Debt: It's the four-letter word that can wreak havoc on your finances. In our Debt Confessions series, real people share how they tackled debt — from credit card bills to student loans to everything in between — and how it felt to reach their zero-balance goals.
Here, one woman shares six things that helped her fast-track her debt-free date.
I’m still amazed I ended up with $80,000 in debt. I never felt I was doing anything wrong, so to speak. I wasn’t living above my means, going to expensive dinners or driving fancy cars. Plus, I’m a CPA — I know what it means to be financially responsible!
But when I graduated in 2008, I had $53,000 in college debt. And my balances only grew as my adult life began in Detroit. I’d planned on living at home to save money, but after getting engaged I moved in with my fiancé. Then I bought a used car, which I financed for $16,500. Plus, I needed additional classes to take my CPA exam, which meant another $8,000-plus in private student loans — and I racked up a few thousand in credit card debt, too.
At the time I was working as an auditor and paying all my bills on time, but the progress felt slow. Then two years later, I ended my engagement — which, in addition to taking an emotional toll, threw my finances out of whack. I had to take out a cash advance in order to make the rent, which pretty much took me back to square one with my debt. It felt like a never-ending cycle.
Everything changed in 2012 when I heard a finance expert speak at my church. Four years later, I had paid down $80,000. Here’s what I learned.
DISCOVER YOUR 'WHY.'
I thought debt was just a part of reality. Life costs money, so you’ll always be racking up a balance here and there, right? But when I heard personal finance author Michelle Singletary say that when you own your paycheck, you own your life, it finally clicked: When you have no debt, you’re in control.
That’s what I wanted. So I made a vision board that reflected my goals: everything from small details like a more professional wardrobe to bigger things like travel. I looked at it every day, and it helped me remember why I was making sacrifices.
KNOW EXACTLY WHAT YOU OWE.
Before I set a budget, I combed through my credit reports and made sure I understood the details on all of my debts, including the total balances and interest I was paying. That helped me analyze whether I could get better rates — but most importantly, just knowing the numbers helped me feel more in control.
STICK WITH A CASH 'ALLOWANCE' FOR DISCRETIONARY SPENDING.
I was incredibly strict about this. After paying my rent and utilities each month, I kept envelopes of cash for groceries, gas and going out with friends. That helped me make hard choices *and* plan ahead because I had to assess every bit of cash: Is that $10 for happy hour really worth it? I added to my cash pile by working as much overtime as I could.
CHOOSE A PAY-IT-OFF APPROACH THAT WORKS FOR YOU.
Originally, I followed the common advice to pay off the debts with the highest interest rates first. But that wasn’t motivating to me; it felt like I was barely making a dent. So I switched to the snowball method, in which you focus on paying off your smallest balance first. Once that’s gone, you take the money you were using to pay down that debt and move it to the next smallest balance, and repeat. I absolutely loved crossing debts off the list, even if they were small. Identify what feels motivating for you personally, because that’s how you’ll keep going.
SURROUND YOURSELF WITH SUPPORT — EVEN IF IT'S FROM STRANGERS.
Some of my friends became frustrated with me. They’d say, "C’mon, it’s one more drink! You’re being so extreme!" So my friendships changed, which was hard. But I had to stay in the right mindset to achieve my goals. That’s why I’d spend hours a day listening to financial podcasts, reminding myself that other people had taken control of their lives, and that I was doing the right thing for me.
CELEBRATE WHEN YOU PAY OFF YOUR DEBT.
Every time I paid off an individual balance, I’d set aside time and a little money to go see a friend out of state. I checked deals on discount airlines like Spirit all the time, or I’d drive. And after I paid off my total debt in April 2016 at age 29, I celebrated by traveling to places like South Africa, which had been a longtime dream. I did buy a house last year so I can’t say that I’m completely debt-free, but I got a duplex and my tenant covers my mortgage.
Generally, though, the sense of relief and lightness I felt after getting rid of my old debt was a win in and of itself, and it’s something I wanted to pass onto others. That’s why I started a company called Financial Garden that helps parents and schools teach children about financial literacy. I’m passionate about helping the next generation avoid some of the struggles I experienced. I still work full-time, but I want to retire early so I can focus completely on this and pay forward everything I’ve learned. It feels like my life is coming full circle.