6 Common Debt Reduction Roadblocks — And How to Beat Them

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Debt is big business in the United States. Currently, credit card debt alone is approaching $1 trillion, or around $5,700 per household. (For those with a revolving balance, it's closer to $16,000!) Paying it down can be a daunting prospect, so we often build mental roadblocks to avoid it. However, that only prolongs the problem — and increases the costs. Learn how to get past the following six mental roadblocks, and finally deal with your debt once and for all.

1. I'll Pay It Off Later

This is probably one of the biggest roadblocks of all time, and one that we've all fallen victim to at one point or another. There's so much time left to pay down that debt, but right now, you need as much money as possible from your paycheck. So, you pay the minimum on credit cards, and promise that next year, or the year after, will be the time to start paying down debt.

The problem with that strategy is that time literally equals money. Interest loves time, and the longer you wait to pay down a debt, the more interest you accrue. You may even see minimum payments creep up as you add more to the balance each year. Before you know it, a year or two has passed, the debt is even bigger, and it becomes even easier to say "I'll pay it off later."

How to Get Past This Roadblock

Calculate how long it'll take you to pay off the debt at your current rate, using a repayment calculator. Then, look at your monthly budget. What can you eliminate and apply to the debt payment? Be thorough. Can you double your monthly payment? Can you triple it? Put those figures into the calculator, and you will be amazed at how much sooner that debt is eliminated. Print that out, and put it somewhere you can see it every day. Check off each payment, and count down the months until you're debt free.

A balance transfer can be an effective tool to use as part of your debt repayment plan. Once you’ve narrowed down the timeline you can pay off an amount, use a credit card with a 0% intro APR offer on balance transfers. Most cards will charge a balance transfer fee (between 3-5%) on the balance transferred. The best option is the Chase Slate card, which offers 15 months 0% intro APR and no intro balance transfer fee (balance must be transferred within the first 60 days), and it has no annual fee. It literally costs nothing to move your balance over and get a break from interest for 15 months. Just be sure that you can, and will, pay off the entire balance within those 15 months, or else you’re right back where you started. (See also: Which Balance Transfer Credit Card Is Right for You?)

2. I Don't Want to Spend My Money on Debt Payments

Let's be honest. Not one person reading this article gets excited about the prospect of using their hard-earned money on debt reduction. After all, you worked hard for that money, and you want to use it on something fun, or meaningful — a vacation, a new appliance, a night out, or just putting it into savings. It's way better than giving it to some credit card company that has more money than a small country.

But, when you're not spending money on debt reduction, you're allowing the debt to get bigger. And bigger. Eventually, you will have to pay it off, and you'll be spending even more of your money on that debt. Plus, don't forget who got you into debt in the first place. You didn't spend your hard-earned money at all; you borrowed it to get those nice things you wanted.

How to Get Past This Roadblock

First, come to terms with the fact that when you're not spending money on debt reduction now, you'll be spending more on it later. Also, realize that you borrowed this money, and at a cost. The longer you wait to pay it down, the more you'll owe. Use an amortization calculator to see the cost of the interest you're accruing while you only pay the bare minimum. In some instances, your monthly payment is literally going towards nothing but interest, and that should be a sharp wake-up call.

3. I'd Rather Live Well and Be in Debt

Fancy shoes. Big car. Year-round tan. Jewelry. Designer clothes. They are all status symbols, and give the owner a feeling of pride and accomplishment. That is, until the owner gets home and looks at the stack of bills and debts that have mounted up. It sure does feel nice to have expensive clothes and accessories, but the cost can be more than money. It can equate to stress, illness, and broken relationships. Living well on borrowed money is no way to live at all, and eventually, the piper will come calling.

