Trust me, I've been there. Hell, I'm there right now. Every year we decide we're going to begin anew. Every year we decide that THIS will be the year that we eliminate our debt - only to find ourselves even deeper in the hole. It's maddening - to say the least. As I sit and prepare myself for another attempt at paying off this debt I know I need to take the opportunity to examine why previous attempts failed.
Paying off debt is a journey—one with plenty of ups and downs along the way. If your previous attempts (like mine) to pay off debt failed, it may feel like you’re stuck in an endless loop without any escape… But it doesn’t have to be this way. In the following blog post, we will cover 5 reasons why your prior efforts were unsuccessful so that you can learn from them and move toward success in paying off your debt for good! By understanding what went wrong before, you can make more informed decisions as you create actionable plans moving forward. So let's get started on tackling that financial goal with confidence and clarity!
1. You neglected to set up your emergency fund before tackling debt
Whether it's $500 or $1000, an emergency fund is a vital component when tackling debt. It never fails - headway is being made and then BAM! Suddenly, you need new tires for your car or you have a co-payment due for your kiddo's emergency room visit.
For many, the idea of saving $500 or $1000 is overwhelming in itself. I hear you. I understand. It's especially daunting when you have children in the picture and they all need a million different things all the time or you have creditors blowing up your phone in the middle of your workday demanding money that you don't have to give. It's not an easy task - but it is doable. For ideas on how to save for your emergency fund, check out this post here.
2. You didn't track your spending
Take the time to sit down and look at the last three months of your bank statements. If you're anything like me, you assume you spend $XX on gas and groceries each week, but when you go back and actually look at your statements it's obviously more than that. It can be even more difficult to track when it's a joint account with multiple cardholders.
If you're serious about paying off debt, it's time to take an honest, no-excuses look at your spending habits. Don't make estimates or assumptions - look back at your spending and look for patterns. Identify the areas that need work and acknowledge the areas you're unwilling to negotiate on.
Tracking your spending might seem like a daunting task, but it’s an essential step to prevent debt payoff failure. Knowing exactly where your money is going each month allows you to plan accordingly, with careful budgeting to cover necessary expenses while still having enough left over to put towards paying off debt.
Slacking on your tracking may make it impossible to spot potential problems before they arise or areas in which expenditures could be reduced or eliminated altogether in order to get the debt paid down faster. Blindly sending out those payments without considering how they could best be utilized is a surefire way to remain in the red for much longer than necessary.
3. You Havent Dealt With Your Emotional Money Issues
We did not have money growing up. Like, at all. I remember Christmases that were entirely provided by the Salvation Army. We didn't get to take fun snacks to school like the other kids did or get fun cereals - store-brand cheerios or white rice with cinnamon and sugar for us, thank you very much. As a result, I want to give my own children access to the things I never had. (But then, on the flip side, I want them to understand the value of a dollar and know they won't simply get things because they want it...)
I also know that I'm an emotional shopper. When I'm stressed, I want to spend. Every rational part of my being knows that it's irresponsible and not an appropriate way to respond to stress so I'm going to have to figure out a way to deal with my stress in a healthier manner. (Hey, if I started working out when I'm feeling stressed, perhaps I could kill two birds with one stone - no spending and I could lose some weight.)
Believe it or not, emotional money issues can have an impact on whether or not debt pay-off is successful. From emotional spending habits that drive up debt to the mental blocks that prevent people from taking financial control, these feelings can stand in the way of a successful pecuniary plan. To ensure long-term debt pay-off success, it's important to seek help to work through any underlying emotional money issues and find the motivation to tackle your finances with enthusiasm rather than fear.
4. You didn't make sure Everyone was on the same page
Debt is difficult enough to pay off on your own, but when you're part of a family everyone has to be on the same page.
First and foremost, you and your spouse have to sit down and have a serious conversation. All the debt needs to be laid out on the table - this is not the time to try to keep anything from each other. It is what it is and now it's time to move forward - together. Once the two of you are on the same page, it's so much easier to move forward. You can encourage each other and hold each other accountable. Move forward as a team and nip this in the bud before it gets completely unmanageable.
Once you and your spouse are on the same page, it may be time to address the rest of your household. Explain to your kids that money is going to get really tight for a bit while you're working to pay off debt. Reassure them that needs will be met, but wants will be placed on the back burner for a while.
5. You weren't motivated enough - when the going got tough, you lost sight of the goal and gave up
Motivation isn't just a fluffy word, it's the fuel when it comes to tackling debt. That’s why it's so important for anyone wanting to make progress with their debt payoff.
For example, when you take on a mountain hike and you're faced with tough terrain; motivation is the thing that's going to keep you picking up those steps, no matter how hard it becomes. The same applies to debt payoff - it can often feel like an uphill battle with many challenges along the way. To be successful you have to be ready to stay inspired and motivated throughout the journey; otherwise, like so many others before, when things got tough, you lost sight of the goal and gave in.
Find your motivation and give yourself the credit you deserve. Make a dream board and look at it every morning. Change the screen on your phone to remind you to make good money choices. Celebrate your wins
6. you didn't budget for the basics
I'm all too familiar with this one and it can get a little tricky when there are children involved. With five children, it almost feels like we need to buy someone shoes or underwear or socks or deodorant or shampoo or whatever other urgent need arises. These little things can add up quickly if you're not planning for them. Create a line in your budget specifically for these expenses and continue to roll the leftover to the next month.
It's easy to set goals and make promises, but it's often much harder to actually accomplish them. This can be especially true when you're trying to pay off debt. With a few simple adjustments, however, you can turn your debt repayment ambitions into reality. By tracking your spending, creating an emergency fund, staying in sync with your spouse, being sufficiently motivated, and budgeting for basic needs, you can bring yourself that one step closer to financial freedom.
This list is far from comprehensive. What other reasons have your previous attempts failed? Let me know in the comments – I'd love to hear all the different reasons why tackling debt can sometimes seem so daunting!
Check out these posts: