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6 Things That Sabotage Your Debt Reduction Strategies

6 Things That Sabotage Your Debt Reduction Strategies

You’ve got a plan to pay off debt. You have spent hours pouring over the figures and you know what you have to do: focus all your efforts on leaving past charges behind and stop being a slave to your interest rates. Your debt reduction strategies are foolproof, or so you think, but are they you-proof? Will you be able to handle the pressure of everyday life and stick to your plan, or will your debt reduction strategies be sabotaged by personal or external pitfalls?

What Should Be the Focus of Your Debt Payoff Plan?

All debt reduction strategies should have an end goal that you can focus on when the going gets tough. When you are designing your debt payoff plan, the following six features should definitely be included. These characteristics can be the difference between failure and success.debt reduction strategies

  • Changing How You Live

To reduce your debt, you have to first reassess how you are living and what choices you made that contributed to your current position. Chances are, it was a couple of bad consumer purchases combined with living off credit for emergencies that catapulted you into the black hole of high-interest rates along with high balances.

You must choose to alter your lifestyle so that you can not only get out of debt, but prevent it from overcoming your finances again in the future. This might involve moving to a cheaper home or apartment. It could involve selling your beloved vehicle and using public transportation. You may have to stop eating out and start buying groceries and packing meals to take to work. Debt reduction strategies that pay off with success involve major lifestyle changes that take commitment.

  • Making Debt Payoff Decisions that Make Sense and Cents

To pay off debt the fastest, you shouldn’t just throw extra money at your balances and hope to see the totals sink. That isn’t how debt works. That mode of handling your money is how you got into debt in the first place. This time around, on the repayment side of things, you have to take charge of your debt and systematically and strategically attack one loan or credit card after the other.

It makes the most sense to pay the least in interest. That way, you get to keep more of your own money. To do this, you must arrange your debts in order of interest rate, placing the highest rate at the top of the list. Then, while making the minimum payments on all of your debts, pay extra money on the loan with the highest interest rate. Once this loan is completely paid off, move on to the next loan on the list. This doesn’t only make sense, it makes physical cents you will save over the course of time.

  • Sticking to a Budget Without Fail

Budgeting involves time. You can’t just write down a budget and call it a day. You have to actually follow the budget. This means keeping track of how you spend, where you spend and facing your temptations head on. It’s similar to dieting, but in a financial sense. You must know your weaknesses and be strong enough to overcome them in the moment.

To help yourself stick to a budget, you can try to only carry the cash you are planning on spending with you. That way you won’t be tempted to forego your previous promises and splurge when you see something you want. If and when you do fail on sticking to your budget, you’re also going to need resilience to bounce back and work on not making the same mistake twice.

  • Boosting Your Income to Make Progress Faster

Paying off debt goes much faster when you are contributing every spare cent you have towards the end goal. Of course, you can cut all the corners in your budget that you want and you still might not have enough left over at the end of the month to make real progress.

To solve this issue, you must be willing to take risks and sacrifice your time to make more money. This might involve asking your boss for a salary raise. It could involve picking up a part-time job on the weekend. It could mean staying after work late and putting in overtime hours for a paycheck bump. Boost your income and put the extra cash towards debt – that’s one of the best debt reduction strategies out there.

  • Building a Network of Support

Contrary to what you may believe, you’re not alone in your efforts to pay off debt. There are so many resources available for you online and in your community to help keep you focused on your goal. Many people are faced with the same challenges as you, including high amounts of debt that are weighing them down and preventing them from achieving their long-term goals.debt reduction strategies

You don’t have to go on the journey alone. In fact, it may be impossible to stay the course for years on end without a comrade who can commiserate you with the struggles and celebrate with you when you triumph over a challenge. You have to build a network of people that will be there for you when it gets tough, just like you’re there for them.

  • Tracking Your Progress from End to End

Finally, debt reduction strategies that work have a tracking system built into place. You are not going to work hard every day, every week and every month without viewing your progress. You will set up milestones along the way, such as paying off your first $1,000, then the next $5,000, then $10,000. You will be able to see how far you’ve come and use it as motivation to keep your focus on the end goal and what truly matters to you in the long run rather than present pleasures.

What’s Stopping You From Achieving Your End Goal?

