3 Steps to Getting Out of Debt that Actually Work

A big reason why many people struggle with changing money habits is like other behavioral habits, they are ingrained in us. Whether you are a saver or a spender or somewhere in between, we all struggle with changing habits, including how we view and spend our money.

Stanford Professor and Psychologist BJ Fogg has some great literature on changing tiny habits over time to create lasting changes. Many of the overall concepts he talks about I have used in this post to highlight some of my experiences and changes in behavior with money.

So how does someone set financial goals and actually stick to them? Why do we set some goals, have the best intentions of following through with them, and then never quite seem to reach them? We may genuinely want to make a change in our lives, but what stops us?

Well, I based on my own experience and learning from others, here is what I think:

  1. We are too general with our goals. For example: many of us want to “get out of debt”, but what does that really mean? How long will it take? What sacrifices will need to be made?
  2. We make a wish list instead of a goal; with no road map, we are destined to fail
  3. We start with a lot of zeal, but lose momentum quickly and get dejected. For example: paying off student loans or retirement planning.
  4. Thinking of the big goal overwhelms us, so we do nothing or very little. For example, when my husband and I originally set out to pay off $120,000 of debt, we almost gave up a few times, but there are a few tricks I learned that helped us get through it.

There are probably a lot more reasons you could list and maybe you can relate to some of these, but the point is, how can we get past our natural behavioral tendencies that pay be impeding us from reaching true financial freedom and wealth. Here are 3 ways:

(1) Start small

Whether it is getting out of debt, losing weight, reading a book, taking a course or getting a certification, you need to start small. Many psychologists have proven that behavioral change comes from consistent small steps towards your goal, not one giant event. This is why getting out of debt takes a lot of work, but if accomplished, can have lasting results in one’s life long after the debt has gone.

So what does this look like practically? Well, I can only speak from experience, but when we were getting out of debt, our debt came from 3 things:

  • $10,000 credit card debt
  • $64,000 student loan (mine)
  • $46,000 student loan (my husbands)

When we finally decided to tackle our debt, we decided to go with the ‘smallest debt first’, which was the $10,000 credit card. We broke this $10,000 further into 4 increments of $2,500. So one of our first mini goals was to pay off $2,500 in 1-2 months (keep in mind that we lived on one income while using close to 100% of the other income to pay off the debt). Sometimes we would get a nice break, like a $7,000 tax refund that would help eliminate 2-3 of our mini goals in one shot.

Having those mini goals gave us the small wins that we needed to push to the finish line. Saying that we accomplished 3-4 of our $2,500 mini goals when we paid off the first $2,500 or got a tax refund was much more motivating than saying we were ¾ away from paying off $10,000. The balance is making the goals small enough so you can recognize the small wins (i.e. $2,500), but not too small that you don’t feel like it takes much to accomplish your goal.

Our $120,000 debt repayment goals was really more like 48 $2,500 mini goals over the course of 2.5 years. I don’t know why I chose $2,500 as the magic number, it just seemed to work for us. Your number could be different, but the idea is the same.


(2) Find an anchor

Because we are creatures of habit, finding triggers in our lives that act as anchors will help to curb our behaviours (in this case spending) towards our goals. It’s much easier to start with what you know and how you currently behave and add a small twist to it, then trying to ‘reinvent yourself’ as a person. Look at the existing routines in your life to act as a trigger for your new behaviour. Here are some money and non-money related examples:

  • After I open my bills (trigger)…I will write the payment due date in my calendar (even if you do automatic bill payments, it’s good to know when you bills are due so you know how much money to have in the bank)
  • After I get paid (trigger)…I will put X% towards paying off my debt
  • When I wake up in the morning to have breakfast and read the news on my laptop before work (trigger)…I will set a pop up reminder to take my vitamins and supplements for the day (I personally do this one)

Adding a positive habit to a routine in our lives by using triggers works effectively when:

  • We complete the new behaviour at the same time of day each time we do it. For example, I am more likely to remember to take my vitamins and supplements if I take them during the same time each day.
  • Making the action after the trigger as simple as possible. For example: write the payment due date on calendar, take the vitamins after seeing the pop-up reminder etc. The more convoluted and overwhelming the task is, the less likely we will do it. This is why automatic bill payments work well in many cases. It removes both the need to remember and take action. However, it’s important to review your statements and bills to make sure you are not overcharged and that you have enough funds to meet your bill payments.


An anchor that worked for me while getting out of debt was pay day. I have the tendency of reviewing all of my prior transactions and bills the morning when I got paid. Probably because that is also when I revisited my budget. This was a perfect opportunity for me to add a positive behavior in my already predictable routine without changing my habits too quickly. So the minute I got paid, I dumped a big chunk of it towards my debt. Yes, I could have set up automatic bill payments, but the act of me personally transferring the money created the routine I needed to solidify this positive behavior. Plus, I was less likely to forget about the debt repayment amount if I physically made the transfer and was less likely to accidentally use up money I no longer had in my bank account.

(3) Celebrate small wins

Don’t wait until you have completely paid off all of your debt to celebrate your accomplishments. Find fun but inexpensive ways to celebrate the small wins. Some examples include:

  • Telling someone that supports your goal and wants to see you succeed. Many times verbal confirmation and praise can be a lasting motivator to continue pushing through.
  • Do something you enjoy doing but had to cut back on to take care of the debt. For me, this included:
    • Going to the movies on a weekend
    • Going out for an affordable restaurant with a small group of friends
    • Going to my favourite but pricey seafood restaurant (this was when we accomplished one of the bigger goals like when we paid off the $10,000 on the credit card)
  • Congratulate yourself on your hard work. Use words of affirmation to propel yourself forward to the next mini goal. It might sound cheesy, but it works.


Lastly, it’s important to remember that getting out of debt is a marathon, not a sprint. It requires both strength and endurance and like a marathon, the final stretch seems to be the hardest and the most painful to accomplish. I know for myself, the final 3-6 months of our debt repayment were harder to get through than the first 3-6 months. Probably because at that point we were so close. The finish line to victory was sweet.

What are some triggers in your life that you can use as anchors to create positive change towards your goal?

Categories: Debt

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4 replies

  1. My husband and I are in the process of getting out of debt right now. This is our plan too! Glad to hear that you’ve had such great success!


  2. Well stated. I actually just finished writing about money though I haven’t sent it out yet. It’s possible to live life without being indebted.