Disclaimer: This post may contain affiliate links. This is one way that bloggers make money, but it is at absolutely no extra cost to you if you choose to make a purchase based on my suggestions! If you would like to read more about how this works, check out my Disclosure Policy!
If you have followed me at all, you have heard all about my debt free journey. Maybe reading about my story has made you curious. Maybe you stumbled upon my post about Why You Should NOT Start Your Debt Free Journey and it inspired you, or at least got you thinking. Maybe you have no clue what I am talking about when I say “My Debt Free Journey.” Or you simply want to know how I have paid off $7,250 since the beginning of the year.
It is crazy that this has been my life for 7 1/2 months because I feel like it was just yesterday that I started this journey. But some days it feels like I have been at this forever. I have poured my whole life into doing everything I possibly can to speed up the steps.
I read some great inspiring stories about how people trade in their brand new car for a 10 year old car and they are able to pay off debt super easy.I am so happy for them, but that isn’t my story at all. All of my debt is student loans and I live in an apartment, so nothing big to sell here. There is no acquired money from relatives, just from working a lot. I am not married, so I don’t have anyone else’s income to live off, just my own.
This year has taught me a lot about myself. I have learned that I have a lot more determination than I originally thought. I can also go days without getting more than 5-6 hours of sleep. This year has been a long one, but I am taking it step by step. I am 22, not married, and no kids.
Here are my 7 steps to start paying off your debt:
1) Read Total Money Makeover
You can start your journey without this step. I actually tried it a few times before without actually reading the book. But let me tell you, once I read the entire book in just a few days, I was hooked. I couldn’t get enough of Dave Ramsey and I wanted nothing more to have a bunch of money to just throw at my student loans. I started working ridiculously long hours and started throwing money onto all of my debt. It all started with just one book. I wish I could have just worked my entire life away for a couple months, but I knew that change takes time.
This book covers one of the great methods of becoming debt free. While it isn’t the only option, it is a method that has helped a ton of people succeed in being debt free. Dave Ramsey’s method is the one that I have chosen to follow! If you don’t have the book, you can get it on amazon for less than $20. I promise you that if you read the book completely and it doesn’t change the way you view money, I will send you the money back. (That is now much I believe this book changed my life.) I actually credit most of my journey to the things that Dave Ramsey teaches in his curriculum.
2) I got mad at monthly payments.
I started thinking about all of the things I could do if I wasn’t pouring $1000-$2000 a month towards my student loans. If I wasn’t working 60-70 hours a week, I could do so many fun things. I started picturing my life in a paid off house with no credit card, student loan, or car payments. All of these things that I could do if I had the time and money were motivating enough to me. Take a second to imagine not owing anyone rent or a mortgage payment. You don’t have any student loans. Where is your money going now? Where ever you want it to!
While I never hit rock bottom with my debt, I am still determined to be able to someday work when I want to instead of work when I have to pay all my bills. My goal is to someday work from home and spend all of my time writing. (Cuz how cool would that be.) I started a blog so I could work from home someday, so in the process of working two jobs, I am also trying to build my business. (Find out how to Start your Blog and How to Make some money doing it!) I started my blog at the beginning of this journey and it has been such a great way to document all the crazy things I have done to get to where I am.
3) Figure out just how much your debt total
You can’t start a journey if you don’t know how far you have to go. I recommend a paper and pen to start off. In January, I totaled up all my debt to be a little over $34,000. After a little over 7 months, I am sitting at $27,740 and I have paid off more than $7,200 including my accumulated interest from throughout my journey! (Update: After 17 Months, I have less than 14,000!)
I recommend pulling up each account and writing the current numbers down on paper (or an excel spreadsheet). By writing down absolutely everything that you owe, you are forcing yourself to be real about what your current financial situation is. It is better to be truthful in the beginning than figure more out later on down the road. This is going to be hard.
This total includes anything that you possibly owe other than a mortgage. Credit cards, student loans, medical bills, car payments. Absolutely everything.
