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!
I then paid off nearly $7,000 that my parents had in Parent Plus loans from my education.
This added up to nearly $100k of debt TOTAL.
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 breaking six-figures in 2015.
The extra income has allowed me to pay off my debt more quickly.
I’m also blogging and bringing in a few thousand dollars in passive income each month from this website (although I started making money from the site after I had paid off my debt).
Increasing your income is a strategy
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 also knew nothing about blogging when I started my first blog back in 2012.
Everyone has a different strategy for debt payoff and all are good, valid strategies, but I figure that the “increasing income” 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 website, I learned search engine optimization, creating a social media community, a bit of html/css, and WordPress.
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 I also have created this new blog that brings in passive income each month.
Whether you pursue formal education or just Google stuff, learning in-demand skills will prove valuable in increasing your income.
2) I switched into an in-demand field
Despite my background in non-profits and a liberal arts degree, I was able to land a great job in an in-demand field because I had been working on improving my technical skill set and I figured out how to ace interviews.
I also was not afraid to jump into blogging, a field I knew little about.
I now find my career very rewarding and I’m never bored.
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.
At the same time though, maximizing your opportunities at your current employer before you leave is important too.
Many people don’t see the opportunities to make more money and get more responsibility where they are and end up job-hopping more times than they need to. Or they switch jobs but neglect to negotiate their salary.
Others forget that personal happiness is important too. Make sure the job is a good fit before you jump at it!
5) I sought opportunities
This one is probably the most important. I am always on the look-out for new opportunities.
I regularly attend conferences and they often lead to job opportunities.
When I’m at a conference, I talk 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.
I’ve attended conferences for my career in tech and for blogging.
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 also lived with a roommate for years 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.
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 SoFi which is a company that does student loan refinancing.
I paid a 6.8% interest rate on my student loans and wish I had looked into refinancing sooner. I might have qualified for a lower interest rate, which would have saved me thousands.
When you refinance, you put more money each month towards the original balance of the loan because you have less to pay in interest.
So far I’ve helped over 100 readers save thousands on their student loans.
Sign up here for the SoFi questionnaire.
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 or website.
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 from blogging which you can put towards your debt. I made $800 on my blog in January and $1500 on the blog in February, which still blows my mind. I’m up to nearly $3,000 a month right now.
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.
Related: I’ve Saved $26,000 in Seven Months
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 someone flowers 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. Most of the major online shopping retailers offer 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.
Listen to people who INSPIRE YOU
What strategy do you (or did you) use to pay off debt? Any advice for other readers in debt?