This is an article I wrote that was submitted as part of Go Banking Rates Personal Finance Olympics.
Competitor: This article comes from Jenny atTheJennyPincher.com.
Entry Category: Strategies for Getting out of Debt
You may have never thought getting out of debt can be compared to training for the Olympics. It’s kind of a funny concept but I was thinking of how many of my personal finance blogger friends treat getting out of debt like a sport, whether they know it or not! While it may seem crazy, you can take a lot of the same practices used by Olympians and apply it to paying off your debt once and for all.
How Getting out of Debt is Like Training for the Olympics
1. Your Starting Point – In order to get out of debt, you have to understand where your finances are today. This means you are going to have to understand how much money you bring in, how often and how much debt you have. This will give you a clear picture of where you are so you know what you are aiming for to improve.
An athlete training for the Olympics wouldn’t begin a crazy routine without first knowing what they can or can’t do. They may get injured which can further delay training. It’s the same for your financial situation! You don’t want to start working towards reducing your debt until you have analyzed your situation and know what you can and can’t do financially to start paying down debt.
Debt Reduction Strategy: Begin tracking income and expenses so you can see a clear picture of your financial situation as it is today. I recommend using an online tool called Adaptu to help manage this.
2. Set goals – You probably already know this, but you are not going to accidentally accomplish your goals in life. It’s true, stop and say it with me: I am not going to accidentally accomplish my goals in life!
Just like an Olympian who has a dream to make it to the Olympics; you have to set goals with your finances to get out of your current situation. Do you think most athletes work towards getting to the Olympics by performing one off work-outs here and there? Obviously not, so why should getting rid of debt be any different?
Progress is made by setting goals and taking steps (no matter how small) each and every day to reach that goal. So how do we do this? First we need to know what the goal is. Is it to pay off credit cards? If so the first step is to stop using the cards! When you understand your financial situation today, you can set goals for your future.
Debt Reduction Strategy:
Focus on 2-3 areas in your personal finances you want to improve on so you don’t get discouraged or overwhelmed (i.e. cutting out unnecessary expenses so you can apply those funds towards paying off debt) If you want to track both personal and business expenses, Quicken has a new home and business software platform that lets you do it all together.
3. Get to Work – Once you have a clear picture of your financial situation and you’ve set goals, it’s time for the real work to begin. An Olympian would begin training for the Olympics by doing specific types of workouts that will help them improve their performance. Then they will repeat that same type of workout over and over it to master it and improve their time and performance.
You can apply the same line of thinking to getting rid of your debt. By repeating the same things that help improve your financial situation, you can get out of debt quickly. This can include things like planning your meals so you aren’t tempted to eat out all the time or staying in one night a week and saving that money to put towards your debt. Many times we forget that it’s the little habits we have daily that can have the biggest impact on our finances. This may require you to retrain your brain and pay attention to your behavior a little closer to see where you can improve.
Debt Reduction Strategy: Change your behavior. Keep what works and drop the habits that aren’t working for you anymore or have contributed to getting you into debt. Repeat what works. Then repeat what works again. Then repeat what works some more until it becomes second nature for you.
4. Review Your Progress/Adjust as Necessary – It’s never easy dealing with money because we can have the best of intentions but we can’t foresee every little thing that may happen to us. It can be discouraging when “life” gets in the way of our plans to reduce our debt. Many Olympic athletes have the same types of challenges. The difference is the successful ones keep going even when they’ve failed.
Things are going to happen that derail you from your progress of paying down debt. The best thing you can do is learn from it and move on. Some months are going to be good and others won’t. When you find something that works, stick with it. If something is sabotaging
you getting ahead, look out for it and adjust as needed.
Debt Reduction Strategy: Make it a point on a regular basis (weekly, bi-weekly, or monthly) to look back and review your progress. Set a reminder on your calendar so you don’t forget to do this!!
5. Don’t Give Up- I’m not going to lie to you, getting out of debt is not going to be easy. It’s going to take some sacrifice on your part and you are probably not going to like it. It’s going to be very easy to give up and go back to your old ways. But remember, this period of your life is only temporary if you let it be!
I heard a great example of this recently on a radio ad for PassitOn where Michelle Kwan talks about how she fell numerous times during her career but then went on to become the most decorated figure skater in U.S. History. What would have happened if Michelle gave up the first time she fell? She obviously would not have made history as a figure skater. What if you give up the first time you fail at trying to get out of debt? You clearly will never end up getting out of debt!
Debt Reduction Strategy: Sacrifice when necessary with the understanding it will be worth it in the end. You will face disappointment and want to quit but keep going and believe in yourself and what you are doing. This season of your life is only temporary. Remember the goals you set in step 2 and keep working towards that.
6. Today Is the Day
An Olympian’s big day is when they get to perform their sport in front of millions of people around the world. All the training, hard work and dedication finally pays off. When it comes to paying off debt, your big day is when you make that final debt payment. How rewarding to know that you’ve accomplished your goals and it all paid off!
An even bigger bonus is now that you’ve paid off that debt, you’ve freed up your money to use towards building wealth for yourself, giving back to charities or organizations that you believe in and having the security of knowing you don’t owe anyone. Life is different when you are debt free!
By following these debt reduction strategies, you can begin your journey of getting out of debt TODAY! What are you waiting for?
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