How to Pay off Debt : Beating the Broke Mindset - The Frugal Farmer (2024)

As we began weaving throughthe process of figuring out how we got into debt and how to pay off debt,it occurred to me that we really had no control over our emotions during that time. As I’ve mentioned before, our debt load didn’t come from big purchases – we literally nickeled and dimed our way into debt. Rick had been laid off in 2010, and had subsequently, after 7 months, taken a job at 80% of his former salary.

Since we’d been living paycheck-to-paycheck on his previous salary, it became obvious pretty quick that we were going to be short on money each month, but in our infinite wisdom (insert sarcasm here) we reasoned that we’d just put any excess expenses on the credit card, and that eventually he’d work his way up to his previous salary. No talk about cutting expenses or bare bones budgets. Yeah, we really didn’t know much about managing money. Rick slowly worked up to making what he made before he was laid off in 2010, but the problem is that our “necessary” credit card purchases left us with super high credit card balances and high payments to go along with them, basically nulling and voiding his new, higher salary.

As I continued to dissect the mistakes we made during that time period, I’ve come to realize that we had several beliefs that belong to what I call a “broke mindset”. That is, we used to expect and accept being broke, and subsequently, we made choices that fell in line with our beliefs. Here I’ll outline some of those dangerous beliefs, and how to conquer them so that you can start living life with a wealthy mindset instead of a broke mindset.

BrokeBelief #1: There’s Nothing We Can Do About it

This can be, in some circ*mstances, a good mindset. But in order for it to be a good mindset, it has to be titled “We’ve done all that we can do, there’s nothing more we can do about it”. When Rick lost his job and then took the new job at the lower salary, we had this mindset that told us that the whole thing just wasn’t our fault, therefore we were justified in putting expenses over and above our income onto the credit cards.We never acknowledged the fact that years of money mismanagement put us in a place with no savings, no budget experience and no self-discipline where money was concerned.

Recommended Reading: 925 Ideas to Help You Save Money, Get Out of Debt and Retire A Millionaire: So You Can Leave Your Mark on the World

In order to beat this “broke belief”, it’s imperative that you adopt a conqueror’s attitude. Acknowledge past money mistakes and determine that you will figure out ways to do more; to cut more expenses, to earn more side hustle income, to sell whatever you need to sell. If you want to know how to pay off debt, you need to first understand that your debt is an enemy, and then treat it as such, pulling out every weapon in your arsenal that will help you to increase income, decrease expenses and kick that debt to the curb.

Broke Belief #2: We Deserve

This was another dangerous mindset we had when Rick was making less money after his job layoff. “We deserve” a pick me up treat. “We deserve” a new rug for the entryway, or whatever. What we didn’t understand is that we deserved financial peace more, and that financial peace brings much more gratification than all of those little treats that you’ve convinced yourself that you need. If you’re really wanting to know how to pay off debt, it’s imperative that you understand and eliminate this dangerous belief.

Recommended Reading: The Recovering Spender: How to Live a Happy, Fulfilled, Debt-Free Life

A good way to go about this is to make a list of your short and long-term goals, and post them in a prominent place in your home. Then, when you’re feeling tempted to spend money on things that you “deserve”, look at that list of goals. What do you deserve more:

• Dinner out or early retirement?
• A night at the movies or that dream vacation?
• That trip to wherever or financial freedom?
• A new shirt or a plushier savings account?

Think long-term, think big-picture, and don’t be fooled into thinking that those little treats will do any more than give you short-term satisfaction.

Broke Belief #3: We’re Not as Bad as the Others

I remember using this one constantly as we justified our myriad of small purchases made during the time we accumulated our debt. We had done some very, very minor cutting of expenses, and so we would justify expenditures with statements like “Well, we’re only spending $900 a month on groceries; most people spend MUCH more than that.” Or, “We only spend $175 a month on entertainment. That’s much smaller than what most families of six spend each month”.

It took us awhile to see and admit this, but this attitude is nothing more than a simple case of pride. I don’t mean to offend anyone, but pride can be a dangerous enemy. It has a great way of encouraging us to reason in our minds that what we are spending is justifiable. The problem with this attitude is that can be, in the long run, devastating to your future financial self. It may seem like because you’re “not as bad as some/most/those we know” people that you’re doing well, but this is a LIE. Just because you’re not doing as badly as others in your spending and money management does NOT mean you’re doing well. There’s a huge difference.

Not doing as bad as others means the hole in your financial ship is smaller than other people’s holes, but it’s still a hole. Doing well means that you are making notable progress – no matter how small – toward your goal. It’s imperative that people understand this difference if they want to truly understand how to pay off debt and keep that debt gone forever.

As I’ve said a million times before: YOU DESERVE BETTER. Make a choice to diagnose and beat the broke mindsets in your life today, and catapult your way to financial peace.

What broke mindsets keep you or have kept you from achieving your financial goals?