How to Create the Right Mindset to Pay Off Your Debts


“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” –Will Rogers Boy, oh boy, did Will nail it on the head with this quote. We live in a society where debt is a way of life and easy to obtain–and therefore can quickly get out of control. If you’re most people, one of your goals this year is probably to pay off your debts once and for all.  But before we can get down to the nitty-gritty of debt reduction, we first have to review your money beliefs about your debt and overcome any emotional roadblocks you may have about it.  Here are 5 ways to create the mindset you need to pay off your debts once and for all.

1. Acknowledge the debt you have.

A lot of women know they have debt, but they may not be very clear on how much they really have—or what type of debt it is.  So, first things first: You have to be willing to look at your debt and get very clear on the types of debt you have- car loan, student loans, credit card debt, etc., the amount you owe on each, and the current interest rates and minimum payment amount on all of them.  You cannot afford to not know this information. Again: get clear about the debt you currently have.  Take the time to write this all out on a sheet of paper and make sure you know the cold, hard facts about your debt.

2. Accept the debt you have and forgive yourself.

Once you acknowledge your debts, a lot of emotions can arise–shame, guilt, regret, anger.  All of these emotions are normal; however, you do not need to give any unnecessary meaning to the debt you have.  It is what it is.  You are not a failure, and you are not a bad person because you have debt.  It’s easy to be really hard on yourself, but choose to see the debt as a neutral thing and a learning lesson in life.  Accept it for what it is, forgive yourself for having it and decide to move forward from here on out.

3. Focus on growing your emergency fund.

Get in your mind that in order to reduce your debt successfully you must also have an adequate emergency fund.  If you allocate all your excess income toward making extra debt payments but have no money in the bank, the next time an emergency comes up, you’ll fall right back toward using your credit card to pay for it. Without an emergency fund to cover the unexpected expenses that always come up in life, you may end up using the same credit card you’ve been working so hard to pay off to bail you out. It easily becomes a catch-22.

So instead, split up your excess cash and allocate some toward making extra debt payments and some toward building your emergency fund. By following this strategy, you will slowly begin to untangle yourself from your debt and build the financial foundation you need to cover you when life’s unexpected events inevitably occur.

Here’s an example:
You have $500 left over every month to save or use toward debt reduction. You may simply divide this in half, add another $250 toward additional debt payments and put the remaining $250 into your savings account. This way you’re building up your emergency fund while still paying down your debt. Of course, working with a financial planner will confirm a suitable allocation breakdown for you and your goals.

4.  Create a game plan.

Now that you understand that you should focus your thoughts on building your emergency fund and paying off your debts, create a game plan to actually do this.  Look at your monthly income and expenses and decide how much money you can realistically save every month while also making additional debt payments.  If you find that you are falling short or living paycheck to paycheck, then you’ll need to either cut back on your expenses or make more money.  I personally like the idea of the latter.  There are lots of ways to increase your income, asking for more at work or finding freelance work to do on the side, so find what works for you and embed that into your game plan.   For more information on ways to negotiate a higher salary, check out

5. Remember that debt is temporary.
The debt you have is temporary and can be eliminated with the right mindset and game plan.  So celebrate the mini milestones.  You can celebrate every time you reach a new benchmark–i.e., you’ve saved up another or paid off another $1,000 increment.  Find ways to acknowledge your hard work, as it is important to stay motivated along the way.  Remember it’s the journey and not the destination that needs to be enjoyable, and celebrating mini milestones is key to your long-term success.

Tune in next week for Part 2 of The Everygirl’s Debt-Free Living Series.  This post was contributed by Brittney Castro, CFP®, Founder and CEO of Follow her on twitter @brittneycastro.
Brittney Castro is not affiliated with Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.