Getting out of debt can be very difficult, but when you make that last payment and become completely debt-free, the overwhelming relief and freedom you gain from accomplishing such a huge feat can make the budgets, planning and discipline worth it.
Anyone who has paid off significant debt, or frankly even a small amount, will tell you that the journey to becoming debt free was difficult.
As a result, it’s completely understandable that newly debt-free people may want to reward themselves. This is great, you should set a goal and a reward when that debt goal/achievement/payoff is reached. However, it is very easy to get right back into the same spending patterns and end up right back where you started.
Getting out of debt is hard, but staying out of debt can be even more difficult.
Here are the top five tips to help you stay on track, avoid a debt relapse and keep you out of debt for good!
1. Loosen up on the budget and breathe, just a little. You’ve come a long way and now you’ve earned a little breathing room. Give yourself permission to spend a little more, if you can afford it, so that you don’t feel deprived.
2. Pay with cash — or charge only what you have the cash on hand to cover. Credit cards aren’t bad, in fact, we've shown that when used responsibly just how great credit cards can be. The temptation is what is difficult. Getting rid of credit cards completely can negatively impact your credit. So, make a promise to yourself— especially if credit cards are a weakness for you: limit the number of cards you use to two and only charge what you know you can pay in full when the bill comes in.
3. Don’t splurge. Plan. If you want to take a cruise, buy the latest TV, or go on a trip/vacation, plan the purchase and save the cash upfront, or know what you can realistically afford to pay. This won’t give you the instant gratification of getting what you want “right now” but if you plan it, you can still get what you want without the guilt of spending money and racking up debt.
4. Identify your money triggers/temptations. What are the things you find really hard to resist buying? It may be one thing, or it might be a few, or honestly, even more, small things that quickly add up. It could be the latest electronic device, clothes, art, vacations, dining out — anything that costs money. These are the things you can't stop yourself from spending money on if it’s right in front of you. These are your money triggers/temptations. By knowing your weaknesses you can avoid impulse spending by removing the temptation — or by avoiding the temptation altogether. You cam remove the temptation by avoiding the store entirely. Or you can order it online to keep from having the merchandise in front of you. You may realize that you now are really thinking the purchase through. Place it in your online shopping cart, think about it for a day, and see if you still want to buy it.
5. Never forget the feeling of how living with debt felt. Probably the most important tip is to never forget the everyday stress and anxiety that you felt and fought so hard to eliminate from your life when you were in debt. You were there once, and remembering how it felt can be an incredibly effective reminder of why you continue to make sure you don’t fall back into debt.