Are rewards for successfully paying down debt a good idea?
I am rewarding myself today, for sticking to my budget and paying the budgeted extra on my debt this month. I bought a camera because my old one broke when I unintentionally knocked it to the floor. I’m also going out to eat with a friend today before we go walking in the local park (with the kids in tow).
Today, I feel good about the decision, but last night, I really struggled.
My problem is in defining at what point I should stop throwing every extra cent I have at my debt so that I can live a reasonably balanced life, buying what I need and occasionally, what I want.
Yes, you could take your lunch to work every day and save a ton of money. But do you have to, just because you’ve decided to live a cash based life and get completely out of debt?
Should you feel guilty if you buy lunch with cash that you could have spent on paying down debt?
If you broke your camera and needed a replacement, should you not buy the camera because you could use that money to reduce your debt even further?
Besides, can’t one consider a family camera a necessity these days? If you want photographs of your family, you’re not going to find them cheaper at a photographers studio than those you’ve taken on your own!
Last night I finally decided that there are limits to my dedication. I want to pay as much as possible on my debts, but only after deciding on a reasonable amount to reserve for family use.
These “rewards” for staying within budget and paying down debt at the predetermined rate I’ve set are deserved and necessary to my future momentum.
Deserved because I am dedicated, but I don’t know if I can sacrifice all the joys that come with living within a fixed budget and knowing you have some extra money to play with every so often.
Necessary because if I continue to adjust my debt payments every time I have a few extra dollars, I worry that I’ll burn myself out of never spending any of that extra money on things that can make life a little easier or more enjoyable now.
This month, I spent $99.99 on a camera, and reserved $75 for the family and extra entertainment this month. (I include dining out in that category also.) As for debts, I chose to pay my normal debt payments, which is the budgeted amount I previously set for paying down my debts.
So, ultimately, I decided to stick with my budget and use my extra money for other things, because if I had been outside my budget this month, I would not have had this extra money.
What about you? Do you think I made the right decision? Do rewards help or hurt your progress to get debt free and live a cash life?
June 10th, 2009 at 9:22 pm
I am totally the same way about feeling the need to reward myself. So many people have related getting out of debt to losing weight, and just like when you are trying to lose weight, you need to give yourself a treat every now and then, I think the same goes with your debt. If I deprive myself of all luxuries or drastically alter my lifestyle to get out of debt, it won’t happen because I will just get disillusioned and go back to my old habits.
June 15th, 2009 at 7:39 pm
I reward myself for staying being dedicated to paying of my debt as soon as possilbe. Like you I struggle with when is it okay to not give every penny to my debt.
If there is something that I need or want and I don’t want to miss the opportunity I will put it in the upcoming budget. From time to time I start to reward myself alot and my progress slows, but I just get back on the wagon and refocus.
It is hard not to become comfortable spending the money that goes towards debt.
June 15th, 2009 at 9:18 pm
@The Yellow Piggy Bank I have definitely found that the longer I force myself to stay strict without any breaks, the more likely it is I’ll splurge and overspend. So far, that hasn’t happened lately, but the purchase of the camera and other use of a little extra money this month is my plan to forestall any budget-busting splurges!
June 15th, 2009 at 9:21 pm
@Rachel I do treat myself when I’m losing weight because I know it’s the only way to keep things real for me, but I’m careful to keep it in line with my ultimate goal. Now that I’m working on paying off all my debt, I’m trying to go at it the same way with money. But like food, sometimes it’s hard to know when it’s okay to ease up and when it’s not. Nobody likes to plateau for long. It’s easy to lose your motivation to reach your goals when you stop making significant forward progress. I don’t want that to happen to me.