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 the blog, Mr. Money Mustache, 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 (R, SQL, Java). 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. If I didn’t make progress on my debt payoff, I was embarrassed. Blogging held me accountable.
If you think you need the extra accountability – sign up for the cheapest web hosting offered through Bluehost and start a debt blog of your own. I wrote a guide, How to Start A Blog of Your Own, to help you get started.
As an added bonus, you could make some extra money each money to put towards your debt. I made $800 on my blog last month which still blows my mind.
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 dashboard. I downloaded the app which is really easy to use.
My favorite feature is the net worth tracker which gives you an accurate picture of where you stand financially. It also tracks your spending so you can see where your problem areas are at the end of the month.
I recommended signing up for Personal Capital. The visual representation of your progress is super motivational.
Save when you spend.
I don’t buy anything online without checking to see if I can get cash back on it. For example, I sent flowers to my grandmother recently and I was able to get $10 in cash back on the purchase.
The cash back program I use is Ebates and it’s free to sign up.
If you download the Ebates browser tool, you can automatically see when any website you are on offers cash back. Even Amazon offers cash back nowadays.
You might as well get cash back on stuff you need to buy anyways and use the savings to pay off debt.
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 sites out there that look up your information and find all debt accounts associated with your name.
Credit Sesame is one of those sites and it’s free to sign up for it.
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. That kind of freaked me out but I’m glad Credit Sesame had that information!
If you want to double check what accounts are open in your name, sign up for Credit Sesame for free.
Credit Sesame will also tell you your credit score and it will email you if anything suspicious is going on with your accounts (such as an account balance change). It’s pretty awesome for a free service.
Related: I’ve Saved $26,000 in Seven Months
Refinance Your Student Loans
I looked into refinancing my student loans and think that is a great option for someone who thinks it will take at least one year to pay off their student loans.
If you’re thinking about getting a better interest rate for your loans, I recommend LendEDU which is a marketplace that lets you compare refinancing rates across the top student loan refinancing companies.
How to Pay Off Your Student Loans (For Real This Time)
If you think you could use 1×1 coaching, I’m also offering debt consulting services to a small number of clients.
I paid off my student loans, my husband’s student loans, as well as our car and credit card debt. I want to help you know what it feels like to be debt free (Spoiler Alert: it’s pretty freaking awesome).
Check out the Millennial Boss coaching page to get on the wait list.
What strategy do you (or did you) use to pay off debt? Any advice for other readers in debt?
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