We’ve all been there. We were fired up about paying off our debt and then “life happened”. Maybe you even started to see some change in your finances but it just isn’t enough to keep you motivated. Well, this is a common occurrence and expected, but you owe it to yourself to keep pushing. So, let’s get going and see how to get your debt payoff back on track.
How To Get Your Debt Payoff Back On Track
First, if this has happened to you then know that you are normal. It is common to be excited for “change” during the weekend but then once you get back into your daily routine it just falls apart. Perhaps you have a longer record of success but then you get thrown off and need to put it back together.
These are critical moments. You can either stop, or you can keep going. What’s it going to be?
Most people quit in these situations. Is this time going to be different and you keep working at it?
It is at these moments where it is easy to say you failed and think it isn’t possible. Just because you failed once though doesn’t mean you’ll fail again. It doesn’t have to mean the same result each time. You can break out of this pattern and make change last for good.
Before we go any further I do want to share with you 6 Simple Steps to Get Out of Debt. This is a great starting point for getting out of debt if you are in the beginning stages. Also, here are 14 Easy Ways to Stay Motivated During Debt Payoff. Both can serve as a complimentary guide to this article.
Slow Down and Assess The Situation
First things first, see where you are at. Take a deep breath and realize that you are in control. You make the decisions and choices in your life. Things might seem like they are working against you or you are about to lose it. You have the power to make this happen.
As Socrates once said, “the unexamined life is not worth living”. Personal reflection is an important part of an intentional life.
Add Up Your Debt and Cash
Start by adding up your amount of debt. Hopefully, you have already done this previously as you always need to know where you are starting. Take this number and compare it to your previous number. Even if you have just paid the minimum payments your current number will still be lower than where you were previously.
Celebrate this. You have a smaller amount to pay off than you did before and you have made progress.
Realize that you are in a better situation now than you would be if you hadn’t made the choice to make changes and pay off debt. Don’t dismiss that.
On a similar front, add up the money you have. We need to look at your whole financial picture. We’ll get back to this later but any extra cash you have could be used to jumpstart your payoff again.
Write Down Your Progress
Think about all the ways you have made progress. Write each way down and you will see how much has changed. This can be anything such as the following.
- Have eaten out less
- Cut subscription
- Made extra payment for first time ever
- Paid off $500!
- Waited to take vacation
- Talked friends into going to free event rather than expensive event
- Went to happy hour and didn’t buy anything
These can be anything, but every decision you make affects your bank account and adds up to long term success. While you are feeling frustrated right now realize that you have made changes. You can continue to build on these changes for more success.
Give yourself credit for everything you’ve done right. This will help boost your confidence and continue to propel yourself forward.
Review Your Budget
Budgets have a negative stigma but they are so critical to understanding where your money is going. Take your original budget and compare it to your spending. See where you have spent more or less than budgeted.
You can track your spending in an app like Mint. They make it so easy to track your spending in relation to your budget.
Looking at your budget will tell you a few things.
- What you missed accounting for in the initial budget
- What you actually spend in certain categories vs. what you think you spend
- What changes have benefited you
- Where you need to make changes
All of this is good information for you to craft a more informed budget. We’re all about moving forward. This isn’t about looking at the budget and using it as an excuse to say we can’t do it. It is a half glass full or half glass empty situation
Take the positive and build on it. There are less things to fix now than there were before.
Evaluate What Worked
Now that you have looked at your budget and seen your progress you have some information to help you move forward.
First, let’s focus on what worked. For example, let’s say you previously decided to eat out 2 times a week less. Per meal you were spending $12 each or $24 a week. By cutting those 2 meals a week you saved yourself roughly $96 per month or $1,248 a year!
After doing so you realized that you are more than OK with that adjustment. In fact, you realize that you could cut another meal a week since you found some great options for meals at home. If you cut another meal a week at $12 then over the course of the year you have another $624.
That means that you could combine both efforts to a savings of $1,872 per year that you are well on your way to paying off that $1,800 credit card bill.
Through the experience of just trying something new you learned that you were happier after the change. You felt more in control and knew you were helping your cause.
Find those instances and see where you can do more of the same to find extra savings. Each decision adds up.
Maybe you were sidetracked with a surprise but those savings are legit. Think about where you would be if you had that same surprise without the savings to have helped you. It is easy to get down on being more disciplined when hit with a surprise but you are thinking glass half empty if you think those savings didn’t benefit you.
