A Strategy for Debt Fatigue

A Strategy for Debt Fatigue

Do you have a lot of debt, particularly large ones? Do you feel like you are making no progress? Did you start off strong on your debt and you have hit a wall? Are different strategies for paying off debt not working for you?

If you answered yes to any of those questions then you might be suffering from debt fatigue. I know that I suffer from it.

Let’s be honest paying off large amounts of debt is hard, particularly if it takes you a long time to do so. One of the best ways to pay off your debt is the debt snowball. The debt snowball can be done a couple of ways. One way is to pay off your debts according to the highest interest rate. Then when you pay that debt off then you take that payment and move to the next one and so forth. The more common and best way I think is made famous by Dave Ramsey.

According to Ramsey, you should list your debts smallest to largest, pay minimum payments on the debts and attack the smallest one with any extra money. Then when you pay off the first one, you take that payment and move to the next one and attack it, etc. Considering that a lot of personal finance is about psychology and behavior and not necessarily about actual dollars it makes sense.

The idea is that the more wins you get right away the quicker you will strive to pay off your debt. You see momentum. You see the light at the end of the tunnel.You will sacrifice deeper, you will want to get it done as fast as possible.

And for a while it can work well, but as you spend more time paying off more debts and you get to the bigger ones (e.g. your car, a lot of student loan debt, credit card debt, and/or your mortgage) you can lose momentum. Debt fatigue can set in.

I full admit I hit that wall about a year ago or so I had paid off about $60,000 in debt (mortgage debt partially included) which included a car, personal loan, and credit cards. And then I hit a wall. I enrolled in public service loan forgiveness so I decided to not put a lot of extra money to my student loans. I know that I won’t make my goal of being debt free by 45. Mrs. ROB enrolled public service loan forgiveness so while I worry about her debt it is not in the front of my mind and I have a back-up idea in case things go awry. So the only consumer debt I really have is Mrs. ROB’s car. Technically, I have the money to pay it off if you include the check I just got for our insurance company for our bathroom. Of course then we would have no savings and we would have to pay for the bathroom on a credit card, which would put us more in debt. However, the car is only a 2.19% interest rate so I have only been making the monthly payments. I have focused more on savings. And I admit I feel bad about that.

But I have debt fatigue.

So I am going back to a strategy that I used before in paying off debt for the first couple of years.

Debt Chunking.

So the only debt I have left that I want to pay off quickly is the car. I want to try to save as much, but I also want the car to be paid off quicker. However, we owe over $15000 on the car. It won’t be paid off next month and we have 2 more years on the loan. Paying off $15000 is a fairly large hill to climb so to make it easier for me I am going to break this into smaller chunks of debt. This kind of debt strategy can give the benefits of the debt snowball and at the same time be a way to tackle larger debts.

The strategy works like this.

You take whatever large debt you have, let’s use my car as an example and you break it up into specific chunks maybe do small chunks to larger ones or whatever. You might just focus on breaking it into even chunks of $1500 or $2500 in our case.

You make minimum payments, but then you take an extra case and you throw it in a savings account until you reach your specific chunk. Then you take that chunk and pay down the debt.

Then you move onto the next chunk and so forth. You keep doing that until you pay off that large debt.

Paying off larger chunks like that make it seems like you are marking quicker progress than just by chipping away at the debt.

I fully admit I use this strategy in all kinds of my own life. For example, when I am running I will break my run into 3 or 5 minute increments and count them down as I am running. Mentally, it helps me deal with a long run, grading papers, etc. I like doing things in chunks and breaking things down.

If you have large debts and have debt fatigue this might be a way to get back the mojo you had when you were on your debt payoff journey.

What do you think?

2 thoughts on “A Strategy for Debt Fatigue

  1. Debt fatigue … I’ve definitely been there (actually I’m still there). I think focusing on debt and using the debt snowball definitely helps promote psychologically WINS but for larger debts ($100k+), motivation can be challenging. I’m currently focused on paying off my last and largest debt, my mortgage. I started earlier this year and staying motivated has be tough at times, especially with the “extra” cash that’s being generated from my side hustle. At times, you want to do other things with that money. Some things I do to keep myself motivated are “to keep the end goal in mind” ala Stephen Covey, which for me is to be financial independent. Another thing I do is to review the progress I’ve made in paying down the debt quarterly (it’s still over $100k but getting smaller). I also enjoy listening motivational podcasts. One guy I really like listening to is Jocko Willink. When you think things are tough, listen to this guy. I really like his “GOOD” motivational diatribe on seeing the good when confronted with challenges. Shifting away from the “debt” mindset is definitely tough but ultimately worth it.

    1. I think it is great you are going after your mortgage. ANd you are right about the motivation part (hence the debt chunking). At the same time, depending on your age, will have to so much more room in your cash flow. Because I am a little older I feel like I am a little behind in investing so while I would love to pay off the house I am actually saving about 30% of my salary (I make extra money teaching classes). I could reduce that to 15%, which would free up another $1000 a month, but then my contributions would go down. I want to invest as much as I can to get to FI quicker.

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