For the second month in the 12 Month to Being Debt Free journey, we thought we would write an article about how to navigate setbacks. Hopefully, most of you have managed to stay on track over the last month, but I’m sure that some of you have already faced setbacks along your journey.
Every debt free journey has setbacks and it’s important when you encounter them that you know how to deal with them without getting discouraged and giving up. Setbacks are inevitable because life is unpredictable. You might plan to use extra money to make a payment towards your debt but there are any number of things that could keep you from doing that.
Your setback could be something that’s out of your control like an unexpected problem with your car or a health problem that you need costly physical therapy to fix. Or your setback could be something that you do have control over. For example, you might go to the mall to pick up a gift and see something you really want and decide to buy it rather than putting that money towards your debt.
What’s important is that you don’t let the setback demoralize you and keep you from pushing forward towards your goal.
Here are a few tips on how to handle life’s financial setbacks:
1: Figure Out Why You Slipped Up
If your setback was something that you had control over, the first thing you should do is ask yourself why you slipped up. For example, if you decided at the beginning of the month to forgo your morning coffee in order to put more money towards your debt but you found yourself in Starbucks splurging on a latte every day, then you might have decided to cut back on the wrong expense.
If you choose to cut back on things that are going to make you miserable then you’re going to be far less likely to be successful. That’s because everything we spend money on has a happiness return on investment. That means that every dollar you spend generates more or less happiness for you. Perhaps having your morning coffee provides you with a significant amount of happiness return on investment but some other expense like cable might not provide as significant of a return on investment. Try cutting back on cable and continuing to have your coffee.
You could also decide to cut back more gradually on things you have a habit of buying. So, if you are used to a latte every morning then choose to make coffee at home one day per week. After a few weeks, you can potentially decide to cut back to just buying coffee three days a week and so forth.
2: Readjust Your Repayment Schedule
You might decide after a month or two that your repayment schedule is actually too strict and trying to keep up with it is causing you a lot of stress. If that’s the case, then you should consider taking a few more months to repay your debt. At the end of the journey, you’re not going to care if it took you 60 or 90 more days to pay off your debt as long as you find yourself debt-free. Sometimes, we put too much pressure on ourselves to do things quickly when what’s important that we stay consistent over time and get it done.
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3: Stop Beating Yourself Up
If you spent money frivolously and you can’t make the repayment on your debt that you were planning to make, you might think that you’ve failed and start beating themselves up for not accomplishing your goal.
Here’s the problem with doing that: the only thing you will accomplish is making yourself feel bad. It won’t help you repay your debt faster and it won’t help you stay motivated and committed to your debt repayment.
In fact, because you feel badly, you might be more likely to splurge on a treat for yourself to make yourself feel better. It’s a vicious cycle. Stop it by being kind to yourself and moving on. You will do better next month.
Also read: How to Tackle High-Risk Debt>
4: Make Up For the Slip Up
If you want to get back on track with your debt repayment after a slip up, you can always decide to make up for your slip up. To do so, you could choose to cut back significantly in another area or you might decide to find a way to make more money. You might even be able to return the things that you bought or you could choose to sell something of equal or greater value on Craigslist. There are lots of ways to get back on track. You just need to choose one of them and take action.
5: Plan for Slip Ups in the Future
The reality of life is that things very rarely go as planned. You’re going to stumble and fall down even when you’re trying your best or something will happen that you have no control over.
The best thing you can do is anticipate these setbacks. You can build a cushion into your budget for unexpected expenses. Or, if you have an emergency fund, you could also use it to help with the unexpected costs or decide to take on a little bit of extra work every month just in case.
By building in some extra room into your debt repayment plan, it will make it less likely that you’ll have to worry as much if you slip up and more likely that you’ll be able to stay on track and repay your debt in 2016.