How to Stay Motivated While Paying Off Debt

Many people have hundreds of thousands of dollars of debt – including student loans and mortgages! This means that many, if not most, debt repayment plans will take years to complete. It can become extremely difficult to stay motivated while paying off debt!

Below are some tips that work well for most people that I speak with regarding the idea of being motivated while getting rid of debt:

Set Smaller Goals

It may become overwhelming to look at that large number each month. If this is the case for you, then you might find it useful to breakup your debt into smaller goals.

Whether you do it by account (Citibank, Credit Union, uncle Joe, etc), category (credit cards, auto loans, student loans, etc), or even assets purchased (cars, computer supplies, houses, etc), the key is to take that huge total debt number, and break it down into smaller, more manageable pieces.

Now your focus can be on these smaller pieces, rather than the huge, seemingly insurmountable total!

Celebrate Small Victories

I usually suggest to people that they set a couple of large milestones along their debt repayment journey. Once they reach these milestones, they should then do something to reward themselves for their diligence and discipline.

If you are one who needs an extra bit of motivation, then you may need to add in more milestones. Maybe it can be once you pay off a particular debt, or it can be a reward for abstaining from a certain negative financial behavior for a set period of time – such as not eating out or playing the lottery for 3 months! In this case, you will celebrate small victories and then use this as a motivation for continuing on in your journey.

Just be sure that you don’t go overboard with your reward. Remember that you still have a long way to go in order to reach your ultimate goal – becoming debt free. Don’t go on a 10-day cruise just because you haven’t purchased a cup of coffee in a month!

Pay One Debt At A Time

This is usually the most logical way to attack debt. Whenever I counsel someone who is attempting to get out of debt, I tell them to list their debt in order from largest to smallest by interest rate – not amount! Then plow every extra penny toward the repayment of the debt with the highest interest rate, while paying the minimum payment on all other debt.

Once that is paid, then move on to the next highest interest rate and attack it in the same manner, adding any additional money that has been freed up by the first debt being paid off. Rinse and repeat until you are out of debt.

If you are in need of additional motivation, then you may need to tweak this plan. Instead of starting with the highest interest rate, start with the lowest balance. That way you will pay off your first debt faster. Hopefully, you will be motivated by the fact that you now owe one less creditor!

Of course this is not the most efficient way to attack your debt, but if you are in need of a psychological boost, then this may work out better for you.

Think of the Ultimate Benefit

For me, the ultimate benefit to being debt free is financial freedom. That means that I now have a choice about how I spend my money. I will be free to give more to my church, and to be a blessing to those in need.

For some, the ability to live off of a reduced income is the ultimate benefit. They see themselves doing freelance work, or living off of their savings for a time and traveling the world!

Others love the idea of being their own boss, and getting rid of debt will help give them the financial cushion they need in order to take that entrepreneurial leap!

What is your ultimate benefit to becoming debt free? Keep your eyes on that prize! Whether it’s traveling, giving, starting your own business, or even volunteering, make that your financial focus.

Reader Questions:

  1. How do you stay motivated while paying off debt?
  2. What will be your ultimate benefit when you’re debt free?
  3. For those who have no debt (yes, a mortgage is debt!), how did you stay motivated?