Debt doesn’t mean you have to send all your extra cash toward repayments and stop enjoying your life. It is possible to carry debt while still traveling, replacing worn-out clothes and spending time with loved ones on the weekends. Nobody wants debt freedom at the expense of their joy. But joy becomes difficult to maintain when you’re stressed about money. That’s why I’m going to share five tips on how to balance both — paying off debt in a way that maintains a level of financial security and honors what brings you happiness.
The idea that you must sacrifice joy on your journey to debt freedom is common — and, tragically — is often seen as noble. While some choose to take an extreme approach, it’s important to remember that there are other ways to think about your debt-payoff journey.
This is especially relevant as cash flow becomes increasingly limited due to rising costs of shelter and transportation. Housing prices are climbing, public and private transportation is getting more expensive and the overall cost of living continues to rise. Naturally, these higher costs reduce the amount of money available for extra debt payments and fun. But your debt payoff strategy shouldn’t come at the expense of your happiness — and it doesn’t have to be.
1. Define your baseline financial security
People often think of financial security in binary terms — you’re either debt-free and financially secure, or you have debt and are financially insecure. But that’s not true.
Financial security is layered and deeply personal. Instead of seeing it as an all-or-nothing situation, you need to determine what financial security looks like for you based on your savings, income stability and personal needs.
Assess your checking account balance
Before increasing spending on joy and pleasure, ensure you are maintaining a checking account buffer. This is money in your checking account that you do not touch — ideally between 5 percent and 25 percent of your monthly expenses.
Maintaining this buffer is your first line of defense against unexpected expenses. It also builds trust in your ability to spend without draining your account. If your checking account buffer is intact, that’s one layer of financial security signaling that you have room to spend on joy.
Example buffer
If your buffer is $500 and you have $600 in your checking account, you should think of it as having only $100 available to spend.
Use a high-yield savings account
Ideally you should have at least one month of expenses tucked away in a high-yield savings account before making extra debt payments. Over time, work on increasing this savings amount to cover several months of expenses.
The right number for your emergency savings depends on your job security and industry. Some people can find a new job within two months, while others may need five or even nine months. Your savings goal should align with how long it would take you to replace your income in the event of a job loss.
Reflect on your level of community support
If you were to lose your job, could you reduce your expenses by moving in with a loved one? Would you have family, a significant other or friends who could help cover costs temporarily? If so, you may not need as much savings set aside.
Your relationships are an asset, and investing in community support adds to your financial security. While not everyone has the privilege of a supportive network, building one can significantly strengthen your financial foundation.
2. Create a list of your joy activities and their associated costs
We all need a variety of activities that bring happiness and light at different price points. You can put these bits of light for your everyday life on a spending spectrum.
- Completely free activities could be dancing in your kitchen or going to the park on a nice spring day.
- Mid-tier costs might include coffee dates or a couple of streaming subscriptions.
- Higher-cost experiences likely don’t happen as frequently, and can include traveling or concerts.
Reflect on how you bring play and pleasure in your life, and notice which activities do or don’t require spending money. Write down the activities you enjoy for fun and note their associated costs. Aim to have a balanced mix of free, mid-tier and high-cost activities so you can engage in them based on your available cash after covering other necessities and debt payments in any given week.
Regularly reflecting on this list allows you to make intentional choices that align with your financial goals. For instance, you might choose to engage in more free joyful activities for a few weeks to free up extra cash for a future trip, knowing that travel brings you immense joy but also comes with a higher price tag. Alternatively, you might prioritize free or mid-tier joyful activities like reading books from the library or inviting friends over for a movie instead of going to the theater so that you can send extra payments towards debt sometimes.
Keep in mind:
The key is to create this list, revisit it often, and continue updating it as you discover new sources of joy. By having a variety of joyful activities at different price points, you can swap between them as needed and ensure that fun remains a constant part of your life, regardless of your financial situation.
3. Make joy a line item in your budget
Now that you have a list of activities that bring you joy, it’s essential to ensure that joy has a dedicated place in your budget. Instead of viewing joyful spending as something extra, treat it as a necessity. A debt payoff plan that doesn’t account for joy is likely unsustainable, and the only way to stay committed to your financial goals is by making sure the journey remains enjoyable.
Just as you decide in advance how much of each paycheck will go toward debt repayment, you also need to determine how much will be allocated for joyful spending. However, it’s important to remain flexible. Your expenses will fluctuate depending on your social calendar, health and available free time, which will all impact how money you can spend on joy.
Money tip:
Regularly check in on your joy budget and adjust as needed. Last month’s spending may not look the same as this month’s — and that’s okay. The goal is to ensure that your joy budget reflects your current needs, allowing it to evolve alongside your financial situation.
4. Get creative with your money
Being intentional with your finances doesn’t mean restricting joy, it means finding creative ways to experience it while staying on track with debt repayment. Leverage credit card reward points, low-cost community events, service swaps and memberships that provide long-term value to maximize both your joy and financial progress.
- Consider using credit card reward points exclusively for joyful spending. You might decide in advance to use them for travel, holiday gifts or special treats for yourself.
- Take advantage of free community events by searching online for local activities. A quick Google search of “free fun activities in (your ZIP code)” can provide a list of enjoyable, low-cost events. Exploring new experiences in your area can add novelty to your routine and make your debt payoff journey feel more sustainable.
- Barter your skills in exchange for services you want. For example, you might help a loved one with cleaning in exchange for home-cooked meals, which can offset your spending on take-out.
- Look into memberships that provide consistent, low-cost joy, such as a gym, museum or botanical garden pass. Also check whether your library offers free passes to local attractions. Knowing you have a place to go for relaxation, movement or exploration without having to spend extra makes it easier to incorporate fun into your routine.
5. Audit the return on investment of your joyful spending
Not all joyful activities provide the same level of fulfillment, so it’s important to regularly assess what actually brings you the most joy. Notice which activities feel truly rewarding versus those that feel more like obligations or social expectations.
For example, you may have assumed that weekly outings with friends to restaurants or bars were essential, but upon reflection, you might realize you’d rather host a game night at home or enjoy some quiet alone time after a busy workweek. Start paying attention to what genuinely fulfills you and adjust how you spend your free time accordingly.
As you review your budget and debt payoff plan, take time to evaluate your joyful spending and ask yourself whether certain expenses were worth it. Give yourself permission to let your sources of happiness change over time. What brings you fulfillment today may not be the same in the future, so continuously reflect on whether your joyful spending is offering a meaningful return on investment. When something no longer feels worthwhile, explore new ways to experience joy.
Keep in mind:
As you review your budget and debt payoff plan, take time to evaluate your joyful spending and ask yourself whether certain expenses were worth it. Give yourself permission to let your sources of happiness change over time. What brings you fulfillment today may not be the same in the future, so continuously reflect on whether your joyful spending is offering a meaningful return on investment. When something no longer feels worthwhile, explore new ways to experience joy.
Financially prioritizing joy makes debt payoff sustainable
If you decide in advance that joy will always be a priority in your budget, you will find ways to sustain it while still following your debt payoff plan and increasing your financial security. Even with rising costs, you can create the emotional safety needed to make intentional spending choices.
By remaining intentional, you’ll build the capacity to increase your income over time — leading to more opportunities for both joyful experiences and debt repayment. Start reflecting on what activities bring you the most happiness today and ask your loved ones for ideas to expand your list. Move forward with the confidence that you can pay off debt and prioritize joy at the same time.
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