How to Stick With a Debt Payoff Plan
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How to stick with a debt payoff plan?
A good debt payoff plan is key to achieving financial independence. And more disposable cash creates more options. The hard part, though, is finding a strategy that actually works for you – and sticking with the plan.
Here’s a look at several ways to stick with a debt payoff plan and reach your goals.
1. Be Realistic
It’s important to always set realistic goals. In other words, your goals must be attainable, or else you’ll lose motivation and give up.
Devision a plan to put all your extra money toward debt is good in theory. And if you stick with this plan, you’ll likely pay off balances faster. But this approach isn’t always sustainable in the long run — especially if you owe a lot. Depriving yourself long-term can lead to frugal burnout, making it harder to stick with any plan.
Yes, paying off debt does require some sacrifices, so you’ll have to make “some” adjustments. Just know that a bare-bones budget can backfire, so be realistic with your ability.
Related: 17 Ways to Get Out of Debt Faster
2. Write Out Your Debt Payoff Plan
Writing out a debt payoff plan helps with accountability. When plans are visual, they become front and center.
As you create a vision board, include tidbits of information about your strategy and timeline for paying off debt. For example, do you plan to put a tax refund or bonus check toward balances? If so, add these details to your board as a reminder.
3. Create a Budget
A solid budget is also key to paying off debt because you can allocate money to different needs and wants. A budget can also prevent overspending, and you’re less likely to create new debt.
Spending plans also free up money, which you can then put toward paying down debts.
Related: 6 Common Budgeting Mistakes to Avoid – Now!
4. Live Beneath Your Means
Just because you have money to buy something doesn’t mean that you should. Buying something “just because” starts a dangerous pattern that often leads to unnecessary debt.
Living beneath your means, on the other hand, can provide enough cash to get through the month. In which case, you don’t rely on credit cards.
Understandably, it’s harder for some to live well beneath their means (depending on where they live). But when possible, limit your monthly house payment to no more than 30% of your gross income. Also, make an effort to save at least 5% of your income, and don’t spend more than 5% to 10% of your take-home pay on fun.
These measures, coupled with other frugal living tips, can help you spend less than you earn – thus creating disposable cash to pay down balances.
5. Don’t Let Setbacks Discourage You
No one is infallible, so unexpected events can happen to us all. With that being said, don’t let setbacks discourage you.
Setbacks come in all forms. These include a job loss, medical emergencies, and other unexpected expenses. If any of these situations occur — don’t give up.
Even if there isn’t an immediate solution, know that it’s possible to get back on track.
6. Know Your “Why”
In other words, why are you creating a debt payoff plan?
Knowing your “why” creates meaning and purpose. Ask yourself, “Why do I want to be debt-free? Do you want to increase your credit score or reduces expenses to buy a house? Or maybe you’re seeking financial independence? Whatever the driving force, having a clear reason can help you stay motivated on this journey.
- Related: 10 Creative Ways to Save Money on a Tight Budget
- Related: How to Get Out of Debt With No Money
Did you find this information helpful, or got a question about paying off debt? Let us know ↓↓