How to Motivate Yourself to Reduce Debt

Today is Friday the 31st. We are just around the corner from a brand new week and a brand new month. It’s a new opportunity to “start fresh,” especially with your finances. So, with that said, I have just one goal today: to motivate you to attack and reduce your debts.

Debt really sucks!

For some of us, this simple statement is all the encouragement we need. We’re fed up with our situation and are ready to spring into action. Personally, I could just stop writing now, having already motivated myself to continue my passionate and fiery Debt-Free Adventure.

What about you, though? Are you properly motivated to get rid of your debt? If not, what will it take? Here are a few things to think about, which will (hopefully) kick start your motivation. They will also help you establish and maintain a proper relationship with your debt.

How much interest are you paying?

Have you ever sat down to calculate your interest payments, to determine precisely how much you pay in interest each month? If not, I encourage you to do so. You might be in for a dreadful surprise — and hopefully some powerful motivation.

Related: The Power of Compound Interest

Simply calculating how much interest I was paying has been the single most powerful source of motivation in my quest to get out of debt. I added up the interest paid each month on my mortgages, student loans, auto loans, and credit cards. And I was disgusted to realize that I was paying out nearly $1, 300/month in interest alone!

How much are you paying?

Debt is not a game

Lenders spend billions of dollars in research and marketing to figure out the best way to separate you from your money. They’re throwing everything they can at us in an attempt to suck our money right out of our pockets.

Are you fighting back? Are you even prepared to fight? Many people are handing their money over faster than they can earn it! To be successful, we need to be equipped with the whole armor of personal finance. Even when we intentionally go into debt for what we deem to be necessary expenses (mortgage loans, student loans, etc.), we need to know exactly how much it will cost us in the long run… and whether the cost will be worth the impact.

Do you really need hundreds of channels?

Sure, TV can be useful, but let’s be brutally honest with ourselves: TV is an enormous waste of time. Does knowing who won “The Biggest Loser” or “The Amazing Race” help you achieve anything or better yourself in any way? No, absolutely not.

I’m not saying that these things aren’t entertaining, or that you don’t deserve to relax with some mindless television (or a sports game) every once in a while. I’m simply challenging you to spend your time — and money — doing things that are more productive. Things that can improve your situation. Things that will make you a better person. Do you really need to pay $100+ every month (or over $1,200 a year) for TV service? Is it worth that to you?

“The average millionaire can’t tell you who got thrown off the island last night.” -Dave Ramsey

Learn the power of simplicity

Remember back to when you didn’t have a pot to… well, you get the idea.

For me, those days were partly nice and partly burdensome. I wanted more money to buy more things, but I also remember the freedom of not being beholden to anyone for anything!

For some reason, right or wrong, our culture drives us down a certain path — go to college, get a job, get married, buy a house, buy a bunch of stuff, etc. My wife and I followed that path for the first few years of our marriage. While that lifestyle afforded us some nice stuff, it also resulted in a mountain of debt.

More recently, we’ve learned the power of simplicity. One day, we stopped to consider our possessions now versus our possessions as college students. Sure, our stuff is nicer now, and we have more of it, but… We’re also in debt! Simplifying life not only saves money, but it makes us happier, as well.

Less debt equals more freedom

The amount of money you owe to others is directly correlated with the amount of time that you HAVE to devote to earning more money. This is especially true if you’re unhappy working a job that you dislike, in order to pay for things that you don’t really want.

Well, wake up — you don’t have to do it anymore! Start making changes. Sell some stuffget rid of a carreduce your housing expenses, and attack your debt. While you might enjoy your job, wouldn’t it be nice to work because you want to, instead of working because you have to?

Simplifying your life, living frugally, and spending less than you earn are three things you can do RIGHT NOW to reduce your debt and regain some of that freedom and independence that you used to enjoy. Always remember that Debt = Slavery. No, you’re not bound in chains and forced to work in a labor camp, but your options are definitely limited when you’re in debt.

