As we neared the payoff date for our car loan, my wife and I discussed how we wanted to celebrate the debt elimination. It’s an important milestone and we decided that we needed to reward ourselves for our dedication to paying off our debts. We’re still making up our minds, but I think we’re leaning toward getting a couple’s massage at our favorite local spa since it’s something special we can share together that doesn’t cost too much.
A co-worker of mine asked me why we were celebrating something as trivial as paying off a car loan. To us, this was no trivial act. We paid over $3,000 extra this year alone to ensure that we would pay it off early. It took a lot of saving, scrimping, and sacrificing to reduce our debt burden.
In my eyes, paying off any large debt is no trivial thing, even if you paid just the minimums every month. It’s completion is a testament to your drive to work off your debts and achieve financial freedom. So if you’re wondering what you should do when you pay off your debts, keep these suggestions in mind.
Celebrate Your Successes
There are many great opportunities in life to celebrate, but a milestone such as a completing the payoff of a debt is a big deal. It comes at the end of a long, hard struggle to push down the balance and, if you’re lucky, pay it off early. While a car loan isn’t a huge deal when compared to the size of a mortgage, the fact that we reached our first target is cause for celebration.
Don’t Go Overboard
While celebration is important, it’s essential that the celebration not undo your hard-fought gains. It is a nearly $16,000 loan that we paid off, but in reality, we’ve basically just freed up the $300/month we were paying toward that loan. If we were to go out and buy a new $2,000 TV on a 0% interest for 12 months credit card, we would immediately eliminate over half of our cash flow gains. Make sure to keep your reward reasonable (almost always less than one month’s payment of the original debt) or else you’re just giving yourself an excuse to get right back into debt.
Regroup, Then Attack Again
Taking a bit of time off from debt elimination to reward yourself also gives you a bit of time to collect your wits, rest from the previous battle, and prepare yourself for resuming the attack. If you take too much time off, you risk losing your momentum and can even lose ground to your debt, but a one-month lag time between paying off one debt and resuming your attack on the next is ok.
Focus On Financial Freedom
The goal is to achieve financial freedom and you do that by continuing to reduce your debt. It’s ok to take a breather occasionally and celebrate your accomplishments. In fact, it’s almost essential.
If you’re working toward paying off your debt, congratulations and keep at it! Just don’t forget to reward yourself for your hard work and remember to continue to enjoy your life along the way.
Photo by: Creativity+ Timothy K Hamilton
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Good thoughts! My car will be paid off at the end of May and I was just thinking this morning how fantastic that will be!
The other thing to keep in mind, is to be proud of what you have accomplished – even if it isn’t quite your goal. For example, I have a goal to make an extra $900 a month. A little while ago I was feeling a bit frustrated because I came in short of my goal when a friend reminded me that I had made over $500 – in a pretty short time. When she said that I realized I needed to stop beating myself up, but instead be proud of my accomplishment, then work like the dickens to get it next time!
And when I do hit it – a small inexpensive celebration of some kind may be in order! Maybe just a day off to relax.
This is a great idea. “All work and no play makes Jack a dull boy”- as the saying goes. I guess that means you have to have fun sometimes, too! And there are lots of inexpensive ways to have fun.