So have you formed quality, thoughtful debt reduction strategies with the previous six characteristics in place? If you have, you still might encounter one or more of the following issues. If you have not taken the previous six characteristics seriously, you will definitely face one of the following obstacles – but probably more.

  • Old Habits Die Hard

In the beginning, when you are first contemplating all the lifestyle changes you will make in order to reach your debt payoff goal, you probably will not feel sad. You may be reluctant, but more than that you will be excited. You will convince yourself that your sacrifices in the here and now are going to pay off down the road, and you will be correct.

However, overcoming your present negative financial habits is not easy to do. Whether it means giving up your daily expensive latte or fancy gym membership or happy hours with your friends from work, the sacrifice will not sound as good when it comes time to make it. Your old habits can creep back in “just this once,” and displace your promise to yourself to change your lifestyle, saddling you with more debt and blocking your progress.

  • Lack of Priorities

Do you have your debt prioritized by interest rate and payback total? If not, you are setting yourself up for a setback. You will add extra to your payments believing you’ll see a huge change next month, but in reality you will just be paying pennies on interest. Your principal will not be shrinking the way you thought it would.

Prioritizing your debt takes time and it makes you spend hours on research, finding out your payoff dates, interest rates, annual fees and more. But if your priority is to reduce your debt, you will gladly allot the necessary blocks of time debt payoff requires for real change to occur.

  • No Mental Fortitude or Commitment

While this downfall might sound similar to the “old habits die hard” mantra, this point is mainly for the people who implement debt reduction strategies but consistently fall behind, making it so they follow a budget one month but not the next. They always make exceptions to the rules: “I deserve a reward! We need a family vacation! It’s holiday season – let’s go shopping!”

There is no valid excuse for going off track of your budget, if you want to continue to reduce your debt that is. But if you want the trademark of your debt payoff plan to be inconsistency and lack of responsibility, you probably tell yourself similar excuses all the time. You must silence the inner voice that’s telling you “yes,” and start learning to say “no,” first to yourself then to others.

  • A Pay Cut, Pay Loss or Lack of Motivation to Add a Side Gig

Maybe the moment you decide to implement debt reduction strategies, you lose your job or your income is suddenly drastically reduced. This might also occur during the months and years you are focused on debt payoff. Sure, this circumstance can be demoralizing, but it wouldn’t feel so hurtful if you were prepared for it to begin with and didn’t have that much debt. If anything, you should turn it around as extra motivation to keep on with your debt payoff plan no matter what happens.

Also, don’t minimize your own capability. Yes, you may be hesitant to add more work to your already busy schedule, but if you’re going to get rid of your debt, you have to be willing to use your free time to make more money. Try to think of unique, creative ways to make money through a side gig that requires as little extra time as possible so you aren’t adding to your stress but you are adding to your income.

  • No Accountability Equals Failure

Now is not the time to try to hide your debt. You have to be willing to talk to others about what you’re doing and where you are headed if you want to build a network of support throughout this process. If you aren’t accountable to anyone, you will be much less likely to stick to your payoff plan.

By building a network of friends and relatives that care about what you’re doing, you can also hear from others about their own debt reduction strategies and stories. Did they use any specific techniques that worked for them? You can also share your own victories as you go along, and you might help other people reach their goals as well. You’ll feel good about yourself and you’ll bond with others in the same predicament as you.

  • Inadequate System for Keeping Track of Your Progress

A lack of attention to your progress is only going to slow you down long enough for temptations to distract you. The more you’re focused on meeting goals, the less likely you are to look around at what everyone else has and compare yourself, which is the ultimate source of discontment. It’s okay if you are disorganized in other areas of your life, but when implementing debt reduction strategies, organization and attention to detail are your two best friends.

Do not start any debt reduction strategies without writing down your current total and keeping track of what you achieve along the way. If you decide to make weekly payments, update the data every week. Once you meet one monthly goal, challenge yourself to pay off an extra $200 the next month. Use an app on your phone, a spreadsheet or a sticky note – anything to keep you motivated and focused on the next payment and the next step in your debt payoff journey.

Awareness is the first key to fighting these pitfalls that could sabotage your debt reduction strategies. Stay conscious of where you are at in your plan. Stay awake and don’t let one day pass you by without thinking about your current progress and where you want to be. Avoid these six issues and you will reach your goals in the timeline you have hoped for. Soon enough, you’ll be able to proclaim that you are debt-free!

Scott Carver
Scott Carver
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