Re-Ignite the Spark: How to Stay Motivated While Paying Off Debt

Being in debt doesn’t feel good – and I should know. I’ve been paying off debt for almost 7 years, and have at least another 3 years to go. It’s easy to get frustrated, and lose steam when it feels like you are never going to get out of it.

But if you stay focused and pay as much as you can toward debt, one day you will actually be debt free.

I accumulated $81k in student loans, and I have $43k left to go. Over 50% of my income goes toward debt, and I’m always looking for new ways to make and save money to expedite the process. I’m nearly at the halfway point in my debt payoff process.

Paying off debt so intensely can inevitably lead to debt fatigue, the feeling of being exhausted and tired from paying off debt. When I find myself giving in to the perils of debt fatigue, I step back and follow these steps to stay motivated while paying off debt.

Know Your Daily Interest Rate

This can be a painfully shocking step at first, but once you accept the reality of the situation, it makes for good motivation.

At the height of my debt, my daily interest rate was roughly $11. That is a ton of money going towards interest each month that isn’t even hitting principal!

Realizing that my daily interest rate was more than I usually spent each day was a rude awakening. I knew that I owed a lot of money, but didn’t really process what was being thrown away each month.

My undergraduate loan is fairly low at 2.5% interest, while the graduate loans are a mix of 6.8% and 7.9% interest.

The key to starting this process is knowing your interest rates and the exact amount you owe on each loan. When I make a payment toward my student loan every 30 days, the bill shows how much of the payment went to interest and what went to principal. I take the amount that went to interest and divide it by 30, to calculate the estimated daily rate.

My daily interest rate is now around $6, which is still pretty high, but much lower than $11. Knowing that even with my no-spend days, I am still paying $6 a day toward debt, motivates me to limit my spending.

Paying off interest often feels like taking one step forward and two steps back, but it’s part of the process.

Set Realistic Goals and Deadlines

A great way to stay motivated is to set realistic and achievable goals for yourself.

A few months ago, I stated that I wanted to put $1,500 per month toward my debt. After a few slow months of side hustle income, I couldn’t afford to put that much toward debt. I could reasonably put $1,000 per month toward debt. If I can pay more each month, then that is a bonus.

I realized I felt down about myself for not being able to reach my goals. But goals are adjustable, so make sure to adjust to your situation and set yourself up to succeed.

Think of the Big Picture

Imagine that day when you make your final payment on your debt.

How great will you feel? What is your purpose for wanting to be debt free?

For me, it’s the ability to be flexible with my career and travel all over the world.

Keeping that vision in mind really motivates me to keep going, and I know I will get there once I am debt free.

That’s not to say you should limit your dreams now, but debt can get in the way sometimes. Think of the big picture and why being debt free is important to you. The why sometimes is more important than the how.

Do you have any other tips to stay motivated in the debt payoff process?