Are you stuck in debt limbo?

If you’re paying your bills on time every month and can’t seem to get out of debt, you’re likely in debt limbo.

Debt limbo is this awkward stage where you’re not drowning in debt but it’s weighing on your life.

It’s preventing you from doing the things you want to do with your life.

It’s probably controlling some of the decisions you make for your life.

I’m willing to bet that 75% or more of people are in debt limbo.

And it’s not because of a lack of effort.

I think it’s because of a lack of awareness.

Let me walk you through things that often keep people in debt limbo so that you can hopefully become more aware of what might be holding you back.

1. No Debt Pay Off Strategy

I wrote about this last week (post here).

But if you’re making the minimum payments or just paying a little extra on debts, that doesn’t mean you have a debt payoff strategy.

Imagine you are trying to lose weight. And every month you tell your friends,

“I don’t get it. I eat healthy, I work out. Why can’t I lose weight?”

And then your friend goes,

“You’re literally eating a burger right now and drinking a margarita!”

Without an actual strategy, it’s hard for us to realize the things that are taking us off track.

Where is your money going every week? Do you know?

Which debt are you focused on paying off first? When will it be paid off by based on your current budget?

These are not hard things to figure out, and knowing them will help you stay on track.

Go make a debt payoff strategy.

2. You don’t have spending goals

Part of your debt payoff strategy is going to be making a budget.

And part of your debt payoff strategy is going to be sticking to a budget.

Which means you need to have spend goals. Or should I say, spend limits?

With Tap and Pay, it’s easy to lose track of spending.

At the beginning of each month, make a plan for how you want to spend your money.

Katey and I use Monarch to track our spending

One of the things I really like about Monarch is that they use previous spending behaviors to help you plan out next month’s spend. This has helped us make realistic goals and better understand where we are overspending.

This is from our current budget. If the $800 on eating out looks alarming.

Just know, we went on a 5-day vacation and budgeted for eating out.

3. You can’t say no

This is going to ruffle some feathers.

Destination weddings, bachelor/bachelorette parties are vacations.

Going on a vacation while you’re in debt will keep you in debt.

Going out with your friends every single weekend will keep you in debt.

Having a YOLO mindset or a mindset that you can buy whatever you want will keep you in debt.

You don’t have to live conservatively forever. I just told you my wife and I went on a 5-day vacation where we budgeted out $800 for eating out.

But, we are able to do that because we were diligent about getting out of debt.

For most of you reading this, a couple of years being diligent would transform your life.

Learn to say “No”.

Have conversations with friends and tell them, I’m trying to get out of debt. I just spent an hour making a budget and while I’d love to do [Fun Thing] with you, if I’m being honest with myself, I can’t afford that right now.

If it’s a wedding, tell them you’re going to get them an amazing gift. The gift will be much cheaper than going and show that you really care about them.

4. You don’t have a plan for staying out of debt

There is nothing worse than paying off your credit card only to be back in credit card debt next month because your dog got sick and needed to go to the vet.

Emergencies happen.

Life happens!

So, you have to prepare for it.

That means setting up a mini emergency fund when you’re getting out of debt. Ideally, you have enough cash set aside to cover your highest deductible. You don’t need more!

That means once you’re out of debt, fully funding an emergency fund. Typically 2-6 months, depending on how risk-averse you are.

And it means that you should start a sinking fund for your next car or vacation so you don’t have to go into debt to enjoy life.

It all comes back to a budget

As much as I didn’t mind using the free budgeting template I created, Katey got sick of using that template.

Going through both of our bank statements and combining the data takes time.

And when your wife isn’t the money nerd, you want to make sure those money meetings are efficient.

Monarch has helped us visualize how different categories are changing month over month.

It’s helped us forecast what we’re going to spend and see how well we stuck to that plan.

To be honest, it’s started a lot of conversations about how we want to spend our money.

This isn’t sponsored, I just wanted to share my honest feedback after using the app for the last 45 days.

For example, it revealed that in January and March, we spent way more than usual on groceries. Which was odd because our eating out numbers didn’t go down.

But, knowing that, we were able to adjust some of our habits and cut down how much we spent on both groceries and eating out. (Minus the vacation).

I’ve used EveryDollar and YNAB in the past, and didn’t find this functionality in their apps which is why I call it out.

Check out Monarch Money

If you are using Monarch, I’d love to hear some of the things you’ve found useful.