Monday Motivation – The Best Psychological Strategies for Paying Down Debt

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motivationmondaysm Paying down debt is a mental battle.

Sure, numerical factors like principal and APR come into play as you strategize how to eliminate your loans, but there’s a hugely important emotional element to becoming debt-free Not only are you fighting against the balance that you owe, but you may also be fighting against some emotional issues as well. I know when I was in $30,000 in debt, I was feeling a terrible combination of guilt, shame and hopeless.

Good news? It doesn’t have to be that way. With the right strategies, paying down debt can feel empowering, liberating and downright exciting.

There are plenty of great strategies out there to help you get out of debt. And while many of these strategies look great on paper, it’s how they affect you mentally and emotionally that really matter.

Here’s how some of the more popular debt-reduction strategies can motivate and encourage you to keep pushing through our debt.

The Debt Snowball Strategy

This is an easy way to prioritize your debt. Start by sorting your loans from lowest balance to highest. Continue to pay at least the minimum on all of your debt, but put any extra cash and payments toward the smallest balance loan first. Once that small-balance loan is eliminated, take the cash you were using for that payment and apply it to the next loan with the smallest balance. Rinse and repeat.

Why This Works

Little victories are emotionally important, especially if you’re in a lot of debt. So even though you may have $10,000 in debt, you’ll still feel incredible when you finally pay off that $400 credit card bill. It’s one less bill you have to worry about, and wiping your hands clean of even just one loan can feel liberating and help you feel like you’re making progress.

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The Cash-Out-Some-Savings Strategy

Even if you’re consistently paying down your loans on a monthly basis, it can be frustrating watching your debt balance barely shrink. If you have a decent chunk of cash saved up (you’re expecting a decent tax refund) that you can throw at your debt, you can slash your loans instantly.

Why This Works

This is the ultimate form of instant gratification – and I’ve personally felt the rush of wiping out a lot of my debt with just the click of a button. Just the other day I cashed out $3,000 in savings to help pay down my student loans, and it felt absolutely incredible. Just remember: anytime you’re drawing down your savings, make sure you’re not taking from your emergency fund or sacrificing too many emotionally important savings goals.

The Earn-Extra-Income Strategy

It may seem obvious, but the easiest way to get more money to put toward your debt is to earn more money. Selling your unwanted junk on Craigslist, taking up a freelance gig or putting in extra hours at work are all great ways to help pay down your loans quicker.

Why This Works

Putting extra money toward debt is a hugely empowering feeling. If you feel emotionally tired of slashing away at everything in your budget to pay off your loans, this could be the strategy for you. Earning money on the side means you’re not limited by your regular paycheck. It also helps calm that “out-of-control” feeling you may experience with a lot of debt to your name. By taking initiative to earn money on the side, you’re taking charge of your situation.

In the end, the best strategy is the one that gets you excited and helps you feel like you’re making progress. So do what works for you!