Whether you’ve committed to a Chapter 13 bankruptcy repayment plan or you're paying off debt without help from the bankruptcy court, it's essential that you stay with your plan over the long term – otherwise, you may never get to the payoff of being debt free.
Here are some tips for keeping yourself excited for your mission, adapted from NotMadeofMoney.com.
Stay Pumped to Pay Debt: Break the Whole into Sections
- Work piece by piece: Rather than thinking of your debt in terms of its overwhelming total number, break it into pieces of debt (whether by account, type of debt or some other groups) and focus on eliminating one type at a time. This should keep you from feeling helpless in the face of a large debt total.
- Take time to celebrate small victories: When you meet one of your small financial goals (which can be anything from paying off a certain debt to avoiding some type of costly, detrimental financial behavior) for a set time period, reward yourself and enjoy the reward. Obviously, it's important not to go overboard on this (and risk undoing all the good you've done), but treating yourself to, say, one fancy latte per month will likely help you enjoy that drink much more than if you gulp one every morning.
- Think debt by debt: Most insiders suggest paying the minimum balance on all but one debt (either the one with the highest interest rate, for maximum efficiency, or with the lowest balance, for speedy elimination) and funneling the rest of your spare change into that debt. This way, you'll pick off debts one by one as your work your way down to a debt-free life.
- Remember your long-term goal: Eliminating debt can provide you with financial freedom that you might use in a number of ways – remember to keep in mind what you plan to do once you're unyoked from your debts. Whether you want to travel, give more, work less or do something else, remember that your journey toward debt elimination will help you get there.
- Enlist a helper: Whether you're working toward financial freedom with a spouse or on your own, having an outside source of motivation can be helpful to keeping you on track. We tend to feel more responsible for our actions when someone is holding us accountable for them, for one thing; for another, it's nice to hear how well we're doing from someone else's mouth once in a while. So if you don't already have a debt-elimination buddy, start thinking about who might best motivate you to stay on track.