This article is the eighth in a series on how to get out of debt. If you haven’t already, you should check out the previous articles:
- Step 1 – Declare War on Your Debt
- Step 2 – Stop Increasing Your Debt
- Step 3 – Create a Budget & Stick to It
- Step 4 – Find Ways to Cut Back & Earn More
- Step 5 – Build a Starter Emergency Fund
- Step 6 – Make a Plan to Pay Off Your Debt
- Step 7 – Focus on Paying Off Your Debt
Step 8 – Celebrate Milestones
As you make progress on paying off your debt, you need to celebrate your milestones – give yourself rewards. If you don’t take time to celebrate your progress, you can easily lose your motivation to keep going. While it seems like spending money to celebrate will lengthen your journey to pay off your debt, it’s better to take a longer route than to never get to your destination at all.
This step is quite simple. First, you choose your milestones. Then, you choose your rewards.
The milestones you set will depend on your situation. If you don’t have a lot of debt, you may only need a couple milestones. If you’ve got $30,000 in debt, you’ll probably need to set more milestones for your journey. When I paid off $6,000 in credit card debt, I set my own milestones for $1,000, $2,500, $4,000, and $6,000 total debt paid off. Choose your milestones so that they’ll be frequent enough to keep you motivated but not so frequent that they keep you from paying off your debt.
Be careful in selecting the rewards you attach to each milestone. Choose things that you find worthwhile, but make sure they will reasonably fit within your budget. Save the best reward for your final milestone. Tying your rewards to things you had to give up in your budget can be a good strategy, but you may find that you don’t want or “need” those things as much as before after going without them for a while. Dining out, going to the movie theater, buying a game/CD/DVD or a piece of clothing, or taking a mini-trip are just a few examples of reasonable rewards. But you don’t have to connect your rewards with spending more money. Be creative and narrow in on the things that really make you happy.
Reaching your final milestone (paying off your debt) may be reward enough itself. The feeling of sending in that last payment is nearly indescribable – especially if you’ve been ruled by your debts for years. But your journey isn’t quite over yet. Just being out of debt doesn’t guarantee you’ll stay out of debt. The last two steps in this series will help you make sure that any future debt is a conscious choice based on good and sound reasons. Make sure you’ve signed up for free updates to Provident Planning so you don’t miss out on these important steps!
Have you set your milestones? Where did you set them, and what rewards did you choose? Did this help motivate you in your journey to pay off your debts? Let me know in the comments below!
