Most Americans are in debt.
According to a recent survey from Comet, debt affects all generations, with almost 80% of baby boomers, Gen Xers, and Millennials saying they struggle with mortgage, student loan, credit card or medical debt (or a combination of).
When you’re struggling to make ends meet, debt can feel like a weight wrapped around your ankle, pulling you deeper and deeper.
But it doesn’t have to be like that.
Our debt doesn’t define us – how we react to it does.
Having the right mindset when it comes to paying off debt can make all of the difference. It can be the difference between confidently paying it off, or languishing in our own guilt.
With the right mindset, it is possible to get out of debt and stay out of debt!
5 Ways to Cultivate a Winning Mindset for Paying Off Debt
Cultivating the right mindset for getting out of debt is possible with the right steps.
Below are the 5 ways I believe you can get a handle on your debt, improve your debt mindset, and start to become debt-free:
- Come to Terms with Your Debt
- Focus on the Long-Term
- Give Yourself a Break
- Reward Progress
- Stay Positive
Let’s dive into each of these points in further detail.
Come to Terms with Your Debt
The first step in shifting your mindset towards your debt is accepting it.
You may have a lot. You may have a little.
It may be the result of something you did (like taking out too many student loans) or something completely out of your control (a medical emergency).
The important part isn’t identifying who’s at fault; it’s about accepting responsibility for the situation you’re in, and deciding to make a conscious effort in changing it.
Deciding to face your debt head on is one of the biggest challenges in dealing with debt, but it’s an important first step.
Once you’ve done that, things should feel much less scary.
Focus on the Long-Term
The second step to improving your mindset towards debt is to focus on the long-term.
Depending on how much debt you have, becoming debt free may be a few years away.
This can make paying it off seem like a daunting task.
When you’re overwhelmed, it’s much easier to slack off, or fall back into old patterns that got you into debt in the first place.
Remembering you’re in this for the long haul, and that knowing it’s not going to be a quick fix, is essential to sticking with it.
A great way to drive this point home is to use a debt-payoff thermometer.
A debt-payoff thermometer is a visual representation of our debt in the form of a thermometer, like this:
As you start to pay the debt off, the thermometer gets colored in higher and higher, signifying your debt is getting paid down.
Once the thermometer is colored in full, you’re debt free!
Having this visual can help show that you’re making progress, even when it doesn’t feel like it.
Just because it’s going to take a lot of time doesn’t mean it’s impossible!
Give Yourself a Break
The third step to improving your debt mindset is to give yourself a break and relax.
The road to becoming debt free can be long and difficult, filled with lots of ups and downs.
It’s definitely not a straight path for most.
In short: on your way to becoming debt free, you’re going to mess up.
When we’re trying to better ourselves and we fail, we feel guilty. This can make it easy to beat ourselves up over mistakes we’ve made.
Maybe you’re not making as much progress as you like.
Maybe you suffered a recent setback because of a financial misstep.
Regardless, if you are earnestly trying to make a change in your life, you shouldn’t hold that against yourself.
Beating yourself up about it does nothing to change the situation, and in fact, only hinders our progress.
You’re going to make mistakes on your journey to becoming debt-free. Give yourself a break.
The fourth step to improving your mindset towards debt is to reward progress when you reach your next debt pay off milestone.
Becoming debt free typically has an air of rigidity and inflexibility to it.
When people are trying to become debt free, they typically pare down, restrict their spending, and stop buying things they love.
While this may help you pay off your debt faster, it can also make you miserable. Being miserable all the time is a great way to get burnt-out.
A great way to avoid debt-burnout is to give yourself rewards for milestones you’ve accomplished.
For example, after every 10% of debt you pay off, you could treat yourself to lunch at your favorite restaurant.
Giving yourself rewards for milestones you’ve accomplished is a great way to allow yourself to buy things you love without completely derailing your debt payoff strategy. It also helps us stay positive about the progress we’re making.
It should be said, however, that the reward should never be large enough to put you back in the red.
Rewarding yourself by buying a new car isn’t exactly helpful 😉
Paying down debt may not be fun, but you should be feeling good about making progress – reward yourself accordingly!
Finally, the last step to having a better mindset towards debt is to stay positive.
Maintaining a positive mindset is one of the biggest factors when it comes to sticking with a goal.
While you will likely face setbacks on your way to becoming debt free, focusing on the negatives will sap you of your energy and optimism.
This negativity wears us down, and makes completing our goals more difficult.
Rather than focusing on the things you’ve done wrong, try focusing on the things you’ve done right.
For example, maybe you went over budget on restaurants this month, but you brought lunch to work every day this week. I’d definitely call that a win!
By shifting our mindset from dwelling on the negatives to focusing on the positives, we keep our optimism levels higher, making it easier to achieve our goals.
Staying positive helps keep us on track.
Change Your Mindset, Take Action and Get Out of Debt!
Becoming debt free is almost as much of a mindset game as a numbers game.
If you don’t have enough money coming in to pay off your debts, you will never become debt free.
Likewise, if you don’t utilize a mindset compatible with paying off debt, you will find paying it off that much harder.
Coming to terms with our debt, focusing on the long-term, giving ourselves a break, rewarding progress and staying positive are all forward-thinking ways to shift our mindset when it comes to paying off debt.
So – are you going to bury your head in the sand, or are you going to make changes to better your life?
Becoming debt free might be a big journey for you, but with these tips, you can take action today.
You are the creator of your life and you can do anything you put your mind to.