Celebrate as you pay down debt

If you have to pay down debt, you know that it can be a long, hard road. Making it a bit of a game and celebrating is a way to keep yourself going …

(This post was published on November 5th, 2013, and has been updated.)

After blogging in the money niche for a while, I've read a lot of stories about people paying down debt. The utter relief — and emotion — of finally reaching the end of a long, hard journey are amazing to read about.

Prior to that story, though, it's hard work, planning, cutting, scrimping, laboring — and perhaps a lot of wishing and wanting. Wishing that they hadn't taken on so much debt on silly things, — or, unfortunately, wishing that the circumstances beyond their control hadn't happened to them. Wanting the financial struggle to be over so that every single purchase doesn't need to be a cost-benefit analysis.

Celebrate debt-reduction progress

One tip that a bunch of people who have been down the road, or who advise people as they go down the road, recommend to people getting out of debt is to celebrate progress once in a while.

The cause for celebration might be paying off a credit card, or knocking the balance down another $1,000, or getting to throw an extra $200 at a pesky balance from a side hustle that's finally starting to pay off.

The celebration doesn't need to be a big one: A round of mini golf with the family, or ordering out for pizza, or a new outfit. To be fair, it shouldn't be a big celebration, because the act of celebrating shouldn't undo all of the progress that was the cause for the celebration! (Much the same way that celebrating weight loss should probably involve something other than a trip to an all-you-can-eat buffet!)

What we've been paying off

Back in 2013 when I wrote this, we had three debts: our primary mortgage, our investment property mortgage, and our minivan loan. (In 2020, we only have the primary mortgage left.)

The first one is big. (My daughter at the time was shocked when she realized that she would be as old as Mommy when that one was finally paid off!) It's picking up speed a little bit following a refinance to a 20-year loan we did in 2016. Now we're talking more about how to accelerate this.

The others, though, were smaller and were getting exciting to look at. The minivan loan was more than half-paid when we wrote this because we were paying it down almost twice as fast as we need to. The investment property mortgage would be paid off in less than five years at our current pay-down rate, and at the time we were crossing another $10,000 milestone on the principal balance.

Ask yourself what's good about your debt numbers

If you're paying off your debts, the numbers look better each time you get a statement.  Celebrating that fact is free, and you can do it every time you look at your balance.

I'm a numbers guy at heart. One of my first electronic toys (in the mid 1970s) was a then-expensive Rockwell calculator, and I still hunt for fancy serial numbers on dollar bills. So it's no problem for me to find something special about whatever debt number we're on right now.

Even if you're not a numbers geek, there are all kinds of ways to see that you're making progress.

Your minimum debt payment is going down

Each time you get a bill, the credit card company will tell you your minimum payment. (They have to.)

This amount is a percentage of your balance.  As it goes down, your balance is going down.  If the minimum payment is 2% of the outstanding balance, then every $10 reduction in that minimum payment means that you've knocked $500 off of your debt!

The amount extra you're paying is going up

If you've committed to making a $200/month payment on your credit card (even though your minimum payment is far less), then you're throwing extra extra money at it each month that your minimum payment goes down.

Give yourself a pat on the back by taking extra stabs at that debt dragon!

Your payoff date is closer

There's usually some milestone in some units that you're crossing right now. Somewhere in between Year 3 and Year 4, you will have only 1,000 days left to pay off your debt.

After you celebrate having only 2 years left on your mortgage, 100 weeks is just around the corner! Once you get within a year, you'll hit 10 million seconds. Then knocking another million seconds off takes less than two weeks!

Some of my colleagues, when they've gotten close to retirement, have started measuring their “time left” in weeks, then days, then hours. You know things are getting close when you have only fifty more weeks left on the mortgage!

The interest portion of your debt keeps going down

If you're paying off a mortgage, it's a happy day when more of your payment goes toward principal than toward interest. On a 30-year mortgage at 5%, this happens on payment #195 (in Year 17), assuming the minimum payment was made all along.

But think about this: Every time you knock $10 off of that interest portion, that's $10 more per month that is going toward the equity in your house. Or, each year you file taxes, your mortgage interest deduction, if you claim it, goes down.  (That deduction is there only because you're paying several times that in interest so it's not a bad thing that the deduction is going down!)

And, of course, your balances keep going down

That's the bottom line. Literally!

Knocking off another $1,000 is an easy milestone to recognize. But you can celebrate way more often than that. Join the “ELEET” club when you owe less than $31,337 on your mortgage.  Or Pi-Tastic when you owe less than $3,141.95.  Or “even” when you owe less than $2,468.10.  (You may have celebrated crossing the $53,180.08 threshold if you've been keeping abreast of things all along!)

Celebrate your debt reduction!

Give yourself every free reason under the sun as you pay down debt to celebrate the fact that your debt numbers are better than they were last month.