Resolve to pay down debt in the new year

Start by taking a smart approach and building good habits

Paying off debt in the new year is a common resolution. But resolving to do something and actually doing it are two different things.

Jon Bailey, professor emeritus in the psychology department at Florida State University, suggests applying some principles of behavioral psychology to help create sustainable habits.

“Our general approach is really from the angle of self-management,” Bailey says. “You have to know yourself and your environment so you can put some things in place ... (to) make the behavior, in this case paying off debt, more likely to occur.”

❚ Know what you owe: Create an inventory of your debts, including their totals and interest rates. Add them up to see exactly how much you have to pay down.

Defining your goal can help you focus your payoff journey and see what being debt-free would look like, says Weslia Echols, an accredited financial counselor in Michigan.

❚ Break it down into smaller tasks: Focus on the day-to-day steps needed to achieve your goal. Figure out how much you can put toward your debt each month, and choose how you’ll approach paying it off. Consider using the debt snowball method — you pay off smaller debts first to secure early victories that will keep you motivated. Trim expenses to find more money for debt paydown.

❚ Keep yourself accountable: Track your progress and create a backstop to help you stay focused, such as updating a friend about your progress each month. Think about using an app to help you cement your new habits. Consider imposing a penalty if you don’t stay on track. For example, make a deal with your accountability partner that if you skip a payment, you’ll have to clean their apartment.

❚ Treat yourself: Build in rewards as you make progress. Each $100 you pay off, for example, give yourself some small treat to celebrate. This can keep you encouraged and on track toward paying off your debt in the new year.

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