When my spouse and I decided to focus on eradicating our $45,000 debt, we removed a significant amount of non-essential spending from our expenses. We made considerable sacrifices to vanquish our debt, such as moving from a one-bedroom apartment to a smaller studio, delaying our honeymoon for a number of years, and driving cars that were over a decade old.
While settling down debts, many find it tough to indulge in personal expenses. A sense of guilt clouds every non-essential purchase, as it’s these very purchases that steer us into debt.
Many believe that one should abstain from all non-essential expenses during the journey of debt repayment. Nevertheless, being too restrictive can actually have a counter productive effect leading to bouts of uncontrollable spending.
This situation is somewhat akin to losing complete control over your diet after a highly restrictive phase. Both weight loss and conquering debt have the same winning strategy, a slow and steady tread.
As you work to payoff your debt, apply the following straightforward regulations to allow yourself some financial flexibility.
1. Small Rewards
If you’ve achieved a certain milestone in your journey of overcoming debt, it’s acceptable to reward yourself for reaching such significant moments. The key is to maintain these rewards small and affordable.
Let’s say, you’ve consistently been allotting $100 weekly towards your debt, and you finally see it fall below the $10,000 mark. In such a case, sparing one week’s $100 to award yourself with a lavish dinner, a stylish attire or a spa retreat isn’t a bad move. These minor indulgences can serve as the much-needed motivation to keep battling against the debt.
2. Investment For More Returns
In some cases, spending money can pave the way to earn more. Does eliminating some daily mundane chores from your life serve you with extra time, which in turn can be employed to increase your income? If devoting more time to your work means ramping up your earnings (thus, speeding up your debt payment), it might be profitable to consider assigning some chores to others. A virtual assistant can prove beneficial in taking your business to higher levels by handling tasks like lead generation, replying to emails etc.
3. Unforeseen Events & Emergencies
During this journey of conquering debt, you might face challenging situations that can potentially disrupt your plan. However, don’t let these hitches make you give up.
In our case, while working towards eliminating debt, my spouse suffered an injury during a soccer match, preventing him from working for six weeks. This incident stalled our debt payment plan, pushing us to tap into every penny we had for covering our bills, apart from the medical bills we had to deal with.
Medical emergencies and unpredictable events can occur, it’s a part of life. But don’t miss out on significant celebrations, such as your best friend’s wedding, for the sake of finishing your debt payment a few weeks sooner. If it lets you participate in key milestones of life or handle an unexpected emergency, it’s worth adjusting your debt repayment timeline.
Sticking to your plan of repaying debt demands acceptance towards the fact that emergencies and life events will occur. Don’t let them throw you off your path. You don’t need to survive on minimal expenses while working down your debt.
Can you justify spending while paying off debt? Under what conditions should one consider spending? If you’ve managed to clear off your debts, did you allocate any ‘fun’ budget for yourself? Thoughts are welcome on Smartasset.com.