Do you own your house? Do you own your car(s)? Do you own your education? Do you own all of the clothes in your closet? Do you own your wedding? Do you own your toys? Do you own the gas in your car?

If you’re carrying any sort of debt, then the answer to at least some of those questions is “no.” So tell me… Are you truly free when you’re beholden to others in this way? Take some time to re-evaluate your debt and ask yourself if the burden you are carrying is worth the benefit of whatever got you into debt. Then, make some changes.

26 Responses to “How to Motivate Yourself to Reduce Debt”

  1. Anonymous

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  2. Anonymous

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  3. Anonymous

    @frugalgrad #21: Keep on doing what you are doing and eventually you will see the light at the end of the tunnel… trust me.

    @Kerri #22: Way to go… for some reason TV seems to be one of the hardest things to let go of, but once you do you see the benefits very clearly! Nice work.

  4. Anonymous

    Hi Matt,
    Great motivational post! Simplicity is key. Certainly making that a priority answers the question, “Do you really need hundreds of channels?” We don’t. My family just got rid of all premium movie channels to the tune of nearly $50 savings a month. We were a bit hesitant, concerned we’d miss them. We have not for one second in the past 3 months. Plus via itunes (insert video stores, netflix, etc. here) you can easily get your hands on specifically what you want, at a much cheaper cost. There was no way we were enjoying $50 a month in HBO. It was freeing to finally let it go!

  5. Anonymous

    Debt is slavery. It take control over your life. You spend all days working to pay off debts. You spend all night thinking about it. Then you spend most of your phone time talking and asking for low interest rate or extend payment. I spend time with debts more than my own family. It’s really suffocating at one point. Like everything else, you can’t pretend it doesn’t exist since it will only come back and bite you in the butt. I can’t wait until the day I will be credit card debt free, then I will attack student loans. My stress level skyrockets whenever I have to send the payment to the credit card company for the things that I don’t remember what the heck they are.

  6. Anonymous

    Great post, a good motivational tool for getting out of debt is to consider it a wealth building plan. Becoming debt free will free up money to invest and save.

  7. Anonymous

    @Matt #16: You _are_ investing.

    For example, if you have a credit card with a 15% interest rate, and you pay extra on it to pay it off early — you are getting a ZERO-RISK and GUARANTEED 15% Rate of Return (ROR) on each dollar invested. That is the investment of a lifetime!

    Paying off debt early is one of the easiest and no-brainer things one could do financially. The tricky part is once you are out of debt, is deciding where to put all the extra money. It’s a nice problem to have…

  8. Anonymous

    @LOL #15: EXCELLENT advice sir! I hold this same belief. A lot of people think me strange because I do not currently invest, but I just cannot bring myself to do it when I have consumer debt lingering over my head.

  9. Anonymous

    I got fired up and payed off my debt two years ago — my realization was that I did not ‘own’ the stocks & mutual funds I had bought, because I had consumer debt as well.

    If you were debt-free, would you take out credit card loans and car loans to buy stocks / index funds?

    If the answer is no, then stop investing in companies, and invest in getting out of debt (invest in yourself) !

  10. Anonymous

    I agree completely on TV costs. I cut cable the when my bill hit $85/month in May 2008. Cable company said they could reduce my price with reduced service. Nope. Shut it off!

    Since then, I’ve saved $1,275. Isn’t $1,000 the initial goal for an EF for many people? Yes, broadcast TV sucks. Having $1,275 saved is sweet.

    I’m not saying I could live without cable for my 40-year professional life, but if I could, $85/month invested at a 9% return would mean $398,000.

  11. Anonymous

    Thanks for the pep talk, Matt!

    It is hard to get fired up about paying off our mortgage when the payoff date is so far in the future (8 more years!). But it’s still important!

  12. Anonymous

    Love the last bit about owning your stuff. Currently, I own 2/3 cars and do not own my education… That’s it! Really, I feel pretty good about the debt I do have. Sure, it’s a fair bit… But for my education, I feel like it was worth it even though I haven’t graduated yet.

