The end of June marks the halfway point of 2016. If you’re trying to get out of debt this year, then June is the perfect month to pause, reflect and recalibrate.
Your journey to become debt free may have had some unexpected setbacks. Perhaps your car has broken down, you’ve needed expensive dental work, or you might be experiencing the mixed blessing of being invited to 10 weddings this summer!
Some people reading this series are likely doing quite well and are on track to paying off their debt in entirety, while others are struggling and wondering how they’re going to meet their deadline. No matter where you find yourself, the following tips will help you reach your debt repayment goals.
Take Stock of Where You Are
Not everyone has time to meticulously keep track of how much is owed and how much is paid off every month. But now is the perfect time to get all your statements together and tally up your remaining debt.
You might find that you’ve put more money towards your debt in the last six months than you had anticipated or perhaps you’ll realize that you haven’t contributed as much as you thought. Either way, the important thing is to celebrate what you have accomplished since you have taken steps in the direction of becoming debt-free. Be proud of your hard work!
Also, have a look at your repayment timeline. If you find that you’re behind, it’s important to figure out why. Were your goals too ambitious? Did you face financial obstacles that you didn’t anticipate? Were you hoping to get a second job but couldn’t find one? Understanding the reasons why you fell behind on your plan will be important to ensure your success over the next six months.
However, if you find that you will have your debt paid off sooner than expected, that is great news! Relax and celebrate being close to reaching your goal.
Adjust Your Goals and Targets
The halfway point in any journey is a great opportunity to make adjustments. If you’ve been very successful so far, you might make it a goal to pay off your debt earlier. For example, you could aim to have it paid off by October and use the money that you would have put towards your debt in November and December to start an emergency fund or go on a vacation.
That brings up another point: now is a great time to start thinking about what you will do with the extra money after you’ve made all your repayments. Perhaps you want to focus on saving money for a down payment on a house or on bolstering your retirement accounts. Remember that being out of debt doesn’t mean you should abandon the financial discipline that helped you get there. Use it to help build your net worth.
On the other hand, if you realized that you might not be able to repay all your debt in 2016 then you will also have to adjust your goals. For example, you may choose to increase your repayment contributions. Think about where you can cut back. Maybe skip that vacation or don’t buy any new clothes unless it’s absolutely necessary. Consider selling big ticket items you no longer use or can live without, such as furniture and electronics or even your car if that’s doable. You could also take on a second job or do consulting or freelance work to increase your income.
Another option to consider is to extend your timeline. To repay your debt in one year is a terrific goal, but it’s also just an arbitrary deadline. Even if you pay off a significant portion this year but not the full amount, that’s still a great accomplishment and it doesn’t mean that you won’t get out of debt soon.
No matter where you are on your debt free journey, one thing that you’re likely feeling is fatigue. It’s tiring to constantly be scrimping and saving or working extra hours in order to pay off debt. This could tempt you to break your budget and overspend.
The good news is. by now you likely have an idea of what is motivating you to keep going. Do you always call a thrifty friend when you’re feeling like you want to buy something you don’t need? Does keeping track of where you are on your debt-free journey provide inspiration? Figure out how to keep moving forward so you continue your new habits. It can be as easy as putting a reminder in your calendar to reach out to people who support your journey, or to schedule monthly celebrations to reward yourself for small successes.
Another great way to stay motivated is to visualize the feeling of making that final debt payment. This is a great way to conquer fatigue in the moment and to prevent it from developing.
You’re Closer than You Think
While it might feel like your journey to being debt-free will never end, remind yourself that you are already halfway there!
The second half of the year may feel easier than the first half since your debt repayment actually speeds up as time passes. Remember that amount of interest you’re charged goes down as your balance decreases, which means that each month more of the money you pay goes towards shrinking your principal. So get ready to see your debt vanish before your eyes!
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