Cheers! Today I am DEBT FREE.
It feels so good to say that after spending the last year and a half of my life paying off some serious debt.
My debt consisted of a mix of student loans, car loan, and credit cards – specifically the nasty 0% interest credit cards that trap you.
I accumulated much of the debt when I received a big promotion in 2014 and then went on a spending spree that included a big house, car, and dog.
Between that and the student loans, I put myself into $53,000 of debt.
Then, my fiancé proposed and I inherited $36,000 of his student loans!!
Together we owed $89,000!
I didn’t want to get married with debt and created a plan to get rid of my part of the loans right away.
I found inspiration and got moving!
I stumbled upon the blog No More Harvard Debt and was completely inspired. If he could crush $90k of debt in 10 months then I could certainly crush mine. There was no reason that I needed to be living this ridiculous lifestyle in my twenties. So I sought out to change that.
I also found MMM around this time and the post “News Flash: Your Debt is an Emergency” lit a fire under my @ss so to speak.
It took me 18 months to pay off the debt and it didn’t look pretty. I wanted a nice little downward slope the whole time like you see in other blogs but my debt journey wasn’t like that.
I had long stretches of time where my debt flattened out and some stretches where it even increased (such as last fall when I needed emergency surgery). Nevertheless, I was able to tackle $53k of my debt in record time.
Below is a graph of my debt payoff over the last 18 months.
After I finished paying off my loans, I made the decision to pay off my fiance’s loans too. It was a hard decision but one that was right for the both of us.
I paid the $36,000 of his loans within 30 days of paying off mine!
How I paid off the debt so quickly
Now to the important part, how I paid off the debt.
I am not going to start with talking about how I reduced my lifestyle and cut back on consumerism. Obviously, I did those things but for me, it wasn’t the #1 strategy behind how I paid off my debt.
The #1 strategy behind paying my debt was increasing my income.
I graduated from college with a liberal arts degree and three non-profit internship experiences under my belt. I wasn’t the prime candidate for a high-salary job.
Nevertheless, I have been able to go from my lowest of getting paid $9/hr in 2012 to a whopping $200k/yr job presently.
The extra income has allowed me to pay off my debt more quickly.
Now before you click off the page – give me a second to hear me out.
There is much reverence for frugality in the personal finance world. There seems to be a disdain for high income.
I often see in the comments section of popular blogs I read, “well this is impossible for me to repeat because you have such a high income” or better “it was easy for you because of your income.”
In my opinion, increasing your income is a strategy within itself. Just like frugality is a strategy.
I didn’t land a cushy job right after college. I didn’t have the right major or connections to lend itself to a high-paying job. I found a way to get myself to a high-paying job because I knew it was the quickest way for me to achieve my goals.
Everyone has a different strategy for debt payoff and all are good, valid strategies, but I figure that this strategy needs a post too.
How I increased my income to pay off the debt
1) I learned new skills
When I first graduated from college, I had no technical skills. My liberal arts degree taught me to think, to write and to communicate (all things I am grateful for) but I didn’t learn any concrete, technical skills.
That changed when I started creating versus following and teaching myself new skills in that process. Through starting my own travel website, I learned search engine optimization, creating a social media community, a bit of html/css, and WordPress. I was approached by a startup in the student travel space after they found me through my site and further refined those skills by working with them.
I then applied for and landed my dream internship because of those skills which has parlayed into so many more opportunities since.
Fast forward a few years later later and I am now in a more technical role which requires additional skills. I have been pursuing my Masters Degree online, reimbursed by my work, and am learning new technical skills. I believe pursuing my Masters degree helped me land my latest job.
Whether you pursue formal education or just Google stuff, learning in-demand skills will prove valuable in increasing your income.
2) I switched into a higher-paying field
I don’t work in my passion and I am OK with that. I respect others who do but the quickest path to financial independence for me was to work in an in-demand field.
Despite my background in non-profits and a liberal arts degree, I was able to land a job in tech because I had been working on improving my technical skill set and I figured out how to ace interviews.
If you think it’s *too late* to change your field, you’re probably wrong. Increase your skill-set and learn how to sell your unique background to recruiters/hiring managers and you’re golden. You just need one opportunity.
