If you find yourself deep in debt you may think the only way to get out is to take drastic measures such as selling your car (or your house), or living on beans and rice and delivering pizzas in the evenings.
While those tactics work for some, the truth is that repaying debt is not much different than any other habit. It takes a few weeks to make it a routine and it has to be done on a pace that is agreeable with your family and your lifestyle.
Set Yourself Up to Succeed With a Realistic Debt Repayment Plan
I’m not a runner by any stretch of the imagination. If I laced up my shoes tomorrow morning and decided to run a 5K I doubt I would make it. In fact, I’d probably fail so miserably that it would discourage me from running in the days to follow.
Paying off debt is sort of similar. If you decide on May 1 to start a debt repayment plan and plow 70% of your take home pay into that credit card balance chances are you won’t make it to the next paycheck without having to use the credit card again. That, my friends, is the debt hamster wheel of death.
Instead, start by diverting 20% of your take home pay towards debt repayment. Maybe that represents what you normally spend on hobbies or entertainment. You can forgo that for a paycheck or two without causing too much pain in your household.
You can always increase that percentage in the weeks to come to strike a balance for aggressive debt repayment (after all, you don’t want those balances hanging around forever).
Don’t Be Impatient. OK, Be a Little Impatient
I am, by nature, an impatient person. I want to lose 20 pounds in two weeks. I want to repay our debts in 90 days. I want to build an emergency fund before Christmas (even if it is October).
The truth is that impatience can be a good thing. It drives us towards our goals. But it can also be a negative if we allow it to set us up for failure by setting unrealistic goals.
Far better to spend the next six months putting $1,000 towards your credit card debt while adding no new debt than knocking out $3,000 in debt the first month, but having to charge $600 in bills because you have no cash, and not being able to repay any the next month.
Smooth out that curve and slowly, and steadily, pay off your debts. Be intentional. Create your monthly budget and set a realistic amount to repay from each paycheck.
Do your very best not to add any new charges to your credit cards while paying them off. That’s like digging a hole to plant a tree and letting some dirt slide back down in the hole between shovel-loads. It’s discouraging and it will turn you off of the whole plan.