Surfing the internet for answers on how to get out of debt, you’ll read a lot of just, well, BS. Between people giving impracticable solutions for busy working folks who are living basically paycheck-to-paycheck to people not being upfront about their true experience of their debt-free journey, it can be hard to tell what is real in the debt-free advice market.
Everyone’s debt-free journey is different. We all have different backgrounds, salaries, experiences, and skills. Even more different is each person’s journey to debt and relationship with money. It would make sense that how we get out of debt would differ as well. With that said, here is my journey to becoming debt-free.
Writer’s note: I am not a professional financial advisor. My experience is my own and any suggestions or tips are merely for advice and not of a professional nature
My debt story
To learn about my story of getting out of debt, it’s helpful to know how I got in debt. I got in debt the old-fashioned way: daring to get a college degree, having a chronic illness, and graduating college into a recession. I’ve always been very careful with my money and worked hard during high school to save up as much as I could for college. I chose a four-year in-state university that was my lowest-cost option for a Bachelor’s. Consistently, I was employed throughout my time in college and worked overtime in the summers.
No matter how hard I worked, I couldn’t keep my head above water. Once I got to school, the recession hit hard and the prices went up each quarter. Cost-of-living in Washington state can be absurd. My illness got worse, and my doctor bills started racking up. I was treading water at this point, and still had a little money saved up.
One day, my car was towed unfairly in the middle of the night from in front of my home. The next morning, I became so stressed out by the cost of getting my car out of impound that I suffered from an incredibly scary nosebleed and had to be rushed to the ER. I kissed the remaining money in my bank account goodbye that day and wasn’t able to put anything significant in my savings account for years afterward.
It’s supposed to get better, right?
After college, I saved up money from a pizza delivery job and moved to NC in hopes of finding a great job that paid well and a lower cost of living. Lower cost of living was something very important to me when looking for a new place to live. Being an optimist, I thought I would find something that paid a decent living wage and pay off my debt immediately. Oh, how very wrong I was.
Like most millennials, my early career was riddled with a lack of opportunities in my chosen field. I worked odd jobs for minimum wage. I ended up working a job full-time minimum-wage job during the day and bartending at night. It felt like I was working constantly, yet I still couldn’t make any payments on my debt. It was absolutely exhausting.
The truth is: I had help
I started trying to learn how to code in my time between jobs or on my half days off, but learning is nearly impossible when you’re constantly stressed. I was given the opportunity to go back to school via a code boot camp. Here’s where many people are not honest about their journey to financial stability: I had help. My family was able to pay the cost of my boot camp and I moved in with my now-husband at the time, who covered most of my expenses. As an independent person, I’m almost embarrassed to share, but I am thankful and aware of the advantage I had in this situation.
After I graduated from boot camp, I got a job almost immediately in my new field. I started getting a decent salary, way more than I had ever made before. It felt good, but it took several months to stabilize my own finances and even start thinking of paying off my debt. When you’ve been struggling to make ends meet for a long time, the emotional and lingering financial toll that can have on you is incredible. I was surprised at how long it took to undo the past several years, just to have a few hundred dollars in my savings.
The day I had enough
Once everything was stabilized, I had one day where a light when on in my head. I had been working at my new fancy desk job as a web developer for about a year. I was making minimum payments on my ~$8000 of student loan debt, ~$2000 of credit card debt, and some (new) debt of ~$6000 for tooth surgery I had just had. Side note: another terrible thing about living paycheck to paycheck is putting off necessary things like visiting a dentist, so everything becomes an emergency.
My student loan debt was nowhere near an average of $37,172, but it still felt like a lot. Every payment I made seemingly made no dent on the debt, and I started to get irritated. The day I had enough, I remember coming home from work and immediately getting to work on my debt. For years, I avoided looking at the numbers or the information. The task seemed too big. I refused to accept that it was too big any longer. I made a spreadsheet of all of my debt and found the total. Then, I looked at my expenses, both necessary, and unnecessary, rolled up my sleeves, and started crossing stuff off.
My number one piece of advice for being debt-free
My friends ask me all the time for financial advice. I try to help them through their individual situations, but my advice usually boils down to one golden rule of being debt-free: stop spending money.
Please don’t roll your eyes at this. You’re probably saying right now “oH yEaH, tHaT’s AlL I hAvE tO Do, tHaNks LAdY,” but for the love of everything, stop spending money. Now, this advice is for people who are comfortable. You don’t have to be rich, but just comfortable. My advice is not for people working minimum wage jobs and can barely afford their rent every month. The system is not in your favor in that case, and my best advice to you, if you’re in that situation, is to take care of yourself the best you can.
