Why It’s So Hard to Pay Off Debt – And What You Can Do About It

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This is a guest post by Kali Hawlk, who created her own excellent blog called Common Sense Millenial where she writes about a wide range of personal finance topics. You can also find her on Twitter @CSMillennial.

Getting into debt can happen almost without thought or effort. It’s so easy to convince ourselves that we need the latest and greatest of everything, from smartphones and tablets to clothes and even cars and homes. In a culture that is so driven by consumerism, it’s become a fact that you can finance anything regardless of the price tag. It doesn’t matter if you can’t truly afford something when acquiring what you want in the moment is as easy as swiping a credit card or signing your name.

Unfortunately, there comes a time when all those bills are due and payments – with interest – are expected. You may have realized at this point that getting out of debt is nowhere near as easy as getting into it, but it’s too late. Your challenge is now far greater than simply paying back the price of the items you financed. But why is it so hard to pay off debt?

The Burden of Interest

Debt would be a little easier to pay off if we only had to pay what we originally spent. Creditors and institutions that make out loans would like to make a profit, however, and that’s where interest and fees come in to play.

A few hundred bucks can turn into thousands when it’s put and left on a credit card. Student loans and mortgages can evolve into hundreds of thousands depending on the interest rate and how long repayment is put off. Interest is great for those charging it. It’s detrimental to those who owe it.

There’s Only So Much Money to Go Around

Making extra payments on your debt might not be so hard in and of itself – it’s just that you have finite resources. After paying for your living expenses and your bills, there’s not much left over to put towards debt.

You might have enough for a minimum payment, but there’s no way your regular paycheck will allow you to aggressively pay down your balances on credit cards and loans. This is disheartening, because thanks to interest, the longer you hold you debt the more you’ll have to repay (and the longer it will take to pay off all of it). It’s a vicious cycle.

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A Constant Feeling of Deprivation

As humans, it’s not in our nature to constantly think about the future. We’re wired to want instant gratification instead. In other words: YOLO! But to pay off debt, we have to continually say “no,” to all the things we want.

We start feeling deprived. We lose our motivation to keep working toward the goal. When you start thinking, “why am I doing this to myself? I only have so much time to live my life, I should live it to the fullest while I can and worry about the rest later,” it becomes extremely difficult to stay the course on your debt repayment journey.

So if we know why paying off debt is so hard, can we also know what to do about this? The answer is absolutely. Understanding why getting yourself out of debt is hard is only step one. Step two is learning how to fight back and overcome these challenges that make paying off debt so difficult.

Defeat Interest by Cutting Costs and Making More

Paying off debt will be easier if you can make more than the minimum payments. This will allow you to crush your debt faster and will lessen the amount you must pay in interest. But we already discussed how paying off debt is made difficult by the fact that we may have limited financial resources, so how can we make extra payments when we’re struggling to make the minimum?

The solution is twofold. First, get mean with your expenses and slash anything that you don’t absolutely need. Cut cable, shop with coupons, cancel your gym membership; anything that doesn’t have to be spent to keep a roof over your head and food on your table should be eliminated from your spending so that money can be put toward your debt.

Second, consider how you can make more income. This may require you take on a part-time job at your favorite retail store. Or you can put your current skill set to use and do freelance work in your free time. You can write, tutor, sell art or handmade items (or sell unwanted items in your home), or do consultant work. Whatever it (legally) takes to make more, do it. Get out there and hustle!

Overhaul Your Habits and Attitude

It’s not enough to take a baby step in the right direction, regardless of how monumental that first baby step will feel. Developing a positive habit, like making extra payments on your student loans, won’t allow you to get out of debt if you continue to treat yourself to daily lattes and weekend shopping sprees. Successfully paying off debt means you must change every single bad financial habit that put you into debt in the first place.

It also requires a serious change in attitude and mindset. You have to embrace frugality and accept that living with less is the new way of life. Instead of thinking, “spending is fun,” we should instead be thinking, “saving is important because I value financial freedom.” Instead of lusting after the latest and greatest material good after seeing your friend got one, invest your time into what’s truly valuable in life: new experiences and your relationships.

If you feel sad, bored, confused, or angry, don’t turn to retail therapy; go for a run or a bike ride instead or head to your local park with a book you’ve checked out from the library. In other words, don’t use spending and material things as answers to problems. There are far better things out there than what money can buy. Make an effort to discover them.

Debt is not easy to pay off. But if you can make a plan to take action and destroy your debt once and for all, you’re strong enough to overcome all the obstacles that will be in your path. You can make the journey as pleasant as possible by reducing your expenses and finding creative ways to boost your income and by making a change in lifestyle along with a change in attitude. These actions, combined with dedication, persistence, and a willingness to see your financial dreams become realities, will allow you to successfully pay off all your debt.

Be sure to read more of Kali’s work at Common Sense Millenial.

Image Credit: VinothChandar

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  • debtfreeoneday

    Paying off debt is incredibly hard for all of those reasons stated in Kali’s post. It really is a vicious cycle especially when your paycheck has to go towards increasing living costs and then there’s not much room for paying off debt each month.

    My own paycheck varies from month to month because I’m self employed and I find this quite hard because I never quite know how much I’ll earning. So I can’t plan to save X amount per month to tackle debt. It’s just a case of battling on!

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      That is so true! A lot of people face that same challenge. In fact, we wrote a blog post about it previously: http://blog.readyforzero.com/budget-for-variable-income/.

      By the way, have you tried using ReadyForZero yet? It might help with tracking your debt payments. Thanks so much for your comment, and good luck!