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The following is a guest post:

Many people incur debt as a matter of necessity. They need to get an education, so they take out debt to pay for their student loans. They need a mode of transportation, so they buy a car with money they don’t have. And they need a home to raise a family, so they take out more debt in the form of a mortgage plan.

These people aren’t frivolous spenders. They don’t necessarily have expensive tastes and they don’t desire to live beyond their means. But for a period of their life they must do exactly that.

This is the period during one’s twenties and early thirties, a time when everything is more expensive and when salaries are small or nonexistent. Trying to get an education, start a family, and begin a career are three things that are usually not economically compatible – but we do them at the same time anyways.

We do it by taking out debt.

It’s easy to get into a perpetual debt mindset during this time. You know that your debt burden only continues to mount, but you resolve to pay it off as soon as your career stabilizes, your children are born, and your family settles down. You’ll pay it off as soon as your life has fully left its transitional period.

Then, one morning, you wake up and realize that the time has come, that this transitional period has reached its end. You have a family and a home and – perhaps most crucially – a job that closely resembles a career. Finally, you are ready to make the transition from the “debt-incurring” period of your life to your “debt-reduction” phase. Failing to transition appropriately could saddle you with many more years of debt.

How can we make this transition? How can we start chipping away at our debt after years of letting it balloon? Is debt consolidation something we should consider as part of this plan? While financial advisors often make it sound as though paying off debt is easy once you have the means, it can often be a challenging process.

Here are a few tips:

  • Impose a debt moratorium. Two major components of making the transition are (1) assessing your total debt load and (2) convincing yourself that the “debt-incurring” years have come to an end. Both of these components can more easily be addressed if you are taking on no new debt for the time being – credit card debt included. So as to make it clear that you will no longer add to your debt load, check out Green Dot prepaid credit cards or make cash purchases rather than rack up any more outstanding financial obligations.
  • Spend less. For some people, the notion of paying off debt is actually more stifling and overwhelming than the feeling of incurring debt in the first place. In order to make meaningful debt-reduction strides, then, you may need to reduce your spending in order to make the overall process seem more manageable.
  • Make a plan. No transition period is complete without a plan, and the case of debt reduction is no exception. Even if you’ve already been chipping away at your major debt obligations for years, sit down with your spouse and explicitly write out the approach you now plan to take. In how many years do you want to be debt-free? Is it time to consolidate credit card debt? What debt obligations should be paid first? What percentage of your incomes can be put towards debt payments every month? These are all important questions to ask when making such a plan.
  • Visualize the end-goal. During our debt-incurring years we try not to think too much about our long-term debt. We might make regular payments, but for our health and sanity it’s difficult to plan a debt-free future when we’re still taking out student loans. As part of your transition to the debt-reduction phase, it is important to now start visualizing a time when you don’t owe money to anyone. Doing so will hopefully give you added motivation to consistently make payments and chip away at your burden.

These are just a few tips to keep in mind when transitioning into the debt-reduction phase of your life. Although you now have the means to pay off your debt, it is important to change your mentality so as to insure that the burden doesn’t stay with you for any longer than necessary.

You can now see the light at the end of the tunnel – rather than standing still, it’s now time to head towards it.


Jenna Smith is a student in the heart of the Midwest, Saint Louis! Her favorite thing to do is ride her bike through Forest Park! Jenna's blogging interests vary from business and finance, to eco-friendly topics.