Tackling debt is an exhausting and painful process that more and more of us have to face. The debt problem in Canada is steadily on the rise, and our numbers are just becoming more shocking. Take this for example: the average household debt is at 163% of disposable income. That’s compared to 66% in 1980!
With such impossible obligations, becoming “debt-free” begins to feel like a distant dream rather than an achievable goal. And as hope dwindles, frequent payments tend to follow. Debtors begin to expect their balances to be in the red and progress no longer becomes an option. Beating debt fatigue suddenly becomes essential if you want any hope in digging yourself out of your financial hole.
What is debt fatigue?
Debt fatigue occurs when a debtor begins to feel the futility of their repayment, surrendering to hopelessness. In a world where Canadian’s are increasingly struggling financially, this can be especially dangerous. Debt fatigue can leave you feeling like you’re in a dark tunnel and you’ve just lost sight of the light at the end.
Once this feeling settles in, it can lead to missing payments or habitual overspending, and making all your payments seems less and less important. Debtors often give up and dig themselves further into their holes. This is why a debt repayment plan should always include strategies to beat debt fatigue!
Why you should pay off your debt in 3 years or less to avoid debt fatigue
This advice hits home for me, as debt fatigue kicked in exactly three years after starting up my credit card. Before this mark, I was dedicated in my repayment. I made a plan for it at the end of every month, accounting for the changes in my budget and spending. But after months, turned into years, of watching my plan gradually shrink and my expected pay-off time gradually grow, I started to loathe even looking at my credit statement.
Time is a huge contributor to the effects of debt fatigue. The longer you feel the weight of your debt hang over you, the more you submit to carrying it. At this point in most loans, interest payments will start to come in. This can be especially painful because the amount being added to your debt starts outweighing the payments you work so hard to make.
Although debt always feels heavy, it’s good to go in knowing that the first three years are likely your best bet at repayment. Especially if your debt is a loan in which interest doesn’t start accumulating for a set amount of time! It’s common sense to pay debt off as quickly as possible, but it can also help you avoid debt fatigue.
What if your debt will definitely be around more than 3 years?
The American student debt crisis recently passed 1.5 trillion dollars. That’s just students, and just in America. The estimated repayment time period is over 20 years.
If you’re not a student in America, count your blessings. However, these statistics show just how buried many of us are. In a lot of cases, the ideal option of vanquishing debt in less than three years is completely out of the question. At this point, it’s no longer an issue of avoiding debt fatigue, but fighting it.
Strategies for beating debt fatigue
Unfortunately, for many of us, debt fatigue is inevitable. This is because, for many of us, debt itself is inevitable! If your repayment plan looks as long and depressing as mine does, don’t be discouraged! Submitting to the temptations behind debt fatigue will only push you further into this hole. Instead, use these strategies to beat debt fatigue!
Taking a break from aggressive debt repayment
My credit card repayment typically follows the same three steps: freak out about my balance owing, put too much of my paycheck towards one single payment, ignore it for the next thirty days. This comes back to bite me in more ways than one. I overcompensate, leaving myself next to nothing for the month. And when I don’t have money to buy groceries, I revert to using my credit card (yes, the same one I just swore off on payday).
But maybe more importantly, this leaves me feeling like my journey to financial freedom is a chaotic, completely unpredictable, sadistic obstacle course. With steady, regular payments, however small, a plan begins to emerge. With monthly payments of $20, you will pay off $240 in a year. With random payments of however much eases my guilt, I can’t foresee anything. Although I use this to protect myself from predicting failure, it also means I can’t motivate myself with the probability of success.
A sporadic approach to debt-repayment will likely lead to more debt fatigue. Regardless of your balance owing, a set plan with a finish line laid out for you is much more motivating.
Consolidation debt so it’s all one payment
Consolidation debt sounds scary, I know. But depending on your debt situation, this could actually help you fight debt fatigue.
Basically, debt consolidation is a repayment tactic in which a debtor obtains a new larger loan and pays off all of their outstanding debts. By doing this, they’ve combined all of their amounts owing, interest rates, and term leases into one single payment plan.
There are some ups and downs to this. Although attaining more debt is usually something to adamantly avoid, the ease and control of having one payment and one commitment is sometimes worth it. Debt consolidation loans are offered by banks or other financial institutions. If you’re able to pay off all other financial obligations with this loan without taking out too much money on top of that balance, then this could definitely save you some money in the long run. As I’ve said before, chaos is a huge contributor to the intensity of debt fatigue. The single payment can actually be incredibly motivating for some debtors!
Celebrating debt pay-off milestones
If you’re making progress on your debt repayments, that deserves celebration. Look at you go! Beating debt fatigue like a badass!
Celebrating milestones and allowing yourself to feel proud of your progress is essential. Any progress, no matter how small, is a huge step, especially considering how tempting it can be to give up on payments when you’re experiencing debt fatigue.
However, you obviously want to keep the cost of this celebration small. Celebrating a loan payment by swiping the hell out of your credit card might be a little counter intuitive. Try to stick to simple pleasures, like a pitcher of sangria or a night at the movies. Even an evening in with a bubble bath and a face mask! In any case, be sure to be your own cheerleader in your fight against debt fatigue.
What to avoid
Unfortunately, the trickiest part about debt fatigue is it’s tendency to make things so much worse. If you submit to a lifestyle in which your only goal is to keep your head above water, eventually you will drown.
Time and time again, debtors make this fatal mistake. Especially when the effects of debt fatigue start to creep in. No matter how far the end seems, turning around and walking backwards isn’t going to get you there any faster.
When things seem way too grim, allow yourself to fall back to the bare minimum. Try to commit to making minimum payments until a better repayment plan can be made. This way you can keep yourself from falling further while also protecting your credit score. One of these days, however far away it might seem, you will start beating debt fatigue. And when that day comes, you’ll thank yourself for not giving up at your lower points!
Going into more debt
Since I was a little girl my dad would say to me, “debt can’t cancel out debt.”
It can, of course, but it’s certainly not ideal.
If you’re suffering from debt fatigue, chances are your limits are already met. Although it’s tempting to take out more money, if only to pay off other debts, it’s rarely the best financial decisions. Piling interest rates, due dates, and minimum payments on top of each other will only add to the chaos. The more loans you have out, the less you are in control, and the harder it is to beat debt fatigue.
Solidarity is my favourite means of coping so: If you’re desperately fighting debt, I’m there with you. Even making yourself familiar with means of beating debt fatigue means you haven’t been defeated yet! You and I will get there, one payment at a time.