How I Paid Off $30k in Less Than 1 Year
After college I had about $2k in credit card debt that kept growing because I decided to attend grad school for a Master’s degree instead of starting my career in Accounting. This shiny, new degree cost me $25k in student loans.
Once I got my Master’s degree in Accounting, I started working for a public accounting firm as an auditor.
Now that I finally had an income, I was ready to pay off my loans and start fresh!
1. Keep living expenses low.
Housing costs are one of the largest expenses in our budgets. In order to keep my living expenses low, I moved back home with my parents. This allowed me to really make progress in paying down my loans.
I know not everyone is able (nor does everyone WANT to) move in with their parents, but as a single girl in my early-20s, that was one of my best financial decisions.
The key is to keep rent or mortgage expenses as low as possible. You can achieve this by moving to a cheaper place and/or getting a roommate.
Better yet, you might consider house-hacking if you already own your own home. Rent out a room and use the rental income to help pay down your mortgage. Win/Win!
2. Limit eating out.
Expenses related to dining out or ordering takeout are sneaky budget-busters. $10 lunches several times a week add up fast!
I decided to bring my own lunch to work instead of buying from the cafeteria. On Fridays my coworkers and I would venture out to a restaurant for lunch.
If I went out to dinner with friends I gave myself a $20 limit. This wasn’t too difficult to do because I prefer water over any other beverage. Drinks increase your bill by quite a bit!
I don’t believe in squeezing your budget TOO tight, because that’s usually how we lose steam when trying to accomplish financial goals (such as paying off debt or saving money).
Choose what you are willing to cut back on and give yourself the green light to enjoy other things. I still traveled and took shorter weekend trips.
3. Use unexpected money wisely.
If you get a bonus at work, or some other surprise windfall, send the money to debt. If you haven’t been squeezing your budget too tightly, still allowing for some things that you enjoy, you shouldn’t feel without. This makes it easier to put that “surprise” money to debt, as opposed to wanting to spoil yourself with it.
I got into a car accident driving home from the airport (for a work trip) and totaled my car. My insurance paid out a few thousand dollars. I sent all of it to debt.
In my particular case, the interest rate on my student loans and credit cards were much higher than the 0.1% rate on my new car. So I chose to pay off the high interest debt, instead of using the insurance money as a down payment for the car.
That’s my debt payoff story in a nutshell! A couple of years later, I married my husband and we paid off his 6-figure student loans. We used the same strategy of keeping expenses low and throwing extra money to debt.
One of the most important elements of paying off debt is staying motivated. Try visualizing your progress with a debt tracker. You can get mine for free below:
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