But if you’re not and you’re making a decent amount of money, like you have some money left over after rent, stop spending it on unnecessary items, going out, etc. Keep one thing that you like to treat yourself with on occasion so you can maintain sanity, such as your morning coffee from Starbucks or a weekly happy hour with your friends. Everything else, however, has to go.
Go through your spending with open eyes
It’s pretty natural to not want to look at what you’re spending. It can be a little overwhelming, and many people attach guilt to their spending. I did this. I would feel guilty, so I wouldn’t look. Remove the guilt from it and go through your finances and really look at how much you’re spending on going out, gifts for other people, treating yourself to random stuff from Amazon or Target, movies, whatever. Heck, even subscription services. Everything that you can live without, look at.
Sometimes, it helps to do this while pretending to be an outside person. Pretend you’re looking at someone’s business or a good friend’s finances. You want to help other people, why not help yourself? Guilt and spending are extremely powerful forces together and can prevent moving forward. If you have friends or family you trust and feel comfortable with, you can also ask them to help you.
Put most of your money in your savings account. Only put what you need for your weekly expenses (gas, groceries, utilities, rent) in your checking account. This way, you’re only spending what you need and you won’t be tempted with the age-old “well I have X amount of money in the bank, so I can buy this unnecessary item,” trick.
Relentlessly attack your debt for your new debt-free strategy
It can be really easy to look at a very large number that you’re in debt for and feel so overwhelmed that it seems pointless to try. I absolutely know that feeling. You don’t have to live with that debt, though. The student loan debt system pretty much prevents you from getting out of that debt if you’re making minimum payments. You have to be relentless about it.
I visualized my debt as a beast that was preventing me from moving forward in my life. I didn’t want to be in debt any longer! For about a year, everything I did was related to my debt. My mindset was that if I could spend a year living the most minimal lifestyle and barely spending anything, I could spend many more years living my best life debt-free.
I got rid of all my subscription services, I stopped going out to dinner and cooked all my meals at home, I made homemade gifts for Christmas. I bought the cheapest possible groceries and utilized coupons when I could. My debt was where all my money (outside of my normal expenses) went. If I made $5 doing something, I’d throw it in my savings account to use on my monthly payments to my debt. Every day, I thought, “how much money can I pay off today?” I was obsessed.
Order doesn’t matter, but it can help
There’s a lot of advice out there about if you have multiple streams of debt, and which order should you pay them off in. Dave Ramsey, for example, has a “snowball method” for getting out of debt. I really don’t think the order at which you pay off your bills matters, as long as you have a plan you can stick to. That said, I did use Dave Ramsey’s snowball method and it was helpful for me to stay on track.
I started by paying off my credit card, then my tooth debt, and lastly my student loans.
The road to being debt-free is rocky, but it doesn’t have to be
Doing what I did and basically living a sad indoor life for over a year to get out of debt doesn’t have to be sad. For many people, they have too much debt to do it in a year. Living a minimal life to pay off debt doesn’t have to be a drag, though. I learned a lot through my year that can make that way of life sustainable for someone with extensive debt.
Potluck days, home hangs, and hikes. Missing your friends because you can’t go out and spend money? Make your friends come to your home. In fact, encourage your friends to pay off their debt with you and make it a group activity. Schedule regular potluck days where nobody is spending more than their normal groceries and alcohol costs can be split. Go on hikes and enjoy the outdoors. There are so many activities that can be done to enrich life through this lean time.
Reward yourself for debt-free milestones
I’m not suggesting you rob yourself of all joys in life. Many articles basically say to do that, but I don’t think that’s sustainable. A good way to make this more fun and sustainable for yourself is by rewarding yourself for small goals. You can set these goals for what you’re comfortable with. For example, I rewarded myself with something small and fun or something I really wanted for every $1000 I paid off on my debt. Usually, I chose something small like a haircut or a day trip somewhere. Whatever you choose, it feels so good to reach that goal!
Change your mindset on your debt
Working towards being debt-free really comes down to a mindset change. Getting out of debt is changing your mindset about your debt, and what sacrifices you must make to get out of it. In the end, you will not view it as a sacrifice. It doesn’t have to be a negative experience, but a learning experience where you’re happy with what you currently have. The connections made with others are stronger. The food you eat is healthier (maybe). By the end of my debt-free journey, I was happy and comfortable with my new life, and the habits I learned have continued on into my minimalistic lifestyle.
If it were trendy, I’d call it a cleanse.