Holy shit, I did it.
For literal YEARS, my goal was to pay off all of my debt. The true goal has always been to pay off all of my debt in order to take my blog full time. I’m talking since 2017!
Now, my goal is to live a financially free lifestyle so I’m not having to choose between a job or my life, able to take quality vacations, buy quality items, buy assets, and eventually teach my daughter how to use money to her advantage, too. I’m doing this to have the lifestyle I want.
I kept finding journal entries about how much debt I had and what my plan was. I started at $13,000 and slowly roller coastered my way to $10,000.
I would pay off some debt and then immediately get myself back into debt. It wasn’t until I finally understood how I was mismanaging my money, that I would get serious about becoming debt free.
Here are some steps I took to get me here:
Mindest Shift
Before you begin, you MUST change your mindset about HOW you spend your money and your time. Because, time is money.
The new goal was to stop purchasing the small meaningless items that would break in a week, so that future me could buy the high-end & good quality stuff that lasts.
AKA, no more mindless trips to Target. Absolutely, no buying from the Dollar Spot. I started to find myself not even wanting to go to Target because it was a waste of time and a waste of my money.
Also, be very mindful of how you speak about money. “I can’t afford that” doesn’t belong in your vocabulary. A few of my favorite money mindset affirmations are:
“Money flows to me”
“I am abundant”
“For every dollar I spend, 10 more come back to me”
Know your numbers
Write down all of your debt. Start with how much you owe to each card. That way you know the number you have to work towards.
Next, write down all of your monthly payments & their due dates. You’ll use that when you create your budget.
Cut Costs
The quick version to everything I’m spilling here is to cut costs & earn more money.
Go through the subscriptions on your phone and cancel them!
Settings > Click your name > Subscriptions
Cancel cable & switch to HULU, switch internet providers, call your insurance company and lower it. The list can go on and on and on with how to cut costs. You just have to take action and do not be afraid to ask your providers to lower your bills.
If you don’t ask, the answer is always no.
Create a budget
Write out your budget by due date. Use excel to calculate the amount due each paycheck as well as how much money you have left over for savings.
Go to your bank and open a SEPARATE bank account, title it “Bill Account”. DO NOT GET A DEBIT CARD FOR IT. Set up all of your bills to come out of this new account automatically.
Create an automatic transfer on the days you get paid for the total amount of your bills. You can even split your bills in half if you have a really big bill. Let’s say you have $500 due on the 18th of each month, but you get paid on the 1st and the 15th – on the 1st of each month send $250 to the bill account, on the 15th send the other $250 to the bill account. On the 18th, your automatic payment will take care of itself.
It doesn’t have to be pretty. Here is my actual spreadsheet:
Everything that is due before the 15th gets transferred to Bill Account using my 1st paycheck, same goes for anything due after the 15th.
Numbers used are for example only!
Emergency Fund
I wish I knew about High Yield Saving Account’s sooner! I use Ally.com which gives me 3.75%. Money is liquid and easy access, but not too easy. I actually have to think about it before pulling money out.
Save up some money! If $1,000 seems difficult, try $500.
Learn about money
Read, Read, Read. & take notes. I would read in this order:
When it finally clicked that it was all about INTEREST, I figured it out. I needed my money to make me more money.
Consolidate
This is a GREAT tool if you feel like you might be drowning. A couple options are getting a personal unsecured loan, cash out refinance your home, or even balance transfer to a 0% interest rate credit card. The latter is VERY risky and I would not recommend it if you cannot commit to paying off your debt before the interest is deferred.
Deferred = “at a later time”. Be careful out there!
Earn More Money
This is my favorite. I get a high off asking for more money haha. Firm believer in knowing your worth and adding tax.
If you need to ask for a raise at work, start with laying out your accomplishments and why you’re worth it. Be confident! & remember, if you do not ask, the answer is always no!
Outside of work, start a side hustle. What are you passionate about?
Attack
You know your numbers, have your separate account and you’re making more money. Stop using your credit cards, send all of your extra money to your debt and get serious about it.
Be disciplined.
Invest
Saved the best for last. Start to learn about investing, how interest rates work, compounding interest, etc. Invest in your 401k, especially if your employer matches. Open an IRA and start investing in it. You can start small and I would highly suggest you start WHILE paying off your debt. TIME IS MONEY.
My biggest road block was “should I pay off my debt or save my money?” Ultimately, the amount of money I was paying in bad interest, outweighed the money I was making in good interest. It was a no brainer for me to pay off my debt first.
Good luck!
