How to Gamify Debt Payoff to Make It Fun

What Is Gamification?

Gamification adds game-like elements, such as levels, missions, achievements and rewards, to everyday tasks. Gamification can add excitement and incentive to a host of personal finance goals, like spending less, adding to your savings, tracking your spending and paying off debt.

According to research, our brains are wired to release pleasure chemicals when we accomplish immediate goals. This explains why people are often inclined to favor immediate gratification, like the pleasure you feel when you buy something, over long-term gratification, like getting into shape by going to the gym every week. To make these future-oriented habits more appealing, it needs to be reinforced to us that we're accomplishing something.

That's where gamification comes in. Gamifying debt payoff can turn an otherwise discouragingly large goal with distant results into an engaging, motivating and even fun challenge. The key is to employ small, attainable wins; use visuals; and reward yourself for your progress.

How to Make Paying Off Debt Fun With Gamification

By turning debt repayment into a game, you may be able to stay motivated to pay off debt faster, which can, in turn, save you money in interest over time.

1. Take Inventory of All Your Debt

Before you can gamify debt repayment, you'll need to take inventory of all the debt you owe. Make a list of all your debts, such as credit card debt, personal loans, car loans and student loans. List out each debt's balance, interest rate and the minimum payment due each month.

Understanding what you owe is the crucial first step in managing your debt. Since you're turning debt repayment into a game, consider listing and analyzing your debt your first achievement unlocked.

2. Set Small Goals

After you've created a list of your debts, break your repayment plan down into small, achievable goals. These goals will likely involve making larger debt payments, not incurring any additional debt or both.

How large or small you make your goal payment amounts is a matter of personal preference, but aim for goals that are neither too large to achieve nor too small to make a meaningful impact on your debt.

You may choose to break down your repayment plan into $100 goal increments, or it might make sense to break your debt into 25% increment goals. How these small goals are tuned will inform the timeline of your long-term debt repayment strategy.

3. Reward Your Progress

Now for the fun part: After you've set up your repayment goal milestones, assign rewards for each "level."

One of the best parts about gamification is that the satisfaction of playing the game is a reward in itself. For some, simply creating a debt repayment flow chart and ticking off various "levels" as you stick to your goals will feel rewarding enough to keep you on track toward erasing high-interest debt.

It can also be effective to assign rewards to various milestones in your debt payoff journey. These rewards should be tangible and desirable, but they should also be low-cost and practical to avoid going working against your goals. Opt for low- or no-cost treats that feel luxurious, like buying your favorite ice cream, giving yourself a workout break, binge-watching your favorite series, cooking your favorite meal at home or taking a long bubble bath.

4. Use Visuals

Adding a visual component to debt payoff is vital for harnessing the motivating aspects of games. That way, you'll be able to watch your progress towards your goal.

You can access many free, printable graphs online to chart your debt repayment course. Some printables feature sections you'll fill in whenever you pay a certain amount toward your debt.

A simple Excel spreadsheet with cells for various debt milestones works, too. Highlight the cells as you make progress towards your goal, such as by making a debt payment or by completing a "no-spend" day.

5. Try an App

Gamification apps are a fun and engaging way to visualize your debt payoff. There are a range of apps available for download, each with different game styles and incentives.

• Qapital: This app encourages you to create "rules" for automatic savings. For example, you can designate a "guilty pleasure" rule that transfers money into savings each time you splurge on a particular item, such as a cappuccino. You can create a savings fund through the app and direct the cash you accumulate towards debt repayment.
• Fortune City: To encourage you to record your spending habits, Fortune City counts each transaction you record in-app toward the development of your in-game city. Different payees create different buildings. This is a great way to visually track your spending. You can record the money you pay your debt creditor to watch your debt-payoff "building" thrive.
• Habitica: While the other apps in this list are specific to finance, Habitica lets you gamify anything, including debt repayment and other financial goals. You'll enter good and bad habits into the app and collect gold which can be used to buy swag for your avatar and to further your character's journey in the game.

6. Use Debt Payoff Strategies

Gamification can incentivize making extra payments toward high-interest debt, but you'll still need to decide what order you'll pay your debts down in. Here are two tried-and-true payoff strategies for getting out of debt:

• Debt avalanche method: Prioritize paying off your debt with the highest APR, while still making the minimum payments on other debt.
• Debt snowball method: Prioritize paying off the debt with the smallest balance, regardless of interest rate, while still making the minimum payment on other debt.

Both methods have their pros and cons. The debt avalanche method may save you more money in interest over time, whereas the snowball strategy offers the motivation of watching your smaller debts get quickly eliminated.

What to Watch Out For

Gamification can be a good way to reach your long-term financial goals, but there are also limits to its effectiveness, and even some potential pitfalls that can come from gamifying your debt without staying grounded in your goals for financial stability. Watch out for these gamification risks:

• Overspending: Gamification uses rewards to incentivize paying down debt, which could lead to overspending if you treat yourself every time you make progress. Instead, opt for low-cost or free treats, like sleeping in on the weekend or allowing yourself extra gaming time. These rewards can incentivize your progress without derailing your budget.
• Unrealistic expectations: If money is tight and you're currently struggling to afford the minimum payments on your credit card, personal loan or other debts, gamifying your debt may not solve the root of the problem. If you're buried in debt and unsure of how to dig yourself out, reaching out to a credit counselor may be an appropriate option.
• Lack of real change: Gamification is a fun way to get on track, but true financial health requires building lifelong habits. You'll need to address the root cause of your debt to avoid ending up back where you started. This may mean learning to budget, avoiding more debt, seeking additional sources of income, tracking your credit score and making a commitment to take steps to improve your credit.

The Bottom Line

Paying off high-interest debt is an important step toward financial health. Alongside paying off debt, look into other areas for improving your finances. Monitoring your credit report and keeping track of your credit score for free through Experian can help you locate areas for improvement.

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