Are you currently in the process of paying off debt? It’s not easy, is it? Let me include you in on a little secret – that’s how you know it’s worthwhile. Nothing in this life that is worth doing is easy, and paying off your debt certainly counts as one of these challenges. But, hang in there and you will soon be debt-free and living a carefree life with more laughter than you can imagine.
So how can you go from completely debt ridden to wealthy? Here comes secret number two – it doesn’t necessarily depend on how big your income is each month. There are plenty of folks with six-figure incomes that have more money going out than coming it. Having a large income doesn’t mean that you’re wealthy and without debt, it just means that you can make bigger mistakes with your money. Big income or little, if you currently have debts to pay then you’re normal. And, if you actually want to get rid of those debts then you are a brilliant individual. So, let’s revisit this question, “How can you go from completely debt ridden to wealthy?”
The Reason Why Most People Fail While Paying Off Debt
The most important lessons in life should really be learned by someone else. If you could spare yourself the pain and agony of going through trials yourself, I would highly recommend it. In order to dodge one more failure, let me whisper to you secret number three – people love to sprint, but can never seem to finish a marathon (or even a 10k for that matter). Aren’t quite following?
Basically, people are fantastic starters but are terrible finishers. They start thinking that maybe it would be wise for them to live within their means and pay off debt. So, they cut their grocery bill in half, they stop going out with friends, and then they decide to give each other nothing for Christmas – all in an effort to reduce their debts. It sounds noble and seems to be the right thing to do, but it is very short-term thinking and simply doesn’t last for months or years. At best, it can last a few weeks until somebody snaps and goes on a spending spree. Cutting all expenses down to practically nothing is not the way to get rid of your debts.
Reward Yourself Instead
It may sound counter-intuitive, but in order to pay down your debts over the long term, you must spend some money on yourself. And specifically, you’ll want to spend money to reward your debt payoff efforts.
Thankfully, I put this into practice when I decided to pay off my home mortgage. In one year I wanted to pay off over $50,000 in home loans which is obviously no small feat. In order to stay focused and on track I decided to set up some goals for myself along the way. I decided that when I would pay my mortgage down to $40,000, I would buy myself a new bicycle (which, by the way, helped me get a personal best time in my August Triathlon). Then, if I were to get my mortgage down to $25,000 I would buy myself a new tablet. And finally, once I make the final payment I would go on a tropical vacation!
By setting up these goals along the way you are transferring your focus from a huge insurmountable goal into small achievable ones. If you have a goal to get completely out of debt, set up some small goals along the way. Put a date and a dollar amount on them. If you hit them, then allow yourself to buy that reward. It sounds fairly simple, but boy is it effective! It’s fun and it will actually get you to your goal faster!
What is your big goal? Are you rewarding yourself along the way?
This post was originally published on October 5, 2020, and updated on January 26, 2022.