How to Avoid Debt Fatigue
Reaching debt freedom is an awesome achievement, but the process of getting there can feel like an exhausting, demoralizing marathon. Whether you’re carrying one large loan that’s been weighing on you for years, or you’re experiencing death by a thousand paper cuts from small bills, there’s a good chance you suffer from some form of Debt Fatigue.
“Debt Fatigue” is the sense of hopelessness that the balance you owe will never be paid off. It usually sets in after 3 or 4 years of making payments against your debts, but can set in a lot earlier if you’ve taken on a particularly aggressive debt repayment strategy that’s left you unable to enjoy small and simple pleasures. Even if you’ve made admirable progress toward paying off your debt, Debt Fatigue might make it feel all for naught.
Once you hit this wall, it’s not uncommon to start to lose momentum and even backtrack on your debt repayment journey. You might stop paying extra toward your debt and revert to making only the minimum payment. You might even give in to making purchases you haven’t budgeted for, compounding your existing debt balances.
When I was paying off over $20,000 of student loans, Debt Fatigue cropped up whenever I forced myself to adhere to too-strict of a budget in order to meet my debt repayment goals. After months of trying to live on next-to-nothing so I could put all my extra money against my debt, I’d suddenly snap and go on a $300 shopping spree that I couldn’t afford, just to try to remember what it felt like to spend freely again. All I ended up with was guilt for my act of self-sabotage, and buyer’s remorse over yet another designer purse I didn’t need. In retrospect I know I could have made things easier for myself by better organizing my debt and allowing myself some occasional healthy spending. Here are my three tips toward beating Debt Fatigue yourself and making it through the repayment race.
Reduce the Number of Bills You’re Keeping Track Of
If you have multiple small debts, and are struggling to keep track each month of when you need to pay what to whom, a good way to reduce your stress of juggling it all is to consolidate everything you owe into a single debt. You can do this by taking out a loan, line of credit, or opening a new credit card, and using it to pay off all your balances. You can then close or cancel your paid-off debts to avoid ringing up new balances.
The MBNA Platinum Plus Mastercard is a good way to consolidate multiple small balances, as long as you’re confident that you can pay them off within 1 year. The card offers 0% interest for 12 months on balance transfers, giving you the opportunity to wipe away your debt without accruing more and more interest-generated debt in that time period. But be warned: the card’s balance transfer interest rate jumps to 21.99% after the 1-year period ends.
Relax Your Timeline for Paying Off the Debt
If you’re carrying any debts with double-digit interest rates that will take you longer than a year to pay off, you’d be wise to transfer the balance you owe to a loan or credit card with a long period of low interest. A 1-year period with a 0% interest rate might be a great opportunity for some, but there’s no point in taking that approach if the short window of time will just stress you out more and exacerbate your Debt Fatigue.
Alternatively, the RBC Visa Platinum Card offers a balance transfer interest rate of 5.9% for 30 months — 2.5 years. If you’re carrying a larger amount of debt that you’ll realistically need a little more time to pay off, but still want a low interest rate to making the burden easier to bear, this card is a good solution.
Put a Little Bit Extra Toward Leisure Money
It might seem counterintuitive to give yourself permission to spend more in order to pay off debt, but this can be a useful strategy to beat Debt Fatigue and ultimately stick to your repayment plan. If you’re denying yourself even the simplest of life’s pleasures like take-out coffee on Friday mornings or after-work cocktails once a week, re-work your budget to give yourself a little bit of cash to spend guilt free. This can be an amount as small as $20 per week, and while it’s true that that’s $20 less that will go to paying off your debt, it’s $20 more that will go to preserving your sanity while you gradually move closer toward debt freedom.
Remember: paying off debt is a long-distance race, not a sprint. You’re more likely to make it all the way to the end if you run at a realistic, sustainable pace. By consolidating your debt, reducing your interest rate, and giving yourself more wiggle room in your budget, you can avoid Debt Fatigue en route to crossing the finish line.