Get Debt-Free in 2015

If you’re like most people, one of your goals this year is to pay off your debts once and for all. But, before you can get down to the nitty-gritty of debt reduction, it’s important to review your beliefs about your debt and overcome any emotional roadblocks you may have concerning money. Here are five ways to create the mindset you need to pay off your debts once and for all.

1. Acknowledge the debt you have.

A lot of women know they have debt, but they may not be very clear on how much they really have — or what type of debt it is. So, first things first: You have to be willing to look at your debt and identify the types of debt you have (car loan, student loans, credit card debt, etc.); the amount you owe for each; and the current interest rates and minimum payment amount on all of them.

You cannot afford to not know this information! Get clear about the debt you currently have. Take the time to write it all out on a sheet of paper and make sure you know the cold, hard facts about your debt.

2. Forgive yourself.

Once you acknowledge your debts, you may feel many emotions, including shame, guilt, regret, or anger. All of these emotions are normal; however, you decide how much meaning you’ll allow the debt to have. It is what it is. You are not a failure, and you are not a bad person because you have debt. It’s easy to be really hard on yourself, but choose to see your debt as a life lesson. Accept it for what it is, forgive yourself for having it, and decide to move forward.

3. Don’t neglect your emergency fund.

In order to successfully reduce your debt, you must also have an adequate emergency fund. If you allocate the totality of your excess income toward making debt payments, then the next time an emergency comes up, you won’t have enough money in the bank. You’ll fall right back to using your credit card to pay for it, starting the debt cycle all over again. So shift your focus toward growing your emergency fund while simultaneously paying down your debts. (I’ll discuss this further in Part 2 of the Debt-Free Living series.)

4. Create a game plan.

In order to build an emergency fund at the same time as paying off your debts, you’ll need create a game plan. Look at your monthly income and expenses and decide how much you can realistically save every month (while also making additional debt payments).

If you find that you are falling short or living paycheck to paycheck, then you’ll need to cut back on your expenses or make more money. Personally, I prefer the latter. There are lots of ways to increase your income, such as negotiating a higher salary at work or finding freelance work to do on the side. Find what works for you and embed that into your game plan. For more information on ways to negotiate a higher salary, check out She Negotiates.

5. Remember, it’s temporary.

Nothing is life is permanent. The debt you have is temporary and can be eliminated with the right mindset and game plan. So celebrate the mini milestones. You can celebrate every time you reach a new benchmark (e.g., buy yourself some fresh flowers each time you’ve saved up another $500 or paid off another $1,000 increment). Find ways to acknowledge your hard work in order to stay motivated along the way. Remember, the key to your long-term success is making the journey enjoyable, and celebrating mini milestones is a great way to encourage yourself to keep going.

Tune in next month for “Should I Make Extra Debt Payments or Save?” Part 2 of The Debt-Free Living Series.

Brittney Castro is a member of the DailyWorth Connect program. Read more about the program here.

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