Let’s talk money, honey.
One of the biggest personal accomplishments I have to date is paying off all my debt within 5 years of graduating college! I am talking EVERYTHING – student loans, Jeep & credit cards!
About a year after graduation I was meeting with the financial advisor for the retirement fund my (then) employer participated in. She was asking me the standard questions about my retirement plan preferences and then asked me what my financial goals were.
I responded, “be able to pay all my bills”.
She asked “OK, other than that” & I honestly had to think about it.
At age 23 I had never thought past ‘paying the bills’.
I joking said “well, being debt-free would be nice,” and she responded, “OK, let’s work on that”. – LIKE IT WAS DO-ABLE –
Until that conversation, I had just accepted being in debt for my entire life. It seemed like every adult I knew had debt. How could I possibly avoid this fate?
Before you ask…
– No, my parents didn’t pay for my school, room, board, books, car or car insurance. (I supported myself working 2 part-time jobs during the school year, and full time while home on summer breaks.)
– No, I did not win the lottery, inherit any money, rob a bank, become a scam artist, or marry rich.
– No, I did not get a big fancy high paying job. (In complete transparency, I was even unemployed/started a freelance company for a chunk of time in those 5 years.)
– No, I did not use one of the ‘debt consolidation’ companies we all get those great phone calls from.
Step 1: Evaluation
With the help of the previously mentioned financial advisor, I evaluated what kind of debt I had and put all my loans in order of which I should pay off first. The plan was that once I paid off one loan I roll that payment amount into the next loan (the snowball method).
There are a handful of tactics out there I have heard of about combining debt and moving it to zero APR cards that I never tried. Thankfully I learned at a young age to treat my credit card like a debit card so I never accrued credit card debt more than my monthly income. Those options do exist though and the strategy behind them has helped a lot of people.
I also evaluated what I needed for my emergency fund. There are so many ‘life’ things that can throw you off from your financial goals. Having decent savings can prevent your whole plan from going down the drain. Check out the easy ways I saved here!
Step 2: Self-accountability
Anyone CAN get out of debt, but to do so you need to take a hard look at what got you there. You can’t play the victim or make excuses for how you got into your current situation. You need to be crystal clear about your priorities and not let past financial mistakes become recurring mistakes. “If you are serious about changing your life you’ll find a way. If you’re not, you’ll find an excuse.” – Jen Sincero.
The idea that one day, in my foreseeable future, I could be completely debt-free and have financial freedom, drove every financial decision I made. I started to strategize every paycheck and see how long it would take to eliminate the next loan. It became a game of ‘if I can live a little leaner’ to see how quickly I could achieve my goals. When my husband proposed the timeline was expedited even further because I was determined to not bring any of MY debt into OUR marriage.
Step 3: I obsessively managed my money
“Don’t go broke trying to look rich, act your wage”. This is not the first time any of us have heard that, but I cannot stress enough how important it is to live below your means, not within them.
I lived cheap, and I mean CHEAP. Like how you lived in college cheap. It was a lot of sacrifices. Even when I had a steady job, I still lived like I was in school. I was rarely eating out (and when I did it was someplace with a happy hour special). I was hardly ever getting new clothes (and when I did it was at TJ Maxx or during a HUGE sale somewhere). I lived with roommates, ate a lot of oatmeal & mac n’ cheese, and said no to a lot of fun things. EVERY extra dollar went towards my debt. I am not going to lie to you, it was hard. Every single day I made sacrifices, but I knew if it kept it up it was only temporary.
Step 4: Surround yourself with positive reinforcements
If people were encouraging me to break away from my goals I spent less time with them. You don’t need people hyping you up to waste your money, you need people hyping you up to achieve financial freedom. Set regular meetings with your financial advisor to help keep you accountable. Talk to friends who have or are trying to achieve the same thing! Follow social media accounts that encourage financial wellness. As I mentioned in my blog about being #influenced, who you follow on social media can have a HUGE impact on your behaviors.
Some of my favorites include:
Step 5: Celebrate your wins
It seems very anti-climactic to pay off debt online. No one brings out the ballons or pops the confetti canons you deserve for this accomplishment, so figure out a way to celebrate! Every loan or milestone you hit deserves some positive reinforcement (that isn’t buying more things). I would call my mom, toast to another loan that ‘died an early death’ next time we had friends over, or start researching trips I would take once I was debt-free!
After I was able to continuously make smart financial choices, stick to a strict, but realistic budget, and follow the Dave Ramsey method (which I highly recommend), I was able to pay off all my debt within 4 years.
Once I was debt-free I started to focus on my dreams. The things I had wanted as long as I could remember, but always seemed out of reach. Getting rid of debt gives you the freedom & capacity to put your money towards things that matter to you. Put in the hard work today so you can live the life you want tomorrow.
“Getting rid of debt doesn’t just free up your finances. It frees up your future.” – Rachel Cruze