal finance was, I wanted to change my family tree. I come from humble beginnings and I never felt we were well off or had enough money to never worry about it. I have always felt the pinch growing up and even into my adult hood. I have always had responsibilities towards my family that motivated me to do well in school and secure a well paying job. I remember vividly during school days how much I wanted to grow up and never be in a situation where I was short on money. I feel it was one of the main reasons why I chose a career that pays well. My liking for software development only helped me marry my passion and needs. I consider myself lucky in that regard. Had I not had a liking for my job, my life would have been miserable.

Given the motivation to change my family tree, I often came across Dave’s rants on building wealth extremely motivating and every time I listened to them I felt good. Of all the people in personal finance I have come across, I feel nobody understood the intricate relationship of human behavior and personal finance better than Dave Ramsey. Dave seems to have studied the role of human behavior and personal finance more deeply than anyone I came across.

A lot of people try to argue about the effectiveness of his plans and question his extreme methods, but what they fail to understand is that personal finance is more than just math. If it wasn’t the case, we wouldn’t have had the need for a separate field of study called Behavioral Finance. A lot of people underestimate the behavioral aspects of personal finance since it somehow makes them feel it’s less nerdy to talk about it. I am beyond convinced that if you change your habits, your finances will change. Period!

I discovered my “why” and worked on changing my habits. Switching to debit cards, having a written budget, etc were all ways of training myself to build better money habits.

4. Celebrate Your Wins

Depending on how deep you are in debt and how much money you are able to throw at it, your debt-free journey can last anywhere from 6 months to 30 months or more. Any activity that lasts this long obviously has a high chance of getting derailed due to lack of motivation. It’s one thing to get pumped up after listening to a podcast and it’s quite another stay focused and follow through.

Things can be extremely challenging when you have a lot of debt and you don't have a bigger shovel to dig yourself out of it. It can seem like groundhog day. It's very easy to throw your towel in the ring and give up! Click To Tweet

Fortunately for us, our debt wasn’t that big and our shovels were big. Even with that, I can see how much motivation we needed to stay the course. The challenge we faced was not about feeling as if it was groundhog day, but to stay away from a remote possibility of falling back to our old ways of living with debt. You see, when you are not living on the edge and the debt isn’t too much and your income is decent, you aren’t necessarily motivated enough to become debt free. I am very thankful that my wife and I were on the same page on this matter and we both wanted to become debt free. We had developed a certain level of hatred towards our debt, we simply couldn’t stand the idea of being in debt anymore.

Related:  My Debt Free Journey – Part II

We also made sure that we celebrated our small wins to keep ourselves motivated. For us, we had 3 major debt pay off moments to celebrate. The first one was when we paid off my car, the second was my wife’s car which was bought less than a year ago and the third was a residual balance on our first rental property. Our celebrations weren’t bombastic since we knew we still didn’t have our emergency fund in place to go full out and celebrate. So we kept our celebrations limited to a nice dinner at a local restaurant.

I cannot emphasize more on how important it is to go celebrate each win. It might seem inconsequential in the large scheme of things but still go ahead and do it. You’ll never know which misstep you might avert with a simple celebration like that, which could have happened as result of a burn out. So give yourself a break once in a while and enjoy within in reasonable limits.

5. Build Your Network Of Accountability Partners

During the debt free journey, one of the best things we did that really helped us stay focused was to join a few Facebook Groups. I personally joined 3 groups that helped me stay dialed in. It really helped me share our small wins and also learn how others are doing. It felt truly motivating to be in touch with a lot of other people who were in the same boat as us.

  1. THE Ramsey Baby Steps Community
  2. Hogan’s Everyday Millionaires
  3. ChooseFI

These groups have a vibrant community and people shared their success stories, their challenges and often reached out to community members when they lacked motivation or felt lost. These people were Gazelle intense and were doing anything in their power to become debt free. When you are in the middle of such people, you can’t help but stay motivated and work hard yourself to get out of debt. It can really make a difference since you’re in the ‘zone’ always.

