Getting out of debt can be a long and exhausting process. Every day, you have to remind yourself that you can’t stop for coffee on the way to work or pick up takeout for dinner on the way home. Going to the mall to pick up essentials can be a challenge when there’s a cute outfit in the window of the next shop that you know you can’t buy. That 50-inch 4K TV will also have to wait until you’re debt free to go bigger and better. It’s like telling a toddler “no” all day – at some point they want to – and likely will – rebel!
When you’re trying to get out of debt, the strain of denying yourself things over and over again can lead to something called debt fatigue. This is defined as exhaustion stemming from continual sacrifices in order to get into the green. Unfortunately, it could end up leading to overspending since you become less able to regulate your impulses and you may splurge, believing that one small indulgence won’t matter. That one indulgence often leads to two or three and suddenly your spending is out of control.
That’s why an essential part of getting out of debt is fitting in rewards and celebrations along the way. These are opportunities to celebrate your progress and put aside an amount of cash that you give yourself as a reward for good behaviour. This ensures that you don’t feel as deprived; rather, you will be motivated and later rewarded for your hard work. This also allows you to enjoy the things you love and purchase some things you want while you’re in the process of getting out of debt.
Just starting to pay off your debt? Read “12 Months to being Debt Free” from the beginning!
What should you celebrate on your debt free journey?
Obviously if you save $20 by cutting down the cost of your cable bill, it’s not the best idea to buy a $20 pizza in its place. Instead, celebrate in moderation. For example, if you stick to your budget over the course of a month and save $500 or $1,000 dollars to put towards paying down your debt, you might set aside $50 or $100 in order to enjoy an evening out or buy yourself a treat that doesn’t fit within your budget. These indulgences program you to recognize that there will be a reward for the sacrifices you’re making the rest of the month, and encourage you to continue dedicating yourself to paying down debt within that period in order to ‘earn’ the reward.
Some people choose to have small weekly rewards while others prefer larger monthly celebrations where they can spend more. Others choose to do both. It depends what you believe will motivate you more towards reducing your debt.
A reward can be simple or extravagant, but it’s best being something that you’ve cut out of your budget that you really miss. For example, if it’s difficult for you to avoid buying coffee all week, you might choose to buy yourself a cup of joe on Friday. Monthly rewards can be somewhat more high-priced, such as visiting a cool new restaurant, or buying a pair of jeans you’ve had your eye on for a while. Just remember to treat these rewards like true celebrations and revel in your repayment accomplishments!
If your debt free journey is a long one, it’s also important to have larger scale celebrations for staying on budget for a full year. This could include buying that new iPad you’ve wanted or go someplace fun like to a local amusement park.
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The final debt free bash
Throughout your journey, it’s important that you visualize the moment when you’ll have everything paid off and you will be debt free. It’s also essential that you have a plan on what you will do to celebrate since it’s a fantastic accomplishment that helps bring about financial confidence. By doing some early planning, you have something to look forward to in the months to come that will help keep you motivated.
Some people decide to throw a party when they finally get out of debt. They invite friends and family members who have supported them along their debt-free journey to toast to the fact that they are no longer in debt. Others prefer to plan a family day trip to a place on their bucket list. Whatever you choose, it should be something that will be motivating and memorable for you.
Do you have questions about paying down your debt? Leave your questions for Amanda in the comments below!