How to Get Past This Roadblock

Calculate the true cost of the things you think you need now — not just the price of the item, but the interest you're paying on it over time. A $200 item at 12% interest will actually cost $279 if you pay only the minimum of $4/month on it. And it will take four years to pay that off. That's money down the drain. Instead, if you must have brand names and high-end items, look at eBay, Craigslist, and thrift stores for good quality used options. You can maintain your image (no one is going to ask where you got it), and save a ton of money.

Put that money you saved into your debt reduction fund. Find Groupons and coupons for eating out and other activities. Bring lunches to work to subsidize the costs of your nights out, and must-have purchases. Even CEOs bring lunches to work, no one is going to think you're a cheapskate. And finally, figure out what living well really means. Things are just that. They are not what make life worth living. Family, friends, and memories — these are the things that matter.

4. It's Free Money!

You'll be amazed at how many people think credit is free. They see $15,000 credit limits and their eyes widen like saucers. A spending spree ensues, and after a few months, that card is maxed out. But who cares — you just pay the minimum and get another card!

This is the state of mind that gets people into all sorts of financial trouble, and credit card companies love these people. In fact, people who pay off their cards each month are called "deadbeats" by creditors; they don't make them any money. They love the customers who carry high balances, and pay only the minimum each month. It can take 20, 30, or even 40 years to pay off debt in that way, as so little of the payment goes to the principal. It is not free money. Not even close. If you don't pay debt back in full each month, it costs. And that cost can equate to many thousands of dollars in interest payments every year.

How to Get Past This Roadblock

First, you need to tell yourself repeatedly that this money is not free. Next, look at your household expenses, and see how much of it you're actually putting on the credit cards. If you're not paying that off every month, you're spending more on groceries and clothing than you should be. Find a way to stop using those credit cards for a few months. Use your debit cards, checks, and cash to pay for items, instead, and concentrate on paying down the debt you have accrued. After a few months without credit, you can assess your situation and see if you really need those cards, at all.

5. Everyone Has Debt

This is not strictly true, although the numbers are staggering. Around 80% of Americans are in debt, but 44% of that is mortgages. If we examine credit card debt alone, only 39% of Americans carry a balance month-to-month. That's far from a majority, and certainly not a group you want to be a part of. And besides, just because a lot of people do something, it's hardly an excuse to do it, too. Over 42 million Americans smoke cigarettes, but that's not a compelling reason to join them.

How to Get Past This Roadblock

Forget about everyone else. Yes, they may have credit card debt and loans, but they are not you. And what's more, you have no idea what kind of financial trouble they're in. They may not be managing their credit cards well at all, and may be painting on a smile to cover the stress they're under. Concentrate on yourself, and your own debt.

Lay it all out on a spreadsheet, or even a notepad. What are the balances, what are the interest rates, and how long will it take to pay each one off at your current rate? Can you consolidate loans? Can you transfer a balance to another card for 0% interest for one year? That will help pay it down. Make a start, and decrease the balances each month. You will feel good knowing that you're making progress, and can be proud of the fact that you're about to join the 61% of Americans who don't have a revolving balance.

6. I'll Never Pay It Off — What's the Point?

Debt has unfortunately become a way of life for many of us, and we feel like it'll never go away. But it's simply not true. Debt doesn't have to be a part of anyone's life. Maybe you fell on hard times, and the credit cards and loans bailed you out. Maybe you had some unexpected expenses, and had to turn to credit. Regardless, debt doesn't have to become a way of life.

How to Get Past This Roadblock

Tell yourself that your debt is something that can be beaten. Then, gather your bills, and arrange them from the smallest balance to the largest. Figure out how much money you can put towards a payment, and then, snowball your debt. Start with the smallest balance, and pay off as much as you can each month, applying minimum payments to the other balances. When that first debt is paid off, apply the payment to the next largest debt, and so on. This is one of the best ways to see progress, and give you hope.

It can be daunting to try and take on the big debts first. And as you see so little progress month-to-month, doing it in reverse gives you a sense of achievement, and this will help you stay on course to finally pay off your debt.

What are you doing about your debt?

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