I often remembered waking up in the morning to check messages in these groups and how these members motivated each other and answered all the questions posted in the group. They would jump at any opportunity to clarify any questions people had in the community. There was a great sense of camaraderie at display here. I have seen people going to great lengths to stand for Dave and his teachings when someone misunderstood a topic or questioned specific teaching of Dave Ramsey. It’s amazing how much of the following Dave Ramsey has in these groups. His teachings and beliefs resonate very well with a lot of people.

I am so fortunate to be part of these groups since I got to learn from other people’s experiences. I got answers to a lot of questions from the members and sometimes they are so well explained that it was totally worth it. If you find yourself in the middle of your debt free journey and lack motivation, I would highly recommend you to join these Facebook groups or something similar. They can be an excellent source of motivation and can also act as an accountability partner in case you lack one.

I hope you find the methods I have listed here helpful and will help you stay motivated till you pay off all of your debt.

What did you do to stay focused? Drop your thoughts in the comments below. I would love to hear your story.

8 thoughts on “How To Stay Motivated When You Are Paying Off Debt”

  1. Great post! For us motivation was the hardest part in paying down debt. When you have as much debt as we did, it takes years of simply making payments. It was so boring!

    One thing we did was made our goals visible. We had a whiteboard on our fridge for the duration of our debt paydown journey (7 years). In the back of my mind I knew if we strayed it would be painful to update that whiteboard. Then I’d have to see our lack of progress every day. It’s a small thing but really helped with motivation.

    • Fortunately our debt payoff happened within a few months. But as I get prepared to take on the mortgage in future, the real test will begin then. I wanted to use this as a reminder for myself and stay motivated to pay that off as soon as I can.

      You’ve done an excellent job paying it off in 7 years. I can’t wait to get where you are. It would be a great accomplishment for us too.

  2. I loved hearing about your journey. I read the Total Money Makeover a long time ago, and did a good job implementing his steps, but the concepts never stuck for me.I always ended up finding an excuse to go into more debt, and never had a fully funded emergency fund.

    I like Dave’s fundamental concepts, but I honestly feel he is a bit too rigid on certain things. We use credit cards connected with YNAB to charge expenses, and I just setup automated credit card payments to pay off the balance every month in full. This gives us about $400-$500 of cash we get free from credit card rewards per year, plus some hotel points that saved us around $2,500 last year. If you found a system that works best for you, I’m not trying to convince you to change, but just bringing up what has worked for us. The key for us is to make sure we are not overspending our YNAB budget categories.

    There are few things as financially depressing as looking at large credit card balances, where it will take years to pay off. In fact, it often has led us to go into more debt because we felt like we couldn’t get out of that pit of death.

    I’m excited to hear about stories from people like yourself, who are thinking about how to be as smart with money as possible. You inspire me to keep on the journey. Thanks for sharing!

  3. Hi Chris,

    I have mostly followed through on Dave’s advice on about not taking on debt, using debit card. But for the part about following baby steps I must confess I didn’t follow it to fully. We were investing in our 401K while we were paying off our debt. I personally liked his philosophy on not borrowing money. It really resonated with my own belief system. The ditching of credit cards also has helped us control our spending.

    I do realize that I might miss out on the credit card points. But I realize this is a very personal decision to switch to debit cards.

    Also I don’t agree with Dave on using an investment advisor for managing my investments. Overall I have drawn the framework from Dave to get out of debt and from here on rely on the habits I have built to stay out of debt and work on my finances.

  4. Well, when we were paying off debt, my ex-husband and I were broke. So we couldn’t afford NOT to stay motivated. Still, we’d get disheartened sometimes by the incremental process we were making on his student loans/medical debt. So like you said we celebrated the wins as best we could and tried to keep our eyes on the prize. The prize being being debt free, of course. We got there eventually!

    • It’s the view one gets at the end of the journey that’s worth it. It can truly challenging when you don’t have a lot of wiggle room in your budget to payoff debt. I can only imagine how motivated you’d be when you are in a tough spot. I am glad you managed to pull it off.

      Celebrating small wins can be great way to recharge and attack more debt!!

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