3) I got promoted
Whenever I start a new job, my goal is to get promoted as quickly as possible. I have a few strategies for how you get promoted but the best ones are to give your manager opportunities to see you shine and to stay visible in the office.
Networking with people did not come naturally to me but it’s something that I’ve worked on over time and now it’s second nature. It has definitely helped me get better opportunities.
4) I changed jobs
Wage compression is when a company pays people coming in more money than the people currently in the job because the market rate for the job has changed and internal raises are not enough to keep up.
Wage compression is why the new guy makes more money than you.
Switching jobs is a way to combat wage compression and to get the big increases in the process. The $40,000 increase I got from 2012 to 2013 and the recently $50,000 increase are from employer changes.
At the same time though, maximizing your opportunities at your current employer before you leave is important too. I doubled my income from 2013 to 2016 at my last employer through promotions, big raises, etc.
Many people don’t see the opportunities to make more money where they are and end up job-hopping more times than they need to. Or they switch jobs but neglect to negotiate their salary. I have negotiated my salary each time I left an employer.
Also, flexibility is key. If I wasn’t willing to move for this latest job, I wouldn’t have gotten the big salary increase. I didn’t necessarily want to move but I prioritize financial independence over location at this point in my life.
5) I sought opportunities
This one is probably the most important. I am always on the look-out for new opportunities.
I got my most recent job because I applied for a scholarship to attend a conference for women in tech. I found the scholarship by googling excessively for scholarships/conferences and then applying to this one. I needed to ask for a recommendation from someone at work as well as write a good essay, so it took a little hustle and was awkward to ask for the recommendation but it was worth it.
When I was at the conference, I talked to everyone. From people on the bus to the recruiters in the career booths. You never know where your next opportunity will come from. It’s uncomfortable to put yourself in situations like this but it can really pay off – or at least it has for me.
6) I cut down on spending
Now to the normal debt payoff strategies. I reversed my consumerism where I could and cut down on spending.
I didn’t need any of the material items and I haven’t missed them since. I now live within walking distance to work and it feels great!
I also lived with a roommate which decreased my spending on housing.
And now I’m debt free!
My next step is to decrease my spending while continuing to increase my income so that I can grow our savings faster.
Other ways to get rid of debt fast
If you are willing to put in a little hustle, you can make a significant dent in your loans. Here are a few strategies you can use to pay off your loans.
- Start a blog. Nothing kept me more accountable to paying off my debt than posting the numbers on my blog each month. Sign up for the cheapest web hosting offered through Bluehost and start a debt blog of your own.
- Track your debt payoff. I track my money using Personal Capital which is a free tool that aggregates all of your credit cards, bank accounts, loans and investments into one easy-to-use dashboard. The net worth tracker on their site gives me an accurate picture of where I stand and pushes me to better my finances.
- Save when you spend. You can use Ebates to get cash back on stuff you need to buy anyways and use the savings to pay off debt. If you download the browser tool, you can automatically see when any website you are on offers cash back. Even Amazon offers cash back nowadays. Get a $10 welcome bonus when you sign up!
How to know what debt you owe in the first place
Some of you reading this may not even know how much debt you owe.
There are two free apps I used to track my debt payoff.
First, you might know about Credit Sesame because of its free credit reporting but I actually used it to aggregate all of my open accounts including credit cards, loans, and mortgage.
When I first logged into Credit Sesame, I saw that I had a Bank of America credit card open from 6 years ago that I complete forgot I had. I don’t even have the physical card anymore!
If you want to double check what accounts are open in your name, sign up for free.
Credit Sesame also sends you emails when your account balances change or your credit score increases so you can stay on top of things.
How to track your debt payoff
After you figure out what you owe, track your debt pay down online with Personal Capital.
I started using the Personal Capital mobile app last year and like how it aggregates all of my accounts in one place and keeps my account balances updated automatically.
Plus, watching my net worth go up each month keeps me motivated!
I’ve saved $26,000 in seven months and I’m not stopping!
What strategy do you (or did you) use to pay off debt? Any advice for other readers in debt?
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