It’s almost been a year since we completed our debt free journey by paying off £16,000 in one year.
Even though we are debt free, helping others on their debt free journey has become a huge part of my life. And I love following the debt free community on Instagram, and keeping up with everyone’s progress.
During my own debt free journey, and following along with others, I see the same mistakes crop up and time and time again. So I decided to collate them into a blog post, with my advice on how to survive and thrive when you make a mistake on your debt free journey.
Like any goal, the mistakes aren’t important, but how you react to them that counts. Often, we let mistakes persuade us to throw in the towel. So that’s why this blog post is so important; it will help you to identify mistakes you might be making, and fix them or learn to live with them.
So read on for my top ten mistakes people make on their debt free journey, and how to overcome them.
Mistake #1: Going cold turkey on everything at the start of your debt free journey
This. Right. Here!
With a debt free journey, there is so much temptation in the beginning to go cold turkey. So you cancel Netflix and your gym membership, eat rice and beans for every meal and stop socialising altogether.
And that first month is great when you pay a huge chunk off your debt. But a few months in, it can get really fatiguing when life becomes a routine of sleep, work, eat, pay bills, repeat.
Quitting becomes inevitable soon after, because cold turkey doesn’t work.
The thing to remember is that you work hard and life is tough. When you start paying off debt, it gets even tougher. You start working more, and see less of the money you make because it all goes towards over-payments.
That’s why I think the advice to go cold turkey on spending during your debt free journey is really bad. Ultimately, you can only make progress by going cold turkey long-term if you have no other options. And if you’ve viewed debt as an option in the past, you’ll probably opt for old habits again if you don’t make your debt free journey bearable.
To have a successful debt free journey, you need to cut down on spending gradually. Focus on cutting down on one area at a time (I recommend starting with your food budget, as that’s where most of us overspend). Come up with ways of cutting your expenses without feeling like you’re sacrificing quality of life.
If you do this for six months, you’ll have transformed your spending sustainably. But if you go cold turkey, you’ll most likely have quit within a couple of weeks.
Mistake #2: Being unrealistic about how little money you can live on while overpaying debt
Like going cold turkey, this mistake stems from good intentions when you are fired up at the beginning of your debt free journey. When paying off debt, it’s very easy to start by thinking you can live off a tiny amount of money and make huge over-payments.
The problem is that we don’t consider our priorities when we draw up that first budget, because we focus on who we think we should be, rather than who we are.
When we start paying off debt, we want to race right to where we feel our budget should be. But if it were that easy, wouldn’t you already be spending less?
To truly cut your expenses down, it takes time because you need to learn how where you are going wrong and how to fix it. It took me a year to cut our expenses by £1,000 per month (including our debt minimums).
Be patient, aim to cut spending a little each month, and focus on how you can spend less without sacrificing quality of life.
Mistake #3: Cutting out all treats while paying off debt
If you are the type of person who needs to get a regular manicure, or a holiday, or fresh food in your grocery shop, then factor these costs in, rather than cutting them out. In turn, cut out some of the spending you don’t get value from, and your budget will be better.
The only issue with this advice is that it requires complete honesty with yourself. When trying not to cut out too much of your lifestyle, you may swing the opposite way and allow yourself too much spending in areas you don’t get value from.
So be honest: what are the things you need, and what are the things you don’t need? Keep the former, and cut the latter.
And the funny thing is that you are more likely to stick to your debt free journey if you allow yourself to spend a little in the areas that matter. So a little bit of spending, in the right way, can be great for paying off debt. Just make sure you get the best deals!
Mistake #4: Not having a plan for your debt free journey
Fail to plan, plan to fail. Like any goal, your debt free journey needs to be based on a plan.
How you make a plan is up to you. I worked out how much we could afford to overpay, and kept a spreadsheet. Every month, I worked out how much we had reduced our debts by, and when we would be debt free if we continued overpaying at that rate. From here, I could work out when we could expect to be debt free.
This spreadsheet became a part of my budget, and I checked in with it regularly. My husband and I had “budget meetings” (but I made it nice for him by having them in the back garden in the Sunday afternoon sunshine with a cup of tea!) where I would tell him our priorities and how we were doing. It was the part of my plan that kept me most motivated, because it helped me to focus on how each day fed into our overall plan.
Whether you choose to have a stringent plan with checklists and charts, or a relaxed ‘got it all up here’ (*points to head*) plan, the important thing is to have a plan.
A debt free journey without a plan is like trying to get fit by just showing up to the gym occasionally and seeing what happens. You’re putting in effort but probably not seeing the results you need at the pace you want. So make a plan!
Mistake #5: Letting a budget fail turn into a reason to stall, or quit, your debt free journey
Budget fails are those universal debt free “whoops” moments that we can all identify with. That time you fell off the wagon and got two takeaways in a day. The pair of shoes you bought on a whim. A bill you forgot to factor in (the worst budget fail in my opinion, because it’s all the punishment of a budget fail without any of the fun).
The point is, we’ve all had them. So how do you combat them?
Short answer: have an account buffer, and learn how to move on when budget fails occur.
We aren’t defined by our mistakes but instead, it’s how we deal with them that counts. So if we all make mistakes, it’s important to learn how to turn that mistake into a lesson and move on.
Let’s say you are trying to lose weight but exceeded your calorie allowance by eating two doughnuts. Do you throw all of your good work out the window and stop trying, or draw a line under it and start again? Which one will get you to your goal, and which one will set you back? Yep, you already know the answer to this.
