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Finding Motivation: A Life Without Debt

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I’m frequently asked how I stay motivated to remain out of debt. After all, there are so many temptations and so many fun things that I could blow my money on. People assume that it is hard for me to remain motivated and disciplined. Sometimes it is. Like anyone else, I have days when I just want something and I want it now. I just want to go blow money and forget the consequences. To remain debt free, though, I have to check the worst of those impulses.

When you’re trying to get out of debt you can see the end goal and that provides motivation. You know that when you’ve paid off $X amount of money you will be debt free. You keep going to reach that number. You’re fired up and motivated to make the necessary sacrifices. But when you’re debt free, you don’t have that magic number to shoot for. When there’s no concrete number staring you in the face it’s easier to lose motivation. Sure, you want to save but for what and how much? You want to have money to spend but do you really have to watch every penny anymore? It’s easy to just drift, spending and saving aimlessly or, worse, spending with so much enthusiasm that you land back in debt. It’s like losing a lot of weight. You’re motivated to get it off in the short term, but once you’re there the enthusiasm drops off and it’s easy to fall back into bad habits.

So how do I find the motivation to remain debt free when there are so many options for my money? How do I keep my bad habits and ugly urges in check? Here’s how:

Set goals

Just because I’m debt free doesn’t mean that I don’t have financial goals. I want to buy a new(er) car someday. I want to retire comfortably. I want to be able to give to charities that I value. I want to travel. I want a new computer. All of these things take money. I write down the things I want to accomplish and assign dollar values to each. Then I track my savings progress toward each goal. Seeing those numbers add up and those goals reach fruition provides me with the motivation to remain out of debt.

Keep one big goal in mind

In addition to the smaller goals, I always keep one big goal in mind. At one time it was a home. Once I got that, I changed it to having a comfortable retirement. Now that that goal is well on track, my current big goal is financial independence. I want my investments and activities to provide enough passive income that I don’t have to work for an income, unless I want to. The big goal is not something that is easily attainable, but it is possible. It’s something that will keep you motivated and working toward it for several years. Even if you’ve managed to mark off all your other goals, the big goal will still be there. As long as it is, you’ll keep striving for it.

Remind yourself about the benefits of being debt free

Whenever I want to blow an unreasonable amount of money (as I did recently when some terrific travel offers came across my desk, plus some property that I’d been looking at came on the market), I remind myself what I love about being debt free. My love of security and freedom go a long way toward keeping me on track. I don’t want to end up in a position where someone else dictates where my money goes, or where someone else controls my decisions because I owe them money.

Know what matters to you

When you’re debt free, you get to know what really matters to you and it usually isn’t stuff. Maybe it’s your ability to be home with the kids, security in the event of a job loss, the freedom to choose work you love, the ability to give money away, travel, a special hobby, or cultural experiences. Would you be able to do, have, or enjoy those things as much (or at all) if you went into debt? Probably not because your time and money would then be spent servicing the debt. When I’m tempted to spend too much, I remind myself of the things that would have to go by the wayside if I had debt. I’m not willing to give them up, so I remain motivated to keep the things that really matter to me.

Staying motivated to remain out of debt is different from the motivation necessary to get out of debt. Getting out of debt takes (usually) a relatively short period of time. The flame of anger and frustration can burn long enough for you to accomplish that goal. Staying out of debt is a long term adventure and something that you’ll (hopefully) have to work at the rest of your life. No short term fire will last long enough to keep you on the right path. You have to seek other forms of motivation. This is what works for me; what works for you might be different. Experiment until you find the right combination of motivational tactics.

The Daily Approach to Financial Improvement

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I see many people who set big financial goals for themselves. Get out of debt. Save up six months worth of expenses. Pay cash for a car. Save up a twenty-percent down payment for a house. Some goals are even bigger than that. Save two million dollars for retirement. Pay cash for a house. All of these are noble goals and I applaud anyone willing to reach so high.

Unfortunately, I see a lot of these goals end in frustration. The goal is too big to be tackled in a short period of time so when months go by and there’s no sense of completion, many people get frustrated and give up. They get tired of living under restrictions or of putting so much time and energy into something that never seems to get anywhere. I can relate. I’ve set the same goals before and while it’s all worked out now, there were times where I wanted to throw up my hands and stop bothering with the whole thing.

There is one thing that my ups and downs taught me, though, and that’s that it’s much easier to think of personal finance goals as daily goals rather than as goals that will take months or years to achieve. Sure, you’re shooting for the big goal of getting the house paid off in three years, or of paying off $20,000 of consumer debt in a year. Obviously (unless you hit the lottery) you’re not going to accomplish these things next week. And it can get frustrating and tiresome to be constantly working toward something that seems so far off. It’s tempting to fall off the wagon. “Well, what does this $100 sweater matter, anyway? It’s not like $100 will make a difference tomorrow. We’ll still need eight months to pay off our debt,” is an example of what I hear people say when they get overwhelmed by a big financial goal. I encourage them to instead think in terms of today and not six months from now.

What does this mean in practice? It means that you forget the big number that you’re shooting for, or that you at least put it in the back of your mind. Don’t think, “Oh, I have to pay off $20,000.” If you want to pay off $20,000 in a year, break that down into daily amounts. Twenty-thousand dollars divided by 365 days in a year is roughly $50 per day (not counting interest, but let’s keep this simple). Change your thinking to, “I need to come up with $50 today.” It’s much easier to think about how that is possible than it is to think about $20,000.

It’s also much easier to do. You can brown bag your lunch and save $10. You can skip the coffee and vending machines and save $5. You can use coupons at the grocery store and knock $10 off the bill. You can sell a couple of DVD’s to a place like Secondspin.com and get $10. You can make the kids eat at home instead of stopping at McDonald’s on the way to soccer practice and save another $10. Refuse to buy the crap the neighbor kid is peddling for school and you’ve saved another $15, making your $50 for the day. If you have a spouse and he/she is saving too, your daily savings rate goes up.

Of course you won’t be able to make your daily goal every single day. But some days you’ll save significantly more, like the day you cancel the cable and save $100/month. That’s an extra $3.33 per day added to your daily total every month. If you have a big garage sale and make $200, that’s $6.67 per day for that month. If you have $100 from your paycheck direct deposited into a savings account, that’s $3.33 per day in seed money every month. Your good savings days will average out your lower days and if you have a daily numerical goal in mind each day, it’s far easier to keep focused.

To keep you on the good path, keep a piece of paper in the car or your purse and write down the savings as you go through the so you can see the daily tally. It provides inspiration to keep saving and cutting to make that goal. List the seed money you start out with each day from cancelled services, big sales, bonuses or “found money,” and automatic savings deposits and then add anything new you save that day. Chances are, at the end of the day you’ll have your total.

Even if your goal doesn’t involve dollars and cents, the daily approach can help. If you want to get your finances organized, plan for retirement, or simply learn more about money, think of what you can do daily to move the goal forward. If organization is your goal, one day you can research software packages. Another day you can go through your papers and keep/toss as appropriate. Another day you can go see a lawyer and get your will drawn up. If you want to learn more about money, one day you can go to the library and check out books. Each day you can read one chapter. And on it goes. It’s easier to succeed if you tell yourself, “Today I’ll learn one new thing,” or, “Today I install a software package,” than it is to say, “I’ll get organized and educated.”

Big goals are great to have, but they don’t lend themselves to success very often, at least not in a timeframe quick enough for most of us. Big goals tend to overwhelm and frustrate us making it likely that we’ll quit. Big goals are achievable, but you can make it easier on yourself by tricking your brain into thinking that the goal isn’t really that big.