Evaluate What Didn’t Work
Now that you have looked at what worked, we need to identify what didn’t work. Your budget will easily tell you this. You should also have a gut feel about any changes you made that just haven’t benefited you.
Don’t look at it is failure. Realize that you now know how you responded to a particular approach or method and now you can try something else.
This is where you need to be honest. Ask yourself why it did not work out. Did you really apply yourself? Does it just not jive with your personality? Did you self-sabotage yourself?
Since we aren’t going to just give up this is where we start to take action. You already have some things that did work for you. Let’s build on that.
Find where you can double down on those items. Or at the very least, use those items to add more adjustments.
Now, let’s go back to what didn’t work and the reasons they didn’t work. Implement changes in response to them.
For example, if you say your budget didn’t work, but you only did it once and then never tracked your spending or kept up with it then that should tell you to do exactly that.
Maybe you ate out too much at lunch but did well with dinner. Find a way to start bringing your lunch to work. Having a hard time avoiding Starbucks in the morning? Maybe take a different way to work or make your own coffee.
Review Your Goals / Evaluate Your Why
So, we have identified what has worked as well as some new things to try. Now we want to find some motivation.
Why are you trying to get out of debt? What is it about being out of debt that you will be able to do? What is your 5-year goal? Where do you plan on being in 20 years?
Do you feel behind on retirement savings? Are you being crushed by minimum payments on credit cards and student loans? These are normal, but dig deeper into what you feel is happening here. What is your concern about retirement? What are these payments preventing you from doing now and in the future?
You have to find your bigger goal. Do you want to live on one income? Do you want to travel more? Do you want to have kids? Do you want to move? Do you want to be more self-reliant?
As you answer these questions make your answers goals. Break them down into smaller goals to the point where you are thinking daily about the life you want to lead. For example, you choose to eat at home not because you want to be debt free, but because you know that debt freedom allows one spouse to stay at home with the kids.
It is the larger goal that you are always working towards. There are general timelines you want to hit those goals and that is what motivates you. If it is just about being debt free you can do that at any point in your life which is why it is so easy to drag out.
For more information, I speak at length about finding your why in the 6 Simple Steps to Get Out of Debt post.
Look for extra cash
Alright, so let’s start to turn things up a notch. You have adjusted your budget and you have various goals to work towards. Since you have the motivation let’s give you something to start making progress.
Go back to the amount of cash you have. If you have any extra cash sitting around let’s use that to jump start your debt payoff again. Now be careful here, you need at least an $1,000 emergency fund before you start paying off debt.
If you have a mortgage and kids you can look to increase your emergency fund to $5K or $10K but any extra cash can go towards debt.
Evaluate your current condition, risk tolerance and future obligations but the sooner you are out of debt the sooner you get freedom and hit those goals we just discussed.
Use this guide for determining what to do with the cash you have and when you can apply it towards your debt.
Look Forward To / Project Future Earnings
Identify any future bonuses or extra paychecks. You will hopefully get at least one bonus a year but you certainly get 2 extra paychecks if you are paid every 2 weeks.
Here is a solution for making sure that extra paycheck does not get wasted.
Do you have a side hustle that will be paying out some money in the future? Does someone owe you money?
Is there a side hustle you can start? Can you sell that junk that is collecting dust?
Find all those future earnings and earmark them for your debt payoff. Add them up and see how they will benefit your debt payoff.
It is easy to say that you are stuck but you are never stuck. You always have options and you can create opportunities for yourself that will benefit your debt payoff.
Track Your Progress
As you get started again you will want to keep track of your progress. Follow your budget using Mint.
Consider using a debt thermometer to watch your progress. Also, use a tool like this amortization schedule with extra payments to see how much you can save in interest each month by paying extra.
Tools such as these can help keep you motivated. We personally used them as it was not uncommon for us every few months to get a bit unfocussed. They are free so why not try them?
This Will Happen Again
So, by now I hope you know that it is totally possible to get things back on track. Use that knowledge you gained to move you forward. Keep working at it and keep adjusting if necessary.
Do realize though that as you go along things will start to start to unravel. Each time though you will recognize it sooner and it will be easier to fix.
We found that when we would come off the rails there was always something around the corner within reach. The steps above really helped us to gain focus again and frankly hit the debt even harder.
We know the same can happen with you though and I bet you are closer to success than you realize.
What do you when things get unfocused?