Are you trying to figure out how to pay off your debt without putting your life on hold?

I bet your reason for wanting to pay off debt goes beyond the reason of "Because debt is bad" or "Because it's what a financial guru said."

I'm guessing you want to pay off debt because you want more freedom. You want to be able to play more, invest more, and do things other than make payments to banks.

You want to be free to spend the money you are currently paying on debt payments on whatever you want.

Maybe the weight of the debt has started to feel heavier than in the past, and you just want to figure out what to do with it.

All of these are great reasons to want to pay off debt. It's also important to keep your life moving forward as you pay off debt.

When I paid off my debt, I felt so excited because then I was able to spend more of my money on things I wanted to.

Ready…let's go..

Step #1: Get neutral about your debt, because negative feelings will derail you

If you have debt, you decided in the past to spend money that you did not have. That decision was made in the past, but you might still be carrying guilt, anger, self-judgment, resentment, or another negative feeling in the present.

The first thing you need to do to pay off debt is to get neutral about your debt. What does that mean?

You need to let go of the negative emotions tied to your debt so you can find a feeling of neutrality about your debt. Meaning you do not see it as good or bad. It simply is.

When your utility bills come each month, do you sit around judging yourself for using the resources you used, or do you simply pay the bill and move on?

That is what neutrality looks like.

You need to start seeing your debt payments as simply payments. The money is already spent. You have to pay it back.

There is no sense in getting upset about any of it. In fact, being emotionally charged about your debt can actually derail plans to pay your debt off.

To pay off your debt as quickly as possible, you need to start seeing debt payments as just another bill.

Set up the bill(s) to be paid automatically. Deduct them from your budget. Keep moving forward.

You may have to allow yourself to get angry or feel other feelings to get to the place of debt neutrality.

I have been teaching "get neutral about debt" as the first step to paying off debt for years.

My clients tell me that seeing debt as neutral was key to both paying off their debt and also not putting their lives on hold because of debt.

This might be quick and easy for you, or it might take a little time and feeling. Either way, keep moving forward with the next steps I'm going to share.

Step #2: Commit to not adding another debt to your finances

The second step to paying off debt is to commit to not adding any more debt to your finances.

If you are in a partnership, getting both people to commit to this is important.

You can write yourself a contract and sign it. You can tell a friend and ask them to remind you about your commitment if you start to waiver. You can put sticky notes up to remind yourself.

Do whatever you need to make the commitment stick-no new debts.

Step #3: Determine How Much Money You Are Willing To Commit To Paying Off Your Debt

After you have made debt neutral and committed to no new debts, determine how much money you are willing and able to put towards paying off your debt.

Willing means what you can and want to add to your current minimum debt payments to pay them off faster.

Able means what you can actually do based on your income and other expenses.

For example, if all your minimum debt payments total $760/month. And you commit to $100 additional The total amount you will pay toward your debt each month is $860

Make sure this is an amount you can commit to for the long term. You want to see the additional money you are committing as a must-pay, not as an optional payment.

It's best to set up your budget before committing to an amount to pay off debt faster, but it's not required.

I have had clients in the past who, before they worked with me, were so focused on paying off debt that they allocated too much money to paying off debt. Then they ended up getting into more debt each month because they had not done their budget to make sure they could commit the extra money to paying off their debt.

If you are using the Buckets of Money Budget, and paying off debt is a priority…

When you are setting up your budget, once you complete the "have to" expenses section, make your first "want to" expense the amount you want to contribute each month to paying off your debt faster.

You can set up your additional debt payment under the "Yes Money!" section.

(You might be wondering…) What is the perfect amount of money to put toward paying off your debt without putting your life on hold?

The amount that feels doable, but doesn't feel like you are putting your life on hold.

Some experts say only pay what you have to and put everything else toward paying off debt.

If that feels good to you, do it.

That is not what I did. I chose an amount that felt easy. It's hard to remember now, but it was probably $100/month.

This is your plan, and you want to feel good about the additional money you are paying.

If you put too much extra toward debt, it will start to feel like you are putting your life on hold.

I have seen people who put so much toward paying off debt that it feels like they are sacrificing. Then it backfires, and all the sacrificing turns into splurging, and they are no better off.

Slow and steady is a great way to win the debt elimination game.

When you are slow and steady, you will be amazed at how the Universe will show up to surprise you.

If putting 10% of your total payments toward the extra feels good, do that.