    It does help me paying off my car when I see the payments broken down into principal and interest. All told, at the end of the loan’s natural life I’ll have to pay $175 or so in interest… Let’s see how much I can shave off, eh? 🙂

    As for tv, it’s great for keeping me entertained… Even now, I have the tv on and am working on my computer. The background noise helps me, and I have a hard time doing homework without it… I just keep busy while it’s on and don’t get sucked into watching tv only. (Unless it’s a good, educational show or a movie or something.)

  13. Anonymous

    This is a great article! I came to same conclusion that we as people pay a lot of interest to other people over our lifetime. As a result, I did some research for about 9months. Found that you can basically start your own bank, by using a Whole Life Insurance policy. Today, I borrow money from my policy and pay myself back. Just like your 401K with less restrictions.

    This isn’t a new concept, it’s been around for decades.

    But people seem to hate life insurance, so it hasn’t caught on. But there is a rogue group of everyday investors that are doing this.

    Wouldn’t you like to line your own pockets with all the interest you pay over a lifetime?

  14. Anonymous

    Wow… I’m glad so many people have received this well and had their hearts set ablaze for debt freedom all over again!

    I have a burning passion in my soul for financial independence and am always humbled to know that I could motivate others to the same end. What a blessing!

    Your stories and advice encourage me as well, thank you for sharing.

  15. Anonymous

    However you can get motivated shouldn’t matter. You would think that reducing debt should be motivation enough, but I understand that may not always be the case. Sometimes a good tough love speech can do it for someone. either way, motivation leads to planning which leads to reducing debt.

  16. Anonymous

    Matt – Great article, as I ABHOR debt absolutely! I Hate debt so much I have reached a level where I will never buy wastefully again.

    However, I LOVE debt when it comes to nice property to live in or rent out for income. OPM or other peoples money as they say. I had saved up a 20% downpayment on a $550,000-$1,000,000 on a place. I first had to overcome my risk aversion of going into debt, which I was happy about… and did end up spending $580,000 after putting 25% down. The property is a nice 2/2 in a prime location. HOWEVER, in retrospect, I should have got that even nicer 3 bedroom closer to my limit b/c the markets are still up about 35% since then (was up as much as 55%). Meanwhile, fast forward 7 years later, we’re generally all making more money and have more savings naturally. I should have gone deeper into debt.

    Again, it is very important younger folks research things out well, and invest aggressively now.

    Get aggressive guys. This downturn is a blessing for younger folks. Just do your research! I promise I will buy another rental/retirement property within the next 12 months. It’s clear the market has bottomed and the labor market will rebound. Don’t kick yourselves in 10-20 years at missing the opportunity.



  17. Anonymous

    Great post. I am about midway through my debt reduction project and motivation can wane quite easily. This post has given me a bit of a kick in the pants to focus a bit tighter on my goals.

  18. Anonymous

    Great post. I’m working right now to finish off paying my debt, and while I’m building up all the cash to make the payment in whole, sometimes it’s a post like this that keeps me on track to get it done!

  19. Anonymous

    Paying off debt = psychological warfare–with yourself!

    I really like the part about TV. Wastes time that could better be spent on productive past times and stokes the consumer in all of us. Turning it off is probably the first, best step to a better life.

  20. Anonymous

    Great post! The key for me was to track ALL my spending for several months. I counted every penny. After that, I prioritized what was important, focused on what I needed versus what I wanted, and started saving. Paid cash for my next car the following year (1986). Other than a mortgage, I haven’t paid interest since then. The next issue was the mortgage. I studied the amortization table and realized how much interest I was paying and how quickly the interest amount decreased with additional payments to principal. I started making extra house payments when I was able while also putting money into savings. Paid the house off in 1995. Haven’t been in debt since and I find it’s pretty easy living comfortably on not very much.

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