How to Pay Off Your Debt: Stay Motivated and Keep it Simple
And here we go with yet another article on paying off debt. Letâ€™s see, the formula is: start with a bunch of statistics about the heavy debt-load of the average American. Especially young adults with piles of student loans to pay off. Then, confess how much credit card debt youâ€™ve personally struggled with and how you paid it off in less than two years. And finally, shoot off a holster-full of bullet-points on how to reduce debt and live happily ever after.
Blah. Blah. Blah.
Itâ€™s just not that easy, is it? Debt wears you down. Debt hurts. Itâ€™s a pain in your assets.
So letâ€™s shake this up a bit. You owe a bunch of money and you want to pay it off. Letâ€™s not make this any more agonizing than it already is.
Please donâ€™t start a blog
Apparently, the deal is: go deep into debt â€“ and then start a blog! Yippee! I can confess my sins, reduce my debt and get famous all at the same time!
If we could eliminate all of the â€œpersonal financeâ€ blogs that feature some poor soul who is chronicling their debt and resurrection we could a dent in the bandwidth requirements of the entire Internet. Think how much faster you could access those Netflix streaming movies! No more frozen frames and â€œbufferingâ€ messages!
You donâ€™t need a world full of strangers watching over your shoulder to keep you accountable. If you want to journal your thoughts, write it down in a diary. One day you can hand it to your kids and say, â€œHere, read this. And donâ€™t ever make the mistakes I did.â€
Of course, theyâ€™ll just snicker and say â€œWhatever.â€ But you tried.
Make it automatic
I am sick of financial advisors saying â€œPay yourself first.â€ We know, we know. That just means weâ€™re supposed to save for retirement, or for the down payment on our first home â€“ or for whatever life-goal weâ€™re supposed to have. But we canâ€™t do that if weâ€™re debt-trapped. Pay off the debt. Never go deep again. Then pay yourself by contributing to a 401(k), IRA or other savings plan of your choice.
But weâ€™ve got to pay off the bills first.
Do it automatically. Find a way to have payments routinely drawn from your checking account so that you always pay on time, pay more than just the minimums and never back down from your debt-reduction duty…
(SFX: Cell phone rings)
ME: Yeah, thatâ€™s pretty cool. Really? Right here? OK, OK, Iâ€™ll mention it.
(SFX: End-call tone)
So, as it turns out, ReadyForZero.com can do this for you. Automatically set up and pay your bills just like I was saying. Pretty nifty, huh?
Set aside Mad Money
Look, youâ€™ve got a pretty good job. Youâ€™re working as hard as you can to make ends meet. Youâ€™re serious about paying off your debt. Thatâ€™s all anyone can ask. Nobody is saying you have to be a monk. You gotta live. Youâ€™re (relatively) young â€“ live your life.
Set aside some mad money. Not a lot, just enough to make your life fun now and then. Remember, this is after your automatic debt payments are accounted for. Whatever is left over, keep it for those â€œsplurge on meâ€ moments.
You deserve it.
And now for the Grand Prize
People will say youâ€™ve gotta track your progress. With a chart or a spreadsheet. Are you kidding me? If you like keeping track of stuff so much, how did you get so deep in debt? That little pie chart you made didnâ€™t help you see it coming? That ten column Excel file had a formula bug, did it?
Look, if it makes you happy, post a giant full-color thermometer chart on the wall and marvel at your progress. But for the rest of us who donâ€™t really go for all that, stick to the basic plan.
And promise yourself a Grand Prize when itâ€™s all paid off. Maybe a couple of mini-awards along the way, but something special when the dust settles from months, years even, of dedicated debt payments.
How? Well, you donâ€™t want to take an around-the-world trip charged to your credit card and end up in more debt than you started with, but you deserve a reward for your consistent discipline.
Maybe you set aside a bit of your Mad Money savings for a real treat when the debt is retired. A week for a (domestic) beach vacation. A new wardrobe. Season tickets for your favorite NFL team. Whatever the reward, make sure you have a plan to
pay for it without having to beg, borrow or steal!
When youâ€™re debt free, youâ€™ll be among the most powerful, attractive and contented people on the planet.
And you wonâ€™t have some embarrassing blog on the Internet reminding you just how pitiful you once were.
Hal M. Bundrick is a Certified Financial PlannerÂ® and former financial advisor and senior investment specialist for Wall Street firms. He writes for TheSimpleDollar, TheStreet and TheMoneyPivot, among others. Follow him on Twitter: @HalMBundrick.