If you want to put 10% of what you have available for your "want to" buckets, do it.

Choosing a number that feels good and doesn't put your life on hold will help you stay committed. You can always increase the additional payment amount if your financial situation changes.

If you are using the Buckets of Money Budget, start setting it up. Once you are finished entering your "have to" expenses, look at the amount that is remaining in your budget. Then pick an amount that feels good to add to your debt.

Remember to set the additional debt elimination payment up in the "Yes Money!" category. Name it whatever you want.

Step #4: List out your debts, payments, and interest rates

Next, list out your debts. Include the name of the debt, the interest rate, and the minimum payment you are required to make each month.

It is easier to do the next step if you have all of this information organized in front of you.

Step #5: Decide between the debt snowball and the debt avalanche

Once you have your debts, minimum payments, and interest rates, you want to decide between using the Debt Snowball and the Debt Avalanche as your plan for paying off your debt. The basic difference is…

Snowball:

You are going to pay off the lowest debt first.

1. Take the minimum payment for your lowest debt and add the additional payment you committed to. If the minimum was $50 and you committed $100, you would pay $150 until it's paid off.
2. Continue paying the minimum amount on all other debts.
3. Once you have paid off your lowest debt, you will add the full payment you were paying to the first debt to the payment for the next lowest debt you have. In the example above, you would add $150 to the minimum payment of the next debt you are paying off.
4. You then continue paying until that debt is paid off.
5. Then you will continue rolling the payment into the payment for the next lowest debt until all your debt is paid off.
6. Once all your debt is paid off, use the payment you were making for something you want to pay for.

Avalanche:

You are going to pay off the debt with the highest interest first.

1. Take your card with the highest interest rate, pay the minimum payment, and add the additional payment you committed to. If the minimum was $200 and you committed $100, you would pay $300 until it's paid off.
2. Continue paying the minimum amount on all other debts.
3. Once you have paid off your highest interest rate debt, you will add the full payment you were paying to the first debt to the payment for the next highest interest rate debt you have. In the example above, you would add $250 to the minimum payment of the next debt you are paying off.
4. You then continue paying until that debt is paid off.
5. Then you will continue rolling the payment into the payment for the next highest interest rate debt until all your debt is paid off.
6. Once all your debt is paid off, use the payment you were making for something you want to pay for.

I personally prefer the snowball, but as long as you pick one and commit to it, it will work.

The key is to start rather than overanalyze which method is best.

The sooner you start, the sooner you will be out of debt.

Once you know what method you are going to use and how much extra you are committing to paying toward eliminating your debt, add the additional payment amount to the minimum payment amount you are already paying for the first debt you are going to knock down.

If you choose the snowball method, you will add the additional payment to your lowest debt.

If you choose the avalanche method, you will add the additional payment to your debt with the highest interest rate.

Step #6: Set it and forget it

Once you have set up the automatic payment with the additional amount to be paid toward your first debt, you forget about it until the first debt is paid off.

Make sure to set the payment with the additional amount to be automatic. If you need to pay the extra as a separate payment each month, that is okay. Just make sure to set up the payment(s) on autopay.

When the first debt is paid off, you adjust the automatic payments and then forget about the debt until the next debt is paid off.

You don't need to focus on your debt or really even think about it once you have set up your plan.

This keeps the feelings about your debt neutral and the plan moving forward.

If you are using the Buckets of Money Budget, once you have paid off a debt, add that debt's payment amount to your "Yes Money!" category you set up for your extra debt elimination payment.

Then delete the debt from your "have to" expenses.

Step #7: Keep Your Focus Financially Forward

Have you ever known someone, or maybe you have had this experience, who was really focused on paying off debt? Maybe they even felt like they were drowning in their debt? They talked about paying off their debt a lot. Paying off debt was a primary focus of theirs?

But almost as soon as their debt was paid off, they racked up new debt?

Paying off debt and then getting new debt happens because of who you practice being.

If someone has practiced being in a lot of debt and putting a lot of energy into paying it off, once it's paid off, they don't know how to handle it.

They don't know where to put the "pay off debt" energy.

Sure, it feels good at first, but then it feels unfamiliar, so they get themselves back in debt.

I had a friend tell me once, "Our debt was wiped out. I walked out feeling so good and promised myself never again, but within six months, we were back drowning in debt."

If this is you, or you know someone like this and want to avoid this happening to you, you have to shift your financial focus.

