Motivation is very important when you are trying to complete a debt consolidation program. The truth is, it is important regardless of what debt solution you are using. Getting out of debt is not an overnight thing. Even if you choose bankruptcy, it will still take time and effort to complete it. This is why you need to understand what debt discouragement is all about.
This is the feeling of frustration that robs you of the drive to achieve debt freedom. You may have started paying off your debts regularly. But if you got hit by this feeling of discouragement, you might end up being unable to complete all your payments.
According to reports, 6 out of 10 millennials do not know when they can completely pay off their debts – or if they can pay it at all. This is actually a scary scenario. Not knowing if you can completely get rid of debt is a serious situation that you should not ignore. If this is how you feel about your debts, then it is obvious that you need to get your finances in order.
Fortunately, using a debt consolidation program to solve your debt issues is effective – as long as you can stay motivated enough to complete it.
Why motivation is important in a debt consolidation program
Keeping your motivation up during debt consolidation will help make the debt relief journey easier. It will give you the drive that you need to make every single payment push through. Here are the specific reasons why this can be helpful as you make your way towards debt freedom.
There is no debt reduction
Unlike other options, debt consolidation will not reduce the amount that you owe. This is probably one of the reasons why some people hesitate to consolidate their credit card debts. It may be true that you can negotiate a lower interest rate but when it comes to the principal balance, you will be paying everything single dollar that you owe. If your balance is a big one, you might find it discouraging just looking at it.
It might take a long time to complete
Since you are expected to completely pay off your principal balance, it might take a bit longer to finish. The truth is, some people opt to consolidate debt because they want to have more room in their budget. That means arranging a lower monthly payment. While there is nothing wrong with this, it will lengthen your repayment period. This is one of the truths that you need to know about consolidating debts. If you want a shorter repayment plan, you have to make bigger monthly payments. But if you cannot afford that, then you need to settle for a long repayment plan. Since a lot of things can happen over that time, the chances of you losing your motivation can be high.
There are no guarantees of huge savings
Finally, a debt consolidation program will not guarantee that you will get huge savings. The lower interest rate will depend on your credit score and the lender. Not only that, if you choose a lower monthly payment, the longer repayment period will end up making you pay more on interest. This is why you should not really expect to save a lot of money. Some people fail to calculate this before consolidating debts. When they realize that they are not really saving a lot of money, that causes them to lose motivation.
How to keep motivation high during debt consolidation
In case you are feeling the early signs of debt discouragement, you need to work fast to increase your motivation to complete the debt consolidation program. If you start falling short, you might end up losing all the progress that you have gone through.
To make sure that you will stay motivated all throughout the debt relief program, here are some tips that you can follow.
Make sure you have chosen the right debt solution
According to one study, the more debts you have that are in the “red” the harder it is for you to make the right decisions. Apparently, your psychological capabilities and cognitive skills are impaired because of the debt stress that you feel. If you started with a lot of debts, it is possible that your judgment was clouded by both stress and desperation. You might have grabbed the first option without really thinking about which one is the best strategy.
If you feel like your current debt consolidation program is hard to follow, you might have chosen the wrong one. It is time to reevaluate your options. Make sure that you take into consideration your financial situation as you make a choice. This will ensure that you can afford the debt relief program that you will choose.
Set a visual representation of debt freedom
A great way to stay motivated is to keep your eye on your prize. Imagine what life will be like after you have paid all of your debts. Would you have been able to afford regular vacations? Maybe without your debts, you can afford to quit your stressful job so you can start your own business. There is also a possibility of having a house of your own. If you no longer have to pay off your debts, you can use that extra money to save up for a down payment.
When you have an idea of what your future will be like after you achieve debt freedom, have a visual representation of it. This is something that you can consistently look at to motivate yourself.
Reward yourself every now and then
Finally, you can set up milestones that will mark the progress that you are making with your debt consolidation program. This could be every $500 that you successfully pay off or every $1,000. It all depends on you. Identify a reward that you can give yourself after reaching the milestone. It can be a certain amount that you can spend on entertainment expenses. You can buy yourself a gift. Or you can treat the family by eating out. Just make sure that it should not cost you a lot. There are a lot of activities that you can enjoy but will not cost a lot of money.
If you set up these rewards, you will be moving forward with a more positive attitude knowing that you have just won another milestone in your debt consolidation program.