“Anyone can run a hundred meters, it’s the next forty-two thousand and two hundred that count.”
I am the first to confess that I didn’t exactly have my financial life together in my 20s. I outlived my means when I was in the Army and then started graduate school while still mired in a pile of credit card debt.
I wasn’t exactly the poster child of fiscal responsibility at that point.
Fortunately, by then, I was on the brink of being engaged, and my eventual wife was one of the noteworthy ones who had her financial act in order.
I wanted to be like her.
However, she had to change jobs to move to Virginia to be with me, and between a new job for her, me being a full-time student who picked up a little money teaching at Kaplan, and the cost of living in Charlottesville – one of the most expensive areas to live in Virginia – we were barely making ends meet and paying minimum payments on my old credit card debt.
I remember feeling the shame of having to admit of my past financial transgressions and the Visa profit statement that came every month in the mail to remind me of it. I felt badly that she’d, in my mind, have to carry me along until I graduated.
So, even though I knew we were going to eventually pay off the credit card debt, that day seemed like an eternity away.
Once I landed a law firm internship, I was able to roughly calculate how much I’d make per month and map out exactly when we could tell MBNA to kiss it.
It’s what kept me motivated.
I faced a similar situation a few years later, although this time it was with our mortgage. We spent several years occasionally paying extra on the principal, but never really attacking it like it was a cancer on our souls. In about 2008, we got religion, so to speak, and started going after the mortgage with as much extra money as we could throw at the problem.
The problem with a mortgage is that it doesn’t go away quickly. It took three years of discipline, aggression, and manufactured luck to kill it off.
We live in a society where we seek instant gratification. We have 453 channels on our cable TV, so if we don’t like what’s on the tube, we can immediately flip to another one, and keep flipping until we find the Jersey Shore rerun that shows the most footage of The Situation’s six-pack.
Paying off debt rarely has an instant gratification moment. It’s a long, long, long slog.
How do you keep motivated when the finish line seems. So. Far. Away?
When it comes to money, I’m a planner. Not just professionally, but behaviorally. I have models that tell me how much we could withdraw monthly if we quit now, when we can buy the next rental property, and how close we were to our budget each month. I may be pretty catch-as-catch-can in the rest of my life, but my goodness, I almost obsess over what it will take to get me to my financial goals.
After deciding that I was first going to get rid of my credit card debt, and then later, to get rid of the mortgage, it seemed daunting.
Here’s what I did:
- Figured out my “graduation date.” I knew that if I paid a certain amount each month and then paid extra when I received bonuses or other income, I could be rid of the anchor by a given time. Having that date provided me with some certainty, knowing that, at worst, I’d be rid of the debt by my “graduation date.”
- Set interim celebratory milestones. The ideal way to pay off your debt is to significantly ramp up your income so that you have more money to throw at the debt. However, most people won’t wind up with game-changing increases in their income, so they’ll have to suck it down and ramp down the lifestyle. It was, after all, the lifestyle that got most (not all, but most if we’re honest with ourselves, including me) of us into the debt-burdened position in the first place. However, all work and no play will kill motivation. You’ll think back to the times when you were out with your friends, whooping it up, not giving a hoot about what Visa had to think about your actions. Soon enough, you’ll start justifying ramping the lifestyle back up by telling yourself that you’ll get a raise, and with the extra money, you can pay off the debt. Hello, hedonic treadmill. Instead, what you need to do is to set target numbers and create little celebrations around them. When we were paying off the credit card debt, we’d treat ourselves to BW-3 wings and beer for every $2,500 that went away. When we were paying off the mortgage, we’d do a celebratory whoop or grab a beer at Beer Run when we knocked $25,000 off the principal. Just don’t set the milestones too low or make the planned celebrations too expensive. You’re seeking to acknowledge and celebrate the milestone and then move on, not treat it as if you won the World Series.
- Work to move your “graduation date” up. I taught at Kaplan. I bought items from the University of Virginia surplus auction and then sold them on eBay (I should coin the term “government inefficiency arbitrage”). I got sold extra things around the apartment. If I could get paid to do it while not failing out of school, I did it. It helped, too. It may not have helped a ton, but it did help move the needle, and I tracked it. Seeing the impact your extra work is having will encourage you to do more extra work. Find a side gig. Do handyman work on the weekend. Whatever it is you need to do, move that date up, and track how much more your work is helping the situation.
- Automate so that you don’t have to think about it. I don’t have a chokehold on the obvious when I state that being in debt sucks and is stressful. It can cause you to dwell and linger on it for way more than is necessary or is productive. So, the less you can think about money, the better your life will be, and the more you can focus on the tasks which will help you to get to the finish line as soon as possible.
- Find an accountabilibuddy. You want someone who can both be a sympathetic shoulder (“I know this sucks”) and will still hold you accountable (“but you have to pay off $200 more this month. Get moving, jackwagon!”). It takes a lot of mental fortitude to knock this out yourself, and even if you’re married, it can sometimes become an echo chamber. Instead, find a trusted outside party to provide you with equal amounts of carrot and stick, or, as I call it, hard love.
- Remember, if you have a plan and stick to it, this too shall pass. Let’s say that it’s going to take five years to pay down your credit card debt. Think about five years ago from today. Doesn’t seem that far away, does it? Time will pass. You will survive. Just keep at it, and you’ll get there. There are lots of us who have emerged on the other side who are completely debt free who can verify that, while it stinks, you don’t die trying!
To quote Forrest Griffin, “the juice is worth the squeeze.” Save from reaching the point where you are truly financially independent and could walk away from the job tomorrow and never have to work again, getting to the point where you have finally put debt in the rearview mirror is the best financial feeling you will ever have. It’s a tonic for the soul. It’s not enough of a tonic that I recommend people who aren’t in debt go into debt just to experience it, but if you’re already there, then shedding the bonds of debt will put an incredible spring in your step.
But what then? What do you do once you become debt free? That’s when you need to find a financial planner near you to help you move forward!