What I’ve learned in one year of my debt reduction plan
September 2008 marks one year since I started this blog and made my ‘official’ commitment to getting out of debt. I remember one year ago making a budget and seeing that my spending exceeded my income. I had large piles of debt and very little confidence that I would ever get out of the mess. Once I learned about how to live below your means I began the slow process of chipping away at the mountain of debt.
It’s easy to make a budget at the start of the month and make a plan to pay off X dollars worth of debt. However, once you make that plan, you have to sit and wait. You have to wait for paychecks to arrive, statements to come in, money to be transferred, payments to be reconciled and finally the new statement the next month that validates your progress. This is all very boring!
Not only is it dull to wait for everything to progress from month to month, but what if you need to repeat the process for 24 more months? It can become very difficult to see the light at the end of the tunnel and it is very easy to doubt that you will really get there. I speak from experience as I have doubted my efforts just about every month. 🙂
How to overcome the boredom and keep working your plan:
- Track your progress regularly
- Be Patient and Expect mistakes
Track your progress regularly:
This can be as simple or sophisticated as you want. Anything from pen and paper to spreadsheets and graphs will get the job done. Use what is most comfortable for you and what you are most likely to update regularly.
I keep a budget and track my debt monthly on a computer, mostly using Quicken and Excel. I also update a whiteboard on my refrigerator each month with my new debt total and how much I have paid off so far. The whiteboard is something I see every day and that is the most effective way to stay motivated to stick with my plan. I highly recommend putting your debt progress somewhere you will see every day.
Be Patient and Expect mistakes:
Patience is great, but no matter how patient you are, you still need to prepare for set-backs. You will make mistakes as you work your plan. You will slip up and buy something that breaks your budget that you know you shouldn’t have bought. You will have emergencies come up that drain your emergency fund and maybe more and stop you from making as much progress as you had hoped that month. Know ahead of time that these mistakes will happen and don’t let them destroy your plan.
Acknowledge your mistakes, but move on to the next month and do your best to get back on track. Believe me, I’ve made plenty of mistakes along the way, but none of them have been as devastating as quitting would be. You’ll never look back and wish that you had quit, but if you do quit now you know you will look back and wish you had not.
- Make a plan
- Track your progress
- Be patient and expect mistakes
It’s not easy, but you have to keep working at it. I don’t like the fact that I could be looking at another year until my credit cards are paid off, but I have no other choice. Giving up isn’t an option. I have a plan, I know it works, I just need to keep going and do my best to speed up the pace every opportunity I get.
There are no secrets and there is no quick fix, but if you follow my advice you will be better prepared to stay the course and survive the long journey to debt freedom.