4 Easy Steps to Get Out of Your Head and Out of Debt

In order to get out of debt, you need to first get out of your head! Lose the feelings of anxiety and shame and think about money for what it is – a simple medium for exchange. How you think, feel and act towards money matters and can be the difference between financial wellness and financial stress.

How do I change my money mindset and get out of debt?

Psychologists describe four necessary components to successfully get out of debt – establishing motivation for the change and setting a clear goal, tracking progress, willpower and mindset.

It’s not easy to dig out of debt, but there are simple steps you can take to achieve it. It just takes dedication and diligence. A key determinate of your success is your money mindset. That’s because it’s been proven that how you think affects how you feel and how you act. How you think about money will play a big role in how you manage it.

If you think paying your debt off is an impossible task, you won’t succeed.

If you are ashamed about the amount of debt you have, you’re likely to ignore it rather than address it.

Here are 4 key steps to establishing a successful plan to get out of debt:

1. First, you need to establish your motivation for getting out of debt and set a clear goal.

Write down your purpose for paying down debt. Whatever the reason for wanting to get out of debt – whether it’s reduce financial stress, buy a home, change careers, or taking time to travel – writing down these reasons can be a mental motivator. Write your purpose where you can see it everyday. If you are prone to online shopping, have a post-it note on your computer! When you’re tempted to shop, or go over your budget, remember the purpose for getting out of debt. Let your purpose motivate you to stick to the plan.

2. Second, you need to monitor your behavior toward your goal of getting out of debt

Build momentum by paying down small bills first. Though it may feel impossible to pay off all your debt, breaking it down into smaller, more manageable chunks can seem more achievable and help spur motivation. If you’re feeling overwhelmed by debt, the snowball method, which focuses on paying off smaller debts first to build momentum, could be for you. You can see real progress that will motivate you to continue paying down.

Track progress to stay motivated. Visualizing progress allows a you to feel a sense of accomplishment for all the hard work you put in. You should take the time to identify milestones you want to reach throughout your journey to get out of debt in order to track your degree of success.

3. The third component is willpower.

Willpower is the ability to resist short-term temptations in order to meet long-term goals. A growing body of research shows that resisting repeated temptations takes a mental toll. Some experts liken willpower to a muscle that can get fatigued from overuse. If you’ve already said no to dessert and yes to that social engagement you’ve been dreading, you’re less likely to have willpower left over for managing your financial budget,

This is where Automate Payments come in. When your willpower is low, you’ll need a “set it and forget it” strategy. You can stick to paying down your debt without having to think about it. Autopay will save you when your willpower fails you and help you get out of debt faster.

4. Lastly, you’ll need to change your money mindset.

Evidence suggests that willpower depletion can be kept in check by your beliefs and attitudes. Those who are driven by their own internal goals and desires, will be less likely to experience willpower depletion.

Reframe your thoughts. Negative emotions associated with debt can keep you from paying down your debt. Imagine a debt-free life. Picture what it would be like. Make a vision board, practice verbal affirmations and seek inspiration from others who have succeeded in paying down their personal debt. These tips will give you a taste of the joy of a debt-free life and be great morale boosters!
Overcome the fear of your debt. When faced with a large amount of debt across multiple accounts, your fear about how much you owe can create a roadblock toward reaching your goal of getting out of debt. Overcoming this fear becomes crucial for financial health.

Emotions of shame and anxiety could make you stuff your unopened bills in a desk drawer.

I have had a number of clients do this, furthering their financial stress. In these cases, I opened the drawer, we sat down together, and made a log of all outstanding expenses. Find a friend or trusted family member to face this with you. If this person is working toward a similar goal, support and motivate each other. Alternatively, apps like HabitForge take the place of a trusted friend and keep users accountable to their goals by sending daily check-in notifications along with progress reports and a community to encourage members to reach their goal.

Many people fear adding it all up because it’s anxiety-provoking to look at it. But once you face your debt, you can make a plan to change your behavior. But you can’t do that until you know what you’re dealing with.

Assessing your account balances is key to understanding your total debt.

Only then, can you take action to outline a repayment plan. There are financial counseling services and even apps to help people organize their debt in one place, outline a repayment strategy and track their progress.

What are the best ways to pay down my debt?

The above simple tips will help you prepare to improve your money habits and paydown your debt. When you’ve got your goals set, and a monitoring system in place, it’s time to set up your auto payments and start paying down your debt. Here are 4 steps to start digging out of debt.

Make a list of each of your creditors along with its type (credit card, student loan, car loan, mortgage etc), remaining balance and interest rate. The goal is to determine the optimal payment strategy for you. For most people, the debt avalanche strategy will be ideal. With the avalanche, you tackle debt with highest interest rate first vs the snowball you tackle lowest balance first.
- The debt avalanche strategy makes the most sense from a numbers perspective and you’ll pay down your debt faster.
- However, its true that our money mindset has a role to play in how we manage our finances. If you’re the kind of person that needs to build a bit of momentum in order to inspire you to stick to the plan, then by all means try to snowball method. As long as you’re digging out from under your debt, it’s a good thing.
Stop using your credit cards. Remove them from your wallet and from your online store accounts.
Sell unwanted items in your home. You’re likely sitting on thousands of dollars worth of unwanted items in your home from clothing and jewelry to toys and electronics.
Get a side hustle to boost your income. Be sure to avoid lifestyle creep – don’t spend the extra money, save it to accelerate paying down your debt and get out of debt faster.l