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Getting Out of Debt: Make That New Year’s Resolution Work

This article was written by in Consumer, Credit, Debt Reduction, Money Management. 12 comments.

Along with losing weight, getting out of debt is the most popular New Year’s resolutions in the United States. This resolution, like all others, unfortunately tends to be forgotten within weeks. Well, if you resolved to get out of debt this year — and haven’t yet abandoned that idea now that we are at the end of January– here are some ideas for not losing sight of the goal.


Don’t focus on zero debt, focus on financial freedom

Debt is at worst slavery; at best, it’s willful indentured servitude.

Say your family takes home $2,500 per month from your job after taxes, but your credit cards, loans, and rent/mortgage total $2,000 each month. This means that you work only one-fifth of your hours for yourself. The remaining four-fifths of your time at your job is exclusively for your creditors. You might as well just hand your paycheck over or work off your debt directly with the credit card companies.

Unlike slavery, though, you are free to leave this arrangement (your job) at any time. You just need to simply quit and look for another job with a pay increase. However, that is not always a simple or practical solution.

If it motivates you, think about what you would do with your freedom from debt. Without having to pay credit card companies, you would have the freedom to choose where your take-home pay goes. If you want to save up for a vacation, place pictures of your favorite getaway spot around your house.

Replace bad habits

Excessive shopping can be a habit. Many compulsive shoppers who go into debt do so because shopping helps them deal with difficult emotions like anger, frustration, and stress. The excitement of shopping helps to temporarily improve a person’s mood. But this habit can be replaced with a healthier alternative.

If starting a shopping trip helps you deal with difficult emotions, replace shopping with jogging, running, or another physical activity. While the act of spending money improves the mood of habitual shoppers, physical activity improves anyone’s mood. This is due to endorphins — natural, mood-altering chemicals released by the body in both situations.

Make getting out of debt fun

The concept of “fun” is personally subjective. One thing that I find fun, someone else might find mundane.

For example: when I was in debt, I liked watching the colorful monthly reporting graphs in Microsoft Money get close to crossing the x-axis of $0 net worth. I fully understand that might not motivate everyone the same way.

Related: How and Why to Track Your Net Worth

Rewards can be great motivators, too — just make sure they aren’t big rewards that will impact your finances negatively. Paying off a student loan and then blowing $200 on a steak and lobster dinner, for example, isn’t very smart. Do something small, yet still enjoyable. You could treat yourself to a movie night every time you pay off a credit card, or plan that weekend hike that you’ve been meaning to do. Celebrate at every possible milestone, but within reason.

Visualize your debt reduction

Losing weight is easy to visualize. Improving finances? Not quite so easy. I’ve seen videos posted online involving time-lapse photography to illustrate weight loss over time. One photograph is taken each week at the same location and in the same position, so when played consecutively from start to finish, the change over time is apparent. You may not realize it, but you can do the same with your debt.

Here are a few visualization tips:

  • When you pay off a credit card, cut it up using a shredder. Save the plastic confetti in a bag and watch it expand as you blow through card after card.
  • Look at your credit card statements before you go to sleep each night. The bad dreams you have will subside when your statements are small enough that they don’t cause anxiety.
  • Here is an extreme option, for those who REALLY need a motivator: If you’ve paid off 20% of your mortgage, paint 80% of your house in a color you don’t like. Once a year, determine how much more you’ve paid off, and paint the corresponding amount in a color you do like. You’ll be encouraged to pay off your mortgage in full just so you can live in a house painted the way you prefer.

Learn More: Should You Ever Cancel a Credit Card?

Do something positive every day. The key to making a resolution stick is to keep it in front of you every day. If your loan or credit card allows you, and if you are not charged an extra fee, make small payments every day before you go to work. Look at your net worth in Mint if it reminds you of your goal. Work an extra hour if it means you’ll get more money for paying off your debt.

Recruit your family and friends. Having a support system is vital, but many people don’t want to let people know about their financial troubles. I think it’s important to have at least one person you trust to talk to about financial issues. It helps to share goals like this because they are often not real until they are spoken out loud with a witness. If no one is aware of your goal to pay off debt, it’s easier to admit defeat without first offering 110 percent of your effort.

Consider your financial options. To truly get started you need to make some financial decisions. It is true that anything you do is better than nothing, but you need to have a plan. First, can you consolidate your debt onto one low-rate card? Call your credit card issuers and ask; the phone numbers are on the back of each credit card. Do you qualify for a loan through a peer-to-peer network? If you have a good credit score, you might find favorable loan terms.

