5 Tricks to Help You Stick With Your Debt Management Plan
A successful debt-management plan depends on two things that only you can bring to the table: Your discipline and ability to make good choices. Without both, all the good work of your lowered monthly payments ends up becoming undone by poorly-timed purchases and an inevitable lack of cash.
"Paying off debt doesn’t do you much good if you just create new debt," says Scott Maxwell, a certified financial planner, and Vice President of Wealth and Income Planning at Talis Advisors. "Stop adding to the problem. Cut out what isn’t worth the cost." Still, you're only human. When living on a budget and paying off debt, it can be tempting to fall off the wagon and spend more money than you should. How do you stay on track? What are the insider's tricks?
We turned to experts for some important tips that will help you avoid the worst mistakes. These strategies will help you stick with your plan, and they can even help make it more fun along the way!
1. Get some distance from your credit cards. You don't have to go as far as cutting up your cards, but get them out of your wallet. Maxwell even suggests placing some obstacles between yourself and online temptations: "Removing credit card numbers from online stores forces you to type it in each time you buy something," he says. "That extra step will give you time to reconsider."
2. Ask these two important questions. "'Do I need it?' and, 'If so, why?'" says Gene Natali, Jr., author of The Missing Semester (which covers financial planning for young people). "The answer to the first question is often a resounding yes, but often times the second question brings us to reality, and helps to avoid spontaneous purchases with money that could be going to reduce your debt — and the accompanying interest payments."
3. Pay more than the minimum. Don't let your spending habits dictate your payback discipline. Beating the interest on payments is a lot like getting that percentage back as an investment return. And the investment is your good financial health. Modify your luxury spending to increase your monthly debt-management results.
4. Talk about and document your progress. Communicate your debt-management goals to a friend, join an online support community, or hire a coach. These are all strategies espoused by Niquenya Fulbright, a life coach and founder of Learning About Debt, Investments, & Economic Sustainability - an online group that focuses on women's personal finances. "Schedule regular meetings or phone calls with your accountability partner to talk through your struggles and successes. Journaling is [also] a highly effective method of staying on track. It can be useful just to see how far you have come."
5. Give yourself a break. Success at a debt-management plan isn't about deprivation. "Decide which entertainment activities are really important to you," says Fulbright. "Perhaps it's that one Amazon Kindle purchase, a monthly date night with your significant other, or a trip to the movies. By setting aside cash specifically for entertainment, you won't feel like you're missing out and succumb to a spending splurge. The key here is moderation."
Putting thought into your debt-management program along these lines, and treating the process with patience and discipline will make you poised to get the results you want.
Remember that debt management isn't a permanent state, it's just a condition of getting to a place where money and personal finances become a whole lot easier to work with in your life.