Someone who is focused on paying off debt is financially focused on debt. This ends up creating a circle of debt if you don't consciously put your energy toward something else.

Switch your financial focus away from the debt and what it is going to feel like to be debt-free.

Instead, direct your focus toward what you are going to do with the additional money you have when your debt is paid off.

The amount of additional money you will have will be hundreds to thousands of dollars a month.

Take a few minutes and add up all your debt payments plus the additional amount you are committing to eliminating your debt. When that is no longer being paid to service your debt, what are you going to do with that money?

The answer is where you want to put your focus any time you think about your debt, which hopefully is not often.

If you are using the Buckets of Money Budget, set up a Wishlist Bucket for the thing(s) you are going to use the money for when you're no longer making debt payments. Setting up your Wishlist Bucket(s) will act as an anchor in time for your debt to be paid off.

You want to make sure you have a plan laid out for that money before you eliminate your debt.

Step #8: Go live!

Once you have set the plan in motion to eliminate your debt, go live!

Below are answers to questions that might be rolling around in your head…

Should I try to commit as much money as possible to paying off my debt?

That's really up to you. You have to find the balance between how quickly you want to pay off your debt and how much you have to contribute toward paying off debt without feeling too restricted.

Often, people who feel too restricted because they are putting too much toward paying off debt rebel. This can mean they go out and buy something that adds more debt. Make sure the amount you are contributing feels good to you.

You can always start with a $100 or $200, even $25 if that is all you have, to put toward eliminating debt. Then, as your financial situation improves, you can adjust the amount.

Should I put any extra money I get toward paying off debt?

That is up to you and how you are balancing paying off debt with continuing to live your life. When I was paying off debt, I didn't want all the extra to go toward my debt because that didn't feel good. It felt too restricting and like I wouldn't get to enjoy any of my money.

So, I would split up any extra money I received so that I had some going to:

• Eliminate my debt more quickly.
• Savings
• Spend on whatever I wanted

I suggest coming up with a plan on how you are going to allocate extra money before you receive it.

Then you know. There is nothing to think about.

If you get a $4000 tax return and you have committed to yourself to use half to eliminate your debt faster, you know when it hits your bank account, you are immediately making a $2000 payment to the debt you focused on paying off at the moment.

Should I get a debt consolidation loan to pay off my debt faster?

If the math makes sense, meaning you are saving a lot of time and money paying off your debts, a consolidation loan makes sense. Check with your financial advisor to make sure it's a good idea.

However, put your debt elimination plan in place and follow it for 90 days before changing anything up.

This will help you adjust to paying extra on your debt.

In some cases, you'll even have a small debt paid off in 90 days.

When you commit to the plan before changing it up, you are more likely to stick with it.

Sometimes, when people get all excited about paying off debt and get a consolidation loan, they end up spending the money they are saving each month from the consolidation loan. Rather than continuing to make the same payment amount they were paying previously.

Unfortunately, sometimes that bump in available money leads to spending more and creating new debt.

If/when you do get a consolidation loan, commit the same payment to the consolidation loan as you were paying already to pay it off faster. This means if you were paying $892 to your debt payments, plus an extra $100, pay $992 to the consolidation loan, even if the payment is lower. Doing this, you will be paying your debt off fast without putting your life on hold.

Review of the Steps

The steps to paying off debt while not putting your life on hold are:

1. Make the debt neutral. See it like any other bill that has to be paid.
2. Commit to not add additional debt to your finances
3. Determine the amount of money that feels good and easy to contribute toward eliminating your debt.
4. List out your debts
   1. Decide between snowball and avalanche
5. Set it and forget it
6. Decide what you are going to do with your extra money once you have eliminated your debt.
7. Keep your focus financially forward
8. Go live while you're paying off your debt.

I've taught you the steps to paying off your debt without putting your life on hold.

Your Next Step

Now you need to know the most important part of sticking to your debt elimination plan…

Setting up and maintaining a budget.

If you don't have a budget, it's hard to know how much extra you can contribute toward debt elimination without it feeling like you are putting your life on hold.

Without a budget, you also run the risk of sabotaging your debt elimination plan. If you aren't saving for expenses that might come, or giving yourself a set vacation budget or keeping your fun spending in check, you could easily add more debt.

Having a budget that you create to fit your life will help keep you on track and move you forward financially.

Start your budget today so you know how much you can contribute to your debt elimination plan.

Let's do this!

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