Most Significant Obstacles Preventing Debt Elimination
Getting out of debt is no easy feat. And it seems like when you start intentionally trying to pay off debt, life sets obstacles in your path out of nowhere that make it even more challenging. So if you’re ready to get out of debt once and for all, here are the four most significant obstacles preventing debt elimination and how you can combat them.
Nothing will knock your debt payoff journey off the rails faster than an emergency. A flat tire or emergency room visit isn’t in the plan, and if you’re not prepared, you may need to take on more debt to cover it.
Instead, before you begin to pay off debt, start a small emergency fund. Even $500 or $1,000 is a great nest egg. Then, once you’ve paid off your debts, you can come back and add more to hit the recommended three- to six-months’ of living expenses.
Inability to change spending habits
If your mountain of debt keeps growing larger, it’s going to be even harder to pay it down. That’s why before you think about how to pay off debt, you’ll need to change any spending habits that put you in debt in the first place.
Consider making tiny changes to your spending habits. For example, leave credit cards at home if you go window shopping with friends. Remove the credit card autofill on your web browsers. Or find an accountability partner, like a spouse or friend, who you can call before buying something you may not need. These small changes can have a big impact and free up more money to put toward debt paydown.
Often, as people earn more money, they tend to escalate their lifestyles accordingly. For example, they might upgrade to a nicer car or buy a bigger home. And that generally means going into more debt to make it happen.
When you’re trying to eliminate debt, earning more is part of the equation. But it’s essential to make sure those extra earnings go toward debt elimination, not keeping up with the family next door. If you get a raise or bonus at work, immediately put the money toward debt repayment. That way, you’ll put the money to good use instead of spending it on something that’s not putting you closer to your debt-free goal.
It’s no secret that to pay off your debt, you need to be earning money. And you’ll need to be earning enough to cover monthly expenses and provide for your family while also affording to put some toward debt. Unfortunately, those with low or inconsistent income will face more of an uphill battle than others.
If you’ve been at your job awhile and are performing well, talk to your boss about a raise or bonus. Or, if you’re in a position to do so, consider applying for other jobs that pay more. Even a small raise can have a huge impact on the amount of money you’re bringing home and what you can afford to put toward paying off debt.
The bottom line
Debt elimination takes consistency and hard work. And there will be plenty of obstacles that get in your way. But preparing an emergency fund, changing spending habits, not falling victim to lifestyle creep, and increasing income can help you avoid some of the most significant obstacles and get your debt paid off fast.
Brooke is a freelancer who focuses on the financial wellness and technology sectors. She has a passion for all things wellness and spends her days cooking up healthy recipes, running, and snuggling up with a good book and her fur babies.