Now, create your debt snowball. I suggest that you list them in order from smallest to largest. This is the order that I recommend paying them off in. You can also create a “Debt Avalanche” which is where you pay your debts with the highest interest first, but most people find it harder to stay motivated when they do it. Paying the smallest ones off first allows you to see quick progress. Once you have one debt paid off, move full force to the next one by adding the first minimum payment and anything extra you have a month towards the second smallest payment. It is like a snowball rolling down a hill and slowly getting bigger with time.
4) Set a Goal Date
Originally, mine was my birthday. December 13th, 2017 was the date that I was going to make my last student loan payment. Now, I am going to have to inherit a ton of money or sell some thing super expensive (that I don’t have) to make that goal happen. My goal right now is October 2018 This is still a super ambitious goal, but I am pretty determined to make it happen. That means that I need to make $2000 in payments every month and that is with an educated guess on my tax return next year.
Make your goal outrageously ambitious, but also be realistic. When I set my first goal, I actually had no idea how much money I was bringing in or spending a month. I just knew that “Debt Free by 23” sounded really cool. “Debt Free at 23” still sounds just as cool. I am still hoping to get closer to December than May, but we will see how the rest of the year goes before I make that judgement.
5) Budget for nothing, but also for everything.
This step is the hardest for some people. You have to have a budget. Budgeting can be hard if you have never forced yourself to stick to it. Also, many people associate b budgeting with not letting yourself have any fun. There are a ton apps out there to help you download. I suggest budgeting for EVERYTHING you can imagine ever spending money on. This might cost you more in the beginning, but I promise it will save you a ton of money in the long run.
I budget for absolutely everything imaginable. I have a categories for electronic replacement, contacts, clothing, and hair and nails. Some of these categories I don’t spend monthly, but instead I save up a little cash every month and when I do need to spend it, I have the money there. I have gone back and forth about using sinking funds. Ultimately, if your income is tight, I recommend setting up the sinking funds. If you have a lot of wiggle room in your budget, you may find that you don’t need them for absolutely everything.
I have found ways to cut spending on my groceries, eating out, and pretty much everything. Check out my blog post on how to save a TON of money on groceries!
6) Raise your income.
Dave Ramsey’s quote is to “Live like NO ONE else, so later in life you can LIVE like no one else.” I have worked 60+ hour weeks, I have sold random things online. I have poured hours of my life into my blog. There is no exact answer to any of it, but figure out what works for you.
I have sold things that I don’t need any more. Clothes, electronics, kitchen stuff, and books have been a few of the things that I have sold. In an effort to clean out my apartment, I have sold even more lately than in the beginning. My goal is to get rid of a ton of stuff in the next few months and have a clean apartment!
I got a second job. I started working a full time Monday-Friday job and I am a waitress at night. Usually my goal is to live off my waitressing money and put my whole full time check towards my debts. Being able to live on just one income has sped up my payment process a ton! Working two jobs is not for everyone and it is extremely hard to do if you aren’t dedicated to the process, but other days it is so rewarding.
I have also been maintaining my blog in the process of the debt free journey, which provides just a little bit of extra income right now, but I am hoping to build that even more. Eventually, I want this to be my full time job. If you want to start a blog, check out my tutorial to help you get started!
7) Try to beat the previous month’s payments
This is always my goal. I want to pay more off my debt every single month. Some months it happens and some it doesn’t, but it also depends on the month for me. Some months, I have to pay for a ton of stuff. Other months I feel like I barely spend any money. It also depends on my income for the month since it is different every single month.
I have increased my monthly payments by doing things like a No Spend Month. This is an entire month where you set aside a certain amount of money for things like gas and food, but that is the only money that you are allowed to spend all month. While my no spend month wasn’t exactly what I hoped it to be, I learned a ton from it! You can read more about what I learned in this blog post.
Whatever your goals or your reason for wanting to be debt free, it is something that you have to commit to. If you aren’t ready to commit to 100%, you may see some progress, but I will guarantee that you will lose the motivation to get where you need to be. This is my second try for a debt free journey, but I am actually making a ton of progress this time! I am ready to see what life is like on the other side!
If you haven’t bought Total Money Makeover yet, I strongly recommend starting your journey with that $20 purchase! I hope it will completely change your life like it changed mine!
Update: I wrote this post 7 months into my debt free journey! By the time I had hit one year, I had paid off over $15,000!