Hey guys! I’m sure you are saying to yourself, there is no way she paid off so much money in debt in such a small time. But, yes way! I totally have! It was such a shock for me to tally up that number this morning as I logged into each of my accounts and added the numbers up. The debt I paid off included a personal loan, some credit cards and some of my student loan debt. And before you guys even start: 1. I’M NOT RICH 2. I DON’T LIVE AT HOME… I LIVE IN HOUSTON… IN AN APARTMENT… BY MYSELF..3. I DON’T HAVE A SPOUSE OR A ROOMMATE. 4. I MAKE A SALARY AVERAGE FOR THE HOUSTON AREA… I WORK IN INSURANCE… NOTHING SPECIAL AND I’M NOT IN MANAGEMENT.
First, lets discuss how much consumer debt I started with. Back in the summer of 2019, I tallied up my total debt figures and I was mind blown. I don’t know if I wrote it all down, but I had about $8,000 in a personal loan, about $78,000 in student loans and by the fall of 2019 I’d amassed an additional $5,000 or so in credit card debt because I was low on cash during the time I had my rental property on the market to be sold.
So how did I even decide that I wanted to start a debt free journey? I’ll tell you how… DAVE FREAKING RAMSEY!! Ugh, I don’t remember when… I don’t know how but here I am. And I don’t know if I’m happy that I learned about him or not.. but it really doesn’t matter. I’m here now.
Every since, I’ve been in complete panic mode. Running around like a chicken with its head cut off, trying to figure out, how in the world am I going to get rid of all of this?? I started feeling stressed and overwhelmed.. mostly disappointed in myself. How on earth did it get to be this bad? I stay up late at night watching Dave Ramsey Youtube videos, I’m on Pinterest trying to figure out how others did it, I Google other peoples debt pay off success stories…
I’m so obsessed now… I’m not saying it’s healthy… I had my first panic attack this year and it wasn’t a good experience.
I’m writing this article to inspire the everyday guy or gal who may be going through the same thing… and I want to make this experience better for you. I’m going to be as transparent as I can here to help you on your journey. I’ve compiled a list below with a summation of the steps I took that enabled me to get rid of so much debt, so quickly. Remember, sometimes you’ve got to use what you’ve got to get what you want. If you aren’t familiar, I spent some time a few years ago writing about Unfair Advantages. If you’re curious to learn more, check out my old blog post.
- CALCULATE ALL OF YOUR DEBT– (knowledge is power!) Make an excel sheet or jot a list down everything you have. I printed out bank statements/ loan statements. You can either arrange the debt by interest rate or largest balance.
- NOTICE ANY TRENDS IN YOUR PAYMENT STRATEGIES– For me, I realize I pay my credit cards off every year… and all I do is put money right back on the credit cards… if I’d put that money on my student loans, they may be lower than they were when I graduated.. not higher…
- 0% BALANCE TRANSFERS- I was astonished when I looked at my credit card statements and saw that my interest rate was over 20% although my credit score was nearly 800. When I called my provider to attempt negotiating my interest rate, they told me no and didn’t bat an eyelash when I told them to close my account. For me, that solidified that I was doing the right thing. I’d recently received a notification from another of my credit card companies for a 0% balance transfer and I decided to take them up on the offer. By doing this, I was able to save over $50 a month.
- CONSOLIDATE YOUR CONSUMER DEBT WITH A PERSONAL LOAN- Lets say you have $10,000 in credit card debt spread out over 3 credit cards with an average interest rate of 25%. If your credit and debt to income ration are within a certain range, your local bank or credit union may be open to offering you an unsecured loan with a lower interest rate. I logged into one of my old credit union accounts from years ago and I still had an active account with my minimum $25 savings account balance. I’d used them before for a car loan and an unsecured loan and reached out to see if I’d qualify for one again. To my surprise, they approved the loan. They asked very specific questions like what did I need the loan for and pulled my credit report to verify what my pay off amounts were on each card. Then, instead of dispersing the funds to me, they issued payments directly to each of the credit card companies I owed. (Trust issues, much?) Instead of my 25% interest rate, I was able to secure a 48 month loan at 8% interest or so. I’d save so much money. My monthly minimum statement wasn’t even touching the principal balance on my credit cards. Shocker.
- PRINT OFF YOUR BANK ACCOUNT STATEMENTS FOR THE LAST 3 MONTHS AND YOUR CREDIT CARD STATEMENTS- Where are you spending your money? Mint.com can help you see your biggest spending categories.. what can you cut out of your budget??
- EVALUATE WHERE YOU ARE SPENDING YOUR MONEY– What can you cut out of your budget? Call everyone you share your money with… can you negotiate your bill? Can you threaten to cancel? Can you get a promo rate? Switch companies? Move?
- MAKE A BUDGET!!! What are your needs? What are your wants? What do you have on auto pay? What can you cut out of your budget?
