The New Mind Games and Strategies to Pay Off Debt

If debt is a four-letter word — and if we all had to shell out a quarter for the swear jar every time we mentioned it — we’d probably have enough to pay off our debts by now. And there’s a reason we talk about it so much. The average household in debt owes $137,063 (including mortgages), and that amount has increased by 11 percent over the past decade. Credit card debt alone has risen to $16,883 on average in households with credit card debt, an amount that costs about $1,300 a year in interest just to maintain.

There’s no denying paying down debt will save you both money and stress in the long run. Though many of the most-bounced-around strategies work (that’s why they’re still around), we talked to personal finance bloggers to unearth their debt payoff secrets. Here are some of the mind games and strategies they swear by.

Use rewards for short-term motivation.

The method: Chelsea Fagan, founder of The Financial Diet, treats herself “like a child” in some respects to keep herself on track — laying out work outfits the night before, packing her lunch for the office and, when she was in debt, rewarding herself when she reached different payoff milestones. Why did it work? “Some people are intrinsically motivated by paying off debt on a cerebral level, and I definitely get it… [but for me] it wasn’t immediately gratifying,” says Fagan. She knew little rewards (like a slice of cake from the grocery store) would motivate her in the short-term and help keep her chugging along. Since most people are wired to want immediate gratification, she leaned into that — and used it to her advantage as a debt payoff strategy.

Do it yourself: Create a chart or list with all your debts, their amounts and their interest rates. Then, come up with different payoff milestones — and the rewards you’ll get when you reach them. It’s important to treat yourself in proportion to what you can afford and how much you paid off — set your limits ahead of time to avoid splurging on something that could become new debt. An example of small, medium and large rewards could be a manicure, a new work outfit and some sort of trip. Know, too, that your rewards don’t have to be purchased — you could take a personal day from work, pack yourself a picnic in the park or have friends over for a potluck. Fagan says finances can feel separate from real life, so it’s important to associate good financial habits with things that are tangible, enjoyable and real.

Convince yourself that every little bit helps.

The method: Tiffany Aliche, founder of The Budgetnista, used her “drip-drop method” (paying off little amounts at a time) to pay down about $35,000 in credit card debt over three years. Here’s the kicker: She did this while mostly unemployed. How does it work? “People always think it’ll get paid off in these big lump sums,” says Aliche. “Sometimes, you don’t have a big sum.” She resolved to put any unexpected money (money she didn’t expect to receive or expect to save) towards her debts, whether it was $5 or $500.

Do it yourself: If you’re planning to try this out, remember we’re talking any unexpected money. For example, if you had set aside $30 to buy a specific shirt, but it’s unexpectedly on sale for $15, immediately transfer the unused $15 to your debt. The same goes for if a friend offers to pick up the tab for lunch one day — head right to the bathroom and transfer the money you had set aside, says Aliche. The key is to transfer the money immediately so you don’t absorb it and use it for something else. Another key tip? Set up your online bill pay (through your online banking or credit card accounts) to automatically withdraw the minimum payment from your account each month. That way, you don’t have to worry about accidentally missing a payment, and it will help chip away at your balance. Just remember to top up with your additional cash.

Remember the “why.”

The method: “Paying off debt feels good, but it also kind of sucks,” says Melanie Lockert, founder and author of Dear Debt. That’s why she started thinking of her payoff plan as a guaranteed return on her investment. Being in debt means paying interest every month whether you like it or not, so the more you pay off, the more money you’re freeing up for the future. To stay motivated, Lockert knew she needed to keep her focus on the reason behind paying off her debt. She created a secret Pinterest board with photos of all her post-debt life goals, including a trip to Italy, moving back to Los Angeles and working for herself. “Being able to have my motivation and my ‘why’ right there in front of me reminded me every single day,” she says.

Do it yourself: Create your own Pinterest board with your goals, or opt for the low-tech version — an actual “vision board” on your wall. Print out photos of your post-debt goals, look at them every day, and check in with yourself to see what’s standing in your way. Then, adjust for progress. You can even enlist an accountability buddy — someone else in your life that you trust who’s also hoping to make a change in their finances — and share your goals with each other.

With Hayden Field