So apply the same thinking to your budget. See your mistakes as human error, don’t beat yourself up, and move on. Perhaps even put some spending money for random purchases in your budget, if you can afford it.
Don’t let that blip turn into another £5,000 debt on your credit file.
Mistake #6: Not having an accountability buddy or network while working on reducing your debt
A lot of people keep their financial life private and I respect that. But when you keep it so private that no one knows that you are taking charge of your finances, it removes a degree of accountability that you may need when time gets tough.
Don’t think that you need to be transparent about your financial situation or even the fact that you’re in debt. You can create an anonymous social media account or blog and share your journey, and connect with others who do this, too. Or tell an in-real-life friend or family member that you want to get on top of your finances.
Telling people adds some pressure to your goal, but I think that’s a good thing. Letting friends know that you’re on a budget means that they can factor that it when making social plans. Updating family with your plan to cut your expenses means that you can manage their expectations.
We are so caught up in projecting the image of ourselves that we want others to see that sometimes we close off a potential support network in the process. Yes, it is true that people can be judgy about money, but not everyone wants to condemn you for your less-than-pristine finances.
When you open up to people, you have to hold yourself accountable. And I bet you’ll find you aren’t the only one you know making debt repayments!
Mistake #7: Failing to check in often enough with your debt free journey plan
As you may know by now, I love a good plan. But a debt free journey is one of the most reactive goals you can give yourself. Your circumstances change often, your expenses will fluctuate, and you need to keep checking in with your plan to adjust as necessary.
Taking some time to check in every week means you can figure out how you’ll be impacted by a rise in income (hooray!) or the surprise party for your aunt that just got sprung on you last minute (boooo!).
There is something incredibly motivating about being organised and fully understanding where you stand financially. It’s that feeling you get when you’ve spring cleaned your space, and somehow get a vibe of complete calmness afterwards.
Not checking in often enough, particularly when you’ve had a budget fail or an unexpected expense, means you start to bury your head in the sand. And if you were previously guilty of avoiding logging in to your banking apps or checking statements, then this is a pattern of behaviour you need to break.
When it comes to checking in with your debt free journey plan, do it little and often.
Mistake 8: Not making changes to your lifestyle during your debt free journey
A debt free journey is a major life event. You start as a debt-laden, stressed and pissed off caterpillar, and emerge a debt free, unburdened butterfly. But enough with the cheesy metaphors. The point is that your debt free journey requires change to truly have a chance of becoming a long-term lifestyle.
To make those changes, you need to identify the habits and triggers that caused you to make poor financial decisions.
So those old marketing emails? Unsubscribe. Not being able to say ‘no’ to yourself or others when it comes to spending? Learn to. The social media accounts subtly (or not so subtly) persuading you to splurge? Unfollow.
The best bit about this is that it’s a lovely part of your debt free journey. It doesn’t require overtime, sacrifice, or hard work. It’s a little bit of mental spring cleaning where you get rid of the old, and bring in the new.
And believe me when I say this, your mental health is about to get a boost with these new habits.
Mistake #9: Comparing your debt repayment progress with someone else’s
Sometimes you’re ahead, sometimes you’re behind. But the race is long. And in the end, it’s only with yourself.
This song lyric is life! And so true when it comes to any goal, especially your debt free journey.
We have a tendency to compare ourselves to others, and frequently with those who are crushing it. But what we don’t see is the sacrifices that person is making, their advantages, or what they lack. We don’t see the full picture, just a little flattering snippet of what we think they are.
So why compare yourself to something irrelevant? The chances are that their income isn’t the same as yours, their expenses aren’t the same as yours, their budget isn’t the same as yours.
The key to moving past those self-comparisons is by learning to see other people’s progress as a motivator and not a competition. Think about it: these folks are also paying off debt. They know what you’re going through. These guys are your people!
When you’re debt free, it won’t matter who got there ahead of you. All that will matter is that you’re debt free.
So learn to be grateful for people who are paying off debt at the same time as you. They keep your head in the game.
Mistake #10: Not motivating yourself by re-defining your debt free “why” often enough
When you start your debt free journey, you’ll be doing it for a reason. Most likely, you’ll have realised how debt has affected the quality of your life. Perhaps you’re sick of living in your overdraft. Or you can’t afford to go anywhere, or do anything.
Whatever the reason, that forms the basis of your “why”. Your why is what you’re paying off debt for. It could be to reduce your working hours, to quit that stressful job, or just to be able to afford to live on your basic salary.
But as you progress on your debt free journey, your why will need to progress, too.
For example, if your why is to be able to afford to live on your basic salary, you probably don’t have to get out of debt completely to do that. You might only need to decrease your debt by 50%. So you will have fulfilled your why before you’re debt free. If you’ve achieved what you set out to do before becoming debt free, why continue?
That’s why it’s important to re-visit your why often, assess it against your progress, and re-define it. Throughout my own debt free journey, I changed my why a couple of times. The reason for this is that my initial why was to reduce our repayments. Once we did, my why became to reduce my hours and change my lifestyle.
As you progress, you need to find new motivators. So keep re-assessing your why. The good news is this is the fun part. This is the side of your journey that’s all about dreaming, planning and aspiring. So enjoy it, particularly if you’re putting in the hard work to make those over-payments.
So these are my top ten mistakes people make on their debt free journey. Have you committed any of the above?
If so, comment below and tell me how you overcame it!