Thursday, October 15, 2009

The Half-Way Point

You can go anywhere online and find a ton of tips about what to do if you are in debt and want to start paying it down. You can also find plenty of advice on how to save and invest your money once you are out of debt. But, what about those at the mid-way point? Is there a big difference between someone starting out and someone who has half of their debt paid off?

The simple answer is YES! If you are still in debt but have paid off a significant portion there are still things you have to look out for. This is also where your motivation will start to wear off. Here are some tips to make sure you don’t start to backslide.

1. Don’t increase your spending. This is the first thing you will probably be tempted to do. “Oh, well now I can afford that $25 extra to get more channels on cable. I still have $75 to put toward my next debt.” Sure it is just $25, but the next thing you know there will be another “extra” you will want and that whole hondo will be history!

2. Don’t lose your motivation. If you are now several years into paying off debt, the intensity has probably worn off. When I get like this I do things like check my credit score to see how many more points I have gained. You could also start some kind of spreadsheet to track how much you have left to go. Have a yard sale so you can add an extra chunk one month. Do anything that keeps you focused on the end result which is becoming debt free.

3. Do consider saving more. This may almost sound contradictory to what I said in number one, but this money won’t be going anywhere. You will have it when you need it. Now that I am halfway through paying off my debt I am going to start putting $100 a month in savings to give that a little boost.

4. Repeat this mantra. They’re in debt up to their eyeballs. From the commercial, this little saying has kept me from feeling like I am lacking something when I don’t spend like everyone else. Now that my debt is down a lot and I do have that “extra” money left over after paying regular bills it is hard not to want to start spending again.

5. Give yourself a pat on the back. No matter how far you have come or how far you have to go, if you are making progress that is something to be proud of. Celebrate this! Just don’t blow your snowball cash doing so! J

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