How to “Know Thyself” in Debt Payoff

I thought I’d expand today on Ruth’s awesome post from Thursday. In it, Ruth talked about the expansive variety of advice that exists in personal finance blogs and how it can be overwhelming at times. This made me laugh, as we spent the first three years of our debt payoff journey relying too much on the advice of others and not nearly enough of getting to “know thyself” in terms of what techniques worked for us and what didn’t. Instead of making a plan that worked with our individual personalities, we made plans that forced us to mold ourselves into the personalities and plans of others.Β 

This, obviously, didn’t work for very long. We’d try it and give up, soon finding ourselves looking for another way, and another way, and another way to manage our money.

Only when we started looking inward about what made us get into our money mess in the first place were we able to make a plan that worked for us. And I think that is the key to success. Here are some questions you can ask that will help you get to “know thyself” better and create a money plan that works for you.

What Are My Subconscious Views on Money?

For both Rick and I, we subconsciously viewed money as something just barely out of our grasp. In our minds, we couldn’t reach it and didn’t deserve it. Those mindsets affected how we spent and how we managed our money. We also were both ingrained in a struggling mindset when it came to money. We weren’t used to not struggling for money, so that made any glimmer of wealth uncomfortable for us. I talked here about being afraid to be debt free and how that mindset messed up our path to debt freedom.

If you’re willing to take the time to dig really deep and figure out what your subconscious views on money are, you can begin to re-train your mind to think differently, and your journey to debt freedom will likely accelerate as you do.

How Do I View Frugality

This is important. There is a major league difference between frugal and cheap, but if you don’t realize that, you could be subconsciously sabotaging your efforts to build wealth because you associate managing your money well with being cheap. Understanding that frugal is different than cheap, and embracing a spending plan that minimizes waste will help you to build wealth/pay off debt faster.

How Much Does My Psyche Affect My Money Management?

The answer to this question will help you to determine whether the debt snowball or the debt avalanche is better for you in terms of a debt payoff strategy. The debt snowball (payoff of debts in order from smallest to largest) is best for those who want the quicker wins, because the number of debts you have will drop off faster. The debt avalanche (paying off the debts with the highest interest rates first) will help you pay off debt faster in general, but you won’t necessarily see individual debts drop off very quickly. You need to find out what motivates your mind more: the quick wins of seeing individual debts drop off faster or the method that will save you the most money overall.

What is NOT Worth Giving Up to Me?

This one is a biggie. Some people have no problem at all giving up everything they own in order to be debt free quickly. Some people would rather keep their house, or their pets, or their car, or their extracurricular sports or whatever. You need to decide what you’re willing to give up and what you’re not willing to give up right off the bat. This can be a tough balance because you probably can’t say “I’m not giving up anything” and still get out of debt. Look at the list of your monthly expenditures line by line and decide what can go – and what has to stay.

For us, we chose not to give up our pets. To us, our pets are like family. We chose to keep them but we also chose to find ways to be as frugal as possible in caring for them without compromising their health or safety.

We did choose to give up eating out and entertainment costs, as well as vacations. We chose to continue to drive old cars and to not remodel our house or buy new furniture. To this day we have crappy living room furniture – and it drives me nuts. But I want financial freedom more than I want new couches. Decide what expenditure cuts are worth financial freedom to you – and what ones aren’t. Then, make the cuts.

If you can dig deep into your psyche and learn to know thyself before you make your debt freedom plan, I’d be willing to bet you’d have better success, not being swayed so much by the vastly differing opinions in the world of personal finance blogs.

What do you know about you and your money that influences your journey to building wealth?


15 comments on “How to “Know Thyself” in Debt Payoff

  1. You and Ruth certainly make a great team. Feeding off of one another’s topics. πŸ™‚

    It took us a few years to come to grips with our bad behavior with money before we made a change. I knew there was an issue, but never really wanted to address it. It was fear of saying no to my wife and kids that postponed our journey. Once I learned that it was okay and educated myself on all things personal finance we’ve never looked back.

    1. Thanks! I think so too. πŸ™‚ Saying no is a big one, Brian. I still struggle with that to this day. I always say no, but when I do there is this deeply hidden fear that I still feel resonating, even if I’ve overcome the actual action of saying no itself.

  2. Great topic, Laurie. “Why” is always at least as important as how, but it can be hard to figure out what really motivates and works for you without some trial and error. I really like your point about figuring out what you’re willing to give up. It’s easy to read about someone else’s debt payoff journey, think “I could never do that!” and use that as an excuse not to begin. Then there’s the camp that says they want to pay off debt, but aren’t ready to give up anything.

    No new furniture or cars was part of our debt payoff strategy–and the old couches drove me crazy too! But now that we met our debt payoff goal we realized we don’t want to spend money on new furniture (we never wanted new cars). So it’s interesting how along the way some of the things you “sacrifice” become things you don’t want at all anymore because they no longer seem worth it, or important.

    1. Great comment, Kalie!! Yeah, it really is a balance between being willing to make sacrifices and knowing what sacrifices to make that will keep you on track and moving forward. Discipline is super important, both in being willing to sacrifice and being willing to not sacrifice in areas where it will cause more harm than good.

  3. I think you and Ruth have this thing down to a science now. I’m so looking forward to the posts that proclaim your respective debt freedoms. I hope there will be pinatas involved! πŸ™‚

  4. I think our journey continues to evolve. Once we really got focused on FI, things changed even more than they did when we had consumer debt and student loans. We don’t want what we used to want because we value freedom more than other stuff. It has been life changing, to say the least. But, there are still things we spend on – it’s all about creating a balance of planning for tomorrow but still living today.

    1. “We don’t want what we used to want….” Well said, Amanda. We have found the same thing. Stuff we used to “have to” spend money on before, well, now it pains us to spend money on many of those same things. πŸ™‚

    2. “We don’t want what we used to want” – those are such triumphant words! Major victory in the battlefield of the mind : )

  5. “How do I view frugality?” I realize now more than I did before how much my negative view of frugality impacted my finances. I did not recognize the distinction between frugal and cheap. Any kind of measured, self-control in spending had negative connotations for me. That played a big, big role in my indebtedness. My perceptions now are so different. And I’m proud of you for sticking with the old couches! Our van just turned 18 years old : )

    1. “Any kind of measured, self-control in spending had negative connotations for me.” I SO hear you there, Ruth. I used to view those things as punishment. Now I view them as rewards. πŸ™‚

  6. I am more of a “small and steady wins the race” sort of person πŸ™‚ All or nothing can be good for debt repayment strategies, but it isn’t the method that works best for everyone.

  7. My views on money were borderline self destructive in that I felt that I had to always be able to afford things or else I was failing at life. I echo Ruth’s comment above that “Any kind of measured, self-control in spending had negative connotations for me.”

    When we started paying off my mountain of debt, I still wanted to buy things and not feel constrained by paying it off. Mrs. SSC just wanted to pay it all off ASAP, so that led to us coming up with the allowance system. That way I still had fun money to spend each month and she could still focus the rest of the extra money towards debt paydown.

    It was a start, and while my mindset has changed a LOT since those times, I still struggle with negative feelings towards money and “budgets” especially. Shudder… ugh… lol It’s hard to break those mindsets, really hard.

  8. Distinguishing the difference between frugal and cheap has been my largest task recently. It absolutely kills me to spend money for most purchases, but when I do, it’s for name-brand things. But, one thing we’ve learned is to live with less and go without.

    Just like you kept your pets, we still go out to eat & even for ice cream afterwards (instead of making it ourselves or buying it from the grocery store) more than we probably should given how much we make, but, we make up for it in different ways.

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