How to bounce back from debt repayment setbacks

By Carmen Chai

How to bounce back when you miss a debt goal
How to bounce back when you miss a debt goal

You took a brave step: You consolidated your debts, put together a strict budget or sought the help of a credit counseling agency for a debt repayment plan. Kudos – you’re tackling your credit card debt head on.

But just as the road ahead seems clear, bam. You hit a setback.

When your financial resolutions stall, how do you bounce back? 

“It’s incredibly disappointing when you’re working toward something and you have a setback or something unexpected happens,” says Amanda Clayman, a New York-based financial therapist and certified financial social worker. “Your disappointment, frustration and sadness are natural, but your goal is to focus on where you are now after the hiccup.”

Experts say that financial roadblocks can demoralize even the most naturally resilient people when they’re trying to repay debt.

“Once you mess up, unfortunately, it creates a feeling of being completely overwhelmed, and when people are overwhelmed they do things that are not helpful,” warns Maggie Baker, a financial psychologist with more than 30 years of practice. “They go into avoidance or stop going to their repayment program or opening their mail, and that leads to more disaster.”

What to do instead? Here are tactics therapists suggest when consumers with serious debt woes are coping with multiple setbacks. 

Set smaller checkpoints: In order to stay successful, you may need small victories to keep your momentum going. Clayman’s fear is consumers will get defeatist if they stumble along the way toward meeting goals that seem overwhelming.

Your disappointment, frustration and sadness are natural, but your goal is to focus on where you are now after the hiccup.

— Amanda Clayman
Financial therapist

With smaller milestones, you’re collecting a series of successes that’ll motivate you even during these trying times. 

“We continue behaviors that make us feel good so, in a way, we get in our own way when we set these big, consuming goals,” she says. “This is why resolutions fail. They need to be broken down into smaller, attainable chunks.”

That could mean you commit to opening your credit card statements and comb through your finances two hours a week, say, from 9 a.m. to 11 a.m. on Saturdays. Then, add a second step, such as listing all of your expenses and debts next to your income. Then, when you feel like you have your bearings and you’ve gained some steam, you could schedule an appointment with a debt counselor to carve out a repayment plan.

Baby steps are easier than leaps and bounds. 

Shorter goals provide you with flexibility, too. You’ll need to make adjustments so a moving target works in your favor, especially when you’re starting out.

Grieve, but then pick up the pieces: When you slip up or an unforeseen crisis hits your bank account, you’re going to need time to digest what’s happened. 

“Let yourself have these feelings. Our brains and bodies are built to process emotions. Go to your coping strategy when you need to be quiet and rest emotionally, but cap it with a timeline,” Baker says.

That could mean moping over the weekend about having to replace your car or refrigerator, or mourning the loss of your job for a week or two. Then Monday morning, you need to get over the doom and gloom and give yourself a proactive push. 

“Acknowledge the loss and negative emotion,” she advises. Then, “Modify your goals and pull together an assessment about where you are,” she advises.

Create meaning from your setback:  It took Jonathan Unverzagt and his family four years to pay back credit card debt totaling more than $38,000. The dad with 11 kids has been debt-free for more than two years, and he concedes his large household faced its share of challenges along the way.

At one point, the pump in the family’s rural home in Sparta, Wisconsin, gave out. Unverzagt needed to repair the pump immediately – at a whopping $1,100.

“It was huge for us. It was that tight and we had no savings,” he says. Luckily, they had just received a tax refund that they put toward replacing the pump. In that difficult moment, they realized a crucial life lesson: Despite their meticulously planned roadmap to becoming debt-free, they would inevitably face interruptions. They needed an emergency fund for future incidents. 

“This was a potential obstacle that helped us,” Unverzagt says. Instead of returning back to living without a safety net, they made it a priority to squirrel away money so they were never caught off guard again.

Clayman agrees. When interruptions to your plan crop up – and they will – you don’t need to play the blame game or look at it like you’ve made a mistake. Instead, ask a neutral question that’s forward-looking: What have I learned from this? 

Villainize your debt but don't avoid it: Unverzagt says he “villainized” his debt. He despised it and attacked it ferociously by taking a 180-degree turn from buying gadgets on his credit card to applying every cent he could to his debt.

You’ve really got to want to hate your debt, which fixes your eyes on the goal and the freedom ahead of you.

— Jonathan Unverzagt
Successfully overcame $38,000 debt

“Every time we made a payment, we added $10. It started out at $700 and it escalated over the first couple of years,” he says. The family cut expenses each time to add to the growing debt repayment sum. 

“You’ve really got to want to hate your debt, which fixes your eyes on the goal and the freedom ahead of you,” Unverzagt says.

On the flipside, you also need to make “financial hygiene” a normal behavior. Clayman says some consumers get sweaty palms and anxiety just thinking about money. It only gets attention when something goes awry. 

That needs to change. You shower, go for a run and prepare meals as harmless parts of your daily routine. Accepting your debt as part of your daily plan of attack is a good way to bring it into the fold.

Build a support network: Chances are other consumers have walked the same path as you or are currently walking alongside you. Talk to them, says Thomas Nitzsche, a spokesman at the nonprofit counseling agency Clearpoint Credit Counseling Solutions. 

A financial accountability team can provide tips, insight and support to pull you through difficult financial times.

“It’s inspiring to hear from people when they’ve paid off their debt,” Nitzsche says. “When we ask, ‘If you’re free of credit card debt in five years, how would that make you feel?’ our clients light up.” 

“We try to talk about the end result and keep them focused on how they’ll feel when they’re finished. It’s satisfying for the client and for the counselor,” he says.

Online communities, personal blogs and other support groups are also good ways to connect with people going through the same journey as you.

See related: 9 ways to revive your New Year's financial resolutions, 9 baby steps that lead to big financial goals, No resolutions, no added stress

Published: April 27, 2016

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Updated: 10-24-2016

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