Once you've totaled up all your debt and picked a payoff strategy, you are ready to set a time frame. The snowball or avalanche calculator can actually adjust your monthly payment amount to determine a future payoff date. If you are anything like me, you want to pay it all as fast as possible.
I like to think of setting a time frame much like putting together a puzzle. Any puzzle lovers out there? If so, you know how important it is to get those edge pieces in place first. Once you see that frame, it sparks motivation. Same for your payoff plan! That large number, just like all those puzzle pieces jumbled up in a big pile, can be a MOTIVATION KILLER. Don't let that stop you.
After you determine the total number of months for your payoff plan, divide your total debt by the number of months. You now know the minimum monthly payment to hit your goal! You have successfully set your puzzle border. Now, forget about your big number - the total debt. You read that right, completely forget it. Your focus should be on the number of months.
I say this for a few reasons:
Smaller numbers allow you to visualize the path to a debt-free life. Focusing on the number of months is much easier than obsessing over the big total, which more often than not feels unattainable.
Smaller cuts to your budget, and in turn your lifestyle, may seem inconsequential, making them even harder to do. A friend of mine, who was recently looking to scale down her expenses, asked me how much we actually saved by reducing our cable. Is it really worth all the hassle for $20-30? Here's the deal - big picture. Apply that tiny savings to your overall journey. Even reducing your expenses by $20 each month in a few categories can be huge. For example, a $20 slash in a single bill applied across 48 months gives you an extra $960 to pay towards debt. Now, we're getting somewhere! Make enough changes, as small as they may seem, and you can shorten the path.
Smaller goals keep my motivation high. Add goals in between to stay engaged and excited. If the spreadsheets show that my payoff will take 60 months, I can challenge myself to get there in 50 months. After paying off $1,000 last month, more than expected, I'm pushing myself to do $1,100 this month. Come on goals, let's go!
Who has ever started a 1,000 piece puzzle and felt immediately overwhelmed? All those tiny pieces scattered with no meaning. Did the box say 1,000 or 1,000,0000? That's exactly how I used to feel about my debt. Simply talking about it made me uncomfortable. I didn't want to be reminded that getting out of debt was about as likely as finishing that million-piece puzzle.
Now, I still have to push myself to stay on course. Doing all the budgeting and trackers by hand is a big part of keeping me straight. The "Monthly Tracker" is used to keep record of the total debt payments for the month, which gives me the number of pieces to color in on "The Payoff Puzzle" - my favorite part. Hey, if coloring in a puzzle piece for every $100 paid down makes me feel better, that's what I'll do. Find whatever clicks your pieces in place, and DO IT.
Did I mention they are fun to color in, too? This simple tracker allows my kids to get involved and actually see the results of our efforts. They love helping me color in the pieces at the end of each month. Having the entire family at the table working toward our common goal makes that million-piece puzzle seem like child's play.