Get Out of Emotional Debt

Posted by Madison on February 24, 2009

Finding creative and inspirational ways to help you repay your debt can keep you motivated and moving the the right direction.

One of the sad things I found when helping my brother-in-law get out of debt, was that he couldn’t even remember where he spent most of the money. Without knowing where the money went, it’s hard to make the connection to your daily life and your debt.

Emotional Debt Payoff

In How to Pay off Credit Card Debt, we discussed some common methods to pay off debt, including paying the highest interest first or the smallest balance first.

Here’s a different approach, one that helps you make the emotional connection to your debt.

  1. Itemize. Go through your debt to find out exactly what you purchased.
  2. List Amounts. Make a list of each item with the amount.
  3. Rank Your List. The first item should be the one that bothers you the most. Now that you know you’re paying 15% interest to sit on your new living room couch each day, how does it make you feel? If it’s lousy, pay it off first. Or if you have $100 worth of charges from dining out, and it kills you to know you’re in debt for food that is gone, make that first on your list.

    Here’s an example of what your list might look like:

    • Dining out: $100
    • Lawn Mower: $200
    • Furniture: $900
    • Kids Toys: $50
    • Clothes: $600
    • Interest and Late Charges: $250
  4. Print Your List. Hang it where you will see it often.
  5. Pay It Off by Item. Here’s where we skip the traditional payment methods and get creative. Attack the debt with the biggest emotional impact first (the item ranked first on your list).
  6. Brainstorm Strategies. Find ways to pay off each category faster. For example, don’t allow yourself to purchase any more kids toys until you’ve paid off the ones on your debt list first. Or put a freeze on dining out until you’ve paid off that category. Could you sell the lawnmower on craigslist and buy a cheaper one to get the job done? The more connections you make between your debt and daily activities, the more you’ll succeed.
  7. Celebrate. As you pay off each item, you’ll be able to celebrate the victories, both in terms of money and emotional attachment.
  8. Follow Up. Mark a date on your calendar three months out. Compare how far you’ve come, and rerank your list if necessary.

My Story

I actually used this strategy when I took money out of savings to cover my last maternity leave. I wanted to build back up the savings, but just looking at a $10,000 number wasn’t very motivating.

When I put it into the perspective of purchases, I was able to work much harder to build back up our savings. You can see how the strategy would work for either replenishing a savings account or paying down debt.

Emotional Attachment

While we can all say that it’s purely math and money, the truth is that debt takes an emotional toll on your life; especially now, when many people are feeling the effects of the current economy. The more emotional baggage you can shed, the better. By dividing your debt into individual purchases and paying off the debt that disturbs you the most, you’ll be happier.

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Comments to Get Out of Emotional Debt

  1. I also find it helpful to focus on your net worth (assets – debt). Even if you don’t have a positive net worth, bringing something positive to the table by looking at your assets as well as debts has helped me off of many emotional debt ledges, and continues to do so.

    Like the articles, keep up the good writing!

    Adam @ Checkbook Diaries

  2. No doubt… being in financial debt is somewhat related to being in emotional debt as well. 😉


    Marc and Angel Hack Life

  3. That is a cool approach Madison. I suppose the mechanics of the actual payment could following the balance/interest rate debate but the ‘face’ of the debt helps motivate action. In some instances it might also encourage someone to sell something once the face is ‘outed’ and branded with a debt total… this is really neat and while I’ve never looked at it this way, I wholly agree that mounds of ‘faceless’ debt can become an anchor and it numbs us to the danger of adding more to the pile.

    Cool, thanks for sharing!

    Do You Dave Ramsey?

  4. Good thoughts!

    So much of the weight of debt isn’t financial but rather mental and emotional. But as you’ve summarized, in order to get out of the emotional strain debt can take on you, you have to create a game plan and then execute it.

    Grant Baldwin

  5. When my fiance got serious about paying off his credit card he made a spreadsheet. It lists all the stuff he bought with his card. Every time he makes a payment he goes to his spreadsheet and deletes the items. He did his in order of least to most expensive, but in order of purchase, or annoyance would work equally as well. It’s nice to have something visibly paid off when you’re making those payments.


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