Decide how fast you want to get out of debt and how much you want to pay. If you want to pay the least and succeed the fastest, you’ll want to examine the Debt Avalanche method. If you believe that a small success earlier on the path is important to keep you motivated, check out the Debt Snowball. Research your options and give it thorough thought.

What tips do you have for keeping a resolution to get out of debt?

Updated May 31, 2017 and originally published January 27, 2017.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 12 comments… read them below or add one }

avatar 1 Anonymous

Having debt has been one of the biggest motivating factors in my life to make more money. At some point, you have to think like a company and figure out what your optimal capital structure is. A combo of debt and equity to maximize your return on equity.

We’ll reach a point where it becomes just accounting. Get a $1 million mortgage to take advantage of the maximum mortgage interest deduction, why not? Esp if you have $1 million cash in the bank, ready to be deployed.

I agree, focus on financial freedom, not zero debt at all cost!

Best, Sam

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avatar 2 Luke Landes

If only people’s finances functioned like a business’s finances. I’m all for using cheap debt when it can help provide you a better return, but that’s how a lot of people ran into problems. Over-leverage, taking on debt to fulfill a dream of high returns in stocks or real estate, was riskier than people bargained. I’m all for attacking your finances like a business, but that can’t be used as an excuse for taking on debt for the risk of losing assets you need.

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avatar 3 Anonymous

Is the maximum mortgage deduction really more than the interest you’d pay in one year on $1M in debt? It sounds preposterous!

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avatar 4 Anonymous

My tip would be post the goal on your bathroom mirror. I think it needs to be stated in positive terms and be specific and realistic. Mine will be about being less in debt rather than debt free. Good post!

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avatar 5 Anonymous

“At some point, you have to think like a company and figure out what your optimal capital structure is.”

You really don’t. I doubt I’ll ever do this. In fact, I have no interest at all in learning what “optimal capital structure” is supposed to mean.

Also, working to pay your rent or mortgage or credit card payment is hardly “exclusively for your creditors”. It’s not like you’re not getting anything (housing, maybe?) out of the arrangement.

What I think is the *most* important first step, and one that is definitely worth mentioning is that you need to stop taking on new debt. This probably means cut up your credit cards. It also means live with the car you’ve got, and you’re not buying a new house for a while. You have to do this though if you want to be able to start making progress.

You can also just declare bankruptcy and be done with it.

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avatar 6 Anonymous

Samuari says “Get a $1 million mortgage to take advantage of the maximum mortgage interest deduction, why not?”


you know the best way to get the maximum mortgage interest deduction. Get a higher rate.

you know how many people refinance to a HIGHER interest rate to maximize their deduction.


Pay off your debt. All of it. Forget the mortgage interest deduction. It is a byproduct, not a reason. When you get to zero, you will understand true financial freedom. Not this made up fantasy “business accounting” crap in your head.

Because really, if you have a million, and you owe a million, you are worth nothing, even if you think you have something.

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avatar 7 Anonymous

I would add another suggestion to your list: talk to a trusted person about your debt situation, who can help you take a hard look at it. Sometimes we are not able to really understand our own situation since we are so wrapped up in it, which makes it more difficult to get out of that situation on our own.

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avatar 8 Anonymous

Let me add another suggestion to your list: talk to a trusted person about your debt situation, who can help you take a hard look at it. Sometimes we are not able to really understand our own situation since we are so wrapped up in it, which makes it more difficult to get out of that situation on our own.

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avatar 9 Anonymous

Keep track of it monthly – on paper like I did – as I liked the thrill of doing the addition and subtraction by hand and seeing that final figure get lower and lower every month.

Or, if you’re a techno-person, do it on a spreadsheet…. but it’s not as much fun as having it all in a little book/ledger that you can look back thru and see your progress :)

It was a thrill to see the balances drop each month, and to see something finally get crossed off the list. I can’t say that I miss the debt, (debt free now) but I miss the thrill of watching the debt drop :)

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avatar 10 Anonymous

There will probably be more new year’s resolutions to get out of debt. Many will have goals written down and maybe even a plan of action. The trick is to make that plan into a habit by consistently implementing the steps/plan for about a month. At this point the habit will become ingrained.

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avatar 11 Anonymous

A sugestion to Marci, Now that you are debt free keep the same records that gave you so mutch pleasure and use it to keep track of increasing your net worth!!!! This should be a very positive motivator to see how mutch you can increase your net worth instead of wondering where all that money went that you used to pay on your debt.

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avatar 12 Joanne Mahoney

When my husband and I were first married and had 2 small children, finances were difficult. I micro-managed our money. We did it. It takes a lot of discipline, and sometimes luck (no financial emergencies). Have a plan, and try to stick to it.

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