If you have a pile of debt, paying it off can be a grueling and tedious process. To be debt free from credit card bills, mortgage payments, or student loans can take several years and even decades and will result in debt fatigue.
Debt fatigue happens when you feel that paying back debt is impossible to overcome. The debt you owe does not seem to lessen even though you have made significant cut-backs to your lifestyle and spending habits. Dissatisfaction, apathy, hopelessness, and depression are their defining traits. When this happens, instead of buckling down, you cave in and overspend to compensate for sacrifices you had made to pay off debt or give up altogether. Increasing your debt may eventually drive you to insolvency or cause you to declare bankruptcy to resolve your financial situation.
You should find ways to keep up your motivation and stay focused on your end goal of financial freedom. Here are four simple tips to combat the ill effects of debt fatigue and stay on track with your financial goals.
1. Remember to Focus on the “Why?”
The first key to overcoming debt fatigue is to focus on the “why?”-why paying off your debt is important? Is your debt hindering your plans for saving for retirement, buying a house, or even enslaving you to a job you hate? So, what you need to do is to believe that debt does not have to be forever. To help yourself do that, take some time to think about your plans once you are debt-free. It will re-energize and encourage you when you feel like giving up. Create a vision board with images of what your debt-free life will look like, write your future financial goals in a journal, or create a Pinterest board with everything you want to do when you are debt-free. It will help you to stay focused on the WHY.
2. Adopt the one-bite-at-a-time mentality
To overcome debt you need a plan, otherwise, it will be like navigating a dark maze. Begin by creating a strategy that breaks down your insurmountable debt into bite-sized chunks. You can either adopt the debt snowball or the debt avalanche method.
- With The Debt Snowball method, you tackle the smallest debts before moving on to the larger ones.
- According to the Debt Avalanche Method, you must order all your debts from highest to lowest in terms of interest rates. Make the minimum payment required on all the debts initially, excluding the one with the highest interest rate. The debt with the highest interest rate should then be the focus of your efforts until it is paid off. Then, move on to the next item on your list. After this, continue till all of your debts are settled in full.
Remember to keep paying your minimum payments on your other debts.
Whatever method you use, you should implement the one-bite-at-a-time attitude so that it becomes easier to brush aside the defeatist attitude and concentrate on your debt-free future.
3. Reward debt-pay-off milestones
When you are in debt, spending money on small pleasures may not feel like the “right thing” to do. However, this method can backfire and lead to burnout. Allow yourself a little splurge from time to time. Any progress you make towards paying off debt however small is a huge step and deserves celebration. You can consider including fun money in your budget every time you pay off a certain amount of debt. Simple pleasures like a massage, dinner at your favorite restaurant, or a night at the movies are nice ways to stay inspired without going overboard.
4. Reassess your repayment plan
If you are constantly feeling burnt out, exhausted, and stretched thin with your debt repayments, it is time to revisit your repayment plan. If you do not have sufficient money left over each month to support a healthy lifestyle, then there may be better options like DIY (Do It Yourself) (Click here for more information) or debt consolidation. It is a tactic in which you can obtain a new larger loan to pay off all your outstanding debts. It helps you to combine all your loan amounts, interest rates, and term contracts into one single payment plan. Banks and other financial institutions offer this option.
You can also contact our expert debt counselor for a debt management plan that suits your unique situation.
When debt fatigue creeps in, it can damper your debt repayment plans. So, when you recognize that you are experiencing debt fatigue, you should follow the steps above to overcome it. Just think positively of all the money you can free up once you are free from debt.