- $0 BUDGET: Dave Ramsey- I calculated EVERY SINGLE EXPENSE I had. Rent, utilities, car insurance, renter insurance, gas, grocery store, fast food expense, dog food, phone bill, Nail salon visit one time a month, hair products (I do my own hair…),
- AUTOMATE YOUR PLAN– Read a book called the Automatic Millionaire: What I took from that read is to automate everything… savings, tithes, bill pay…. Literally… I added up my entire budget for the month and divided it by two. My bills added up to approximately $1400 a month… I gave myself a $50 cushion and so every pay period, $750 dollars goes into my checking account. I took my prior direct deposit and subtracted it by $750 and put the rest into my online savings account. For example, every pay period, you get a direct deposit from your job for $1200. You would put the additional $450 in your savings account to go towards your debt. My company allows me to split my pay roll direct deposit into two accounts, at least.
MAKE MORE MONEY ANNNNNND SPEND LESS MONEY– I’d spent my time cutting my expenses. Now I still felt like I needed to do more. I started trying to figure out, what can I do to add an additional $10,000 in income? When I did the math… that was ONE THOUSAND HOURS OF WORK over the course of the year, making at least $10 an hour… So I’d started filling out job applications at my local grocery store.. Target… and I got quite a few rejections in my email lol. To clarify, I would have needed to work at least 20 hours a week at $10 an hour to make an additional $10K a year (before taxes!) Guys, I was so mad/ frustrated! I didn’t really want to UBER and HIGH KEY, I really didn’t have the energy to work a part-time job… yes… I’m a lazy hustler. So what did I do?…I APPLIED FOR A PROMOTION… AND GOT IT!!! Yep, I sure did… I got a 25% raise anddddd the promotion came with a company car! WOOT WOOT!
- RECOGNIZE YOUR SAVINGS ACCOUNT MAY BE COSTING YOU MONEY– I was earning .01 % interest on my savings account!!! I had thousands of dollars sitting in a savings a account with my local credit union and my interest payment was 2.47 in the month of December…NAHHHHH SON!!!
- YOU CAN NOT AFFORD TO YOLO IF YOU ARE IN DEBT!!- I’m not getting fake nails, going to the hair salon, not going out to the club and if I do I take $10 cash and my ID, you can pregame before you go! I haven’t done brunch, I’m not shopping at Fashion Nova. No big vacations except a trip home a few time/ work related travel. I’m not offering to pay for any dates! Matter of fact, I have been creating a $25-$50 date budget. That’s 2 movie tickets on $5 Tuesdays one week and maybe a dinner date at an okay restaurant. Fuck that. If you are dating anyone who can’t recognize you are trying to do something major, Fuck em. I’ll also try to budget in like 1-2 cheap things I can do alone like skating on the nights they have 21+ up events.
- RE-EVALUATE YOUR 401K CONTRIBUTION– I did not stop contributing to my 401K, but I did drop it down to my company match of 6% instead of 10-15% contribution I had been making… I even considered stealing from myself (especially because the CARES Act took away the early withdrawal penalty for the rest of the year, but Dave Ramsey said, nah. Don’t steal from your future self, boo.)
- PUT ANY EXTRA MONEY YOU GET TOWARDS YOUR DEBT!!! – This is where a large chunk of my debt payoff has come from. I put my Christmas Bonus, Tax Refund $1200 STIMULUS CHECK and a lot of the proceeds from selling my rental property on debt! These large payouts amount to about $24,000 of my debt pay off, so I’d say about $10,000 has come from all of the steps I mentioned above–which is still HELLAS to put towards debt over 6 months! And moving forward, the steps above will likely be the only way I’ll be paying off debt for the remainder of the year.
- TREAT CHO SELF! whenever i get large sums of money, I tend to buy myself one small thing at least. I just recently bought myself a new pair of $100 running shoes, but to be fair I really needed them (I ran almost 50 miles in the month of April 2020 I needed them, because you only get one pair of feet, haha).
By completing all of these steps, I was able to create over $900 additional dollars to put towards my debt EVERY TWO WEEKS!!! Dave Ramsey suggests emptying your savings to $1000 only, I just haven’t been able to bring myself to do that quite yet.. but I did bring my savings down to 5-6 months instead of 18-24 months. Two years of emergency savings was a bit much! Besides, I started having kind of a “fuck this job” kind of mentality, when really I can’t afford to say that!!! I’m freaking poor!!
There you have it, I’ve implemented all of these things at some part of my journey. I try to stay away from telling people to do things that I’ve never tried before. I know it sounds hard and like it may be impossible, but you can do pretty much anything you put your mind to these days. I’d love to hear any suggestions you may have on somethings you’re doing different or if you’ve ever used any of these methods. I think that I haven’t given up because I am on such an aggressive repayment plan, I know I can see the light at the end of the tunnel…
Thanks again for reading. And remember, you can do it!!
astoldbymickb 