I'm in debt. $52,759 to be exact. Like most new college graduates, my debt was larger than my income and I didn’t know where to start to get rid of it…well, until recently.
When I started my first post-undergraduate job, I quickly learned how much of my hard-earned money would go toward bills. Between a car note, car insurance and other miscellaneous financial obligations, I would barely have enough to last me until the next paycheck 🥴. Living paycheck to paycheck wasn't exactly how I envisioned living my Millennial life of luxury. It dawned on me that if I didn't change my habits Usain Bolt-fast, I would spend most of my adulthood working to pay off debts. So, like anyone with a Wifi signal, I started doing research. I decided that I wanted to be debt-free by the age of 30.
Removing debt takes sacrifice, patience and determination, values that are difficult to stay true to in this microwave era. But I knew that if I wanted to hit my goal of having debt-free 30s, I’d have to get comfortable with delayed gratification, and fast. Fact is, I’ll only see the full benefits of my hard work when my loans are completely paid off. So, to keep me accountable (and drag you along for the ride). Here are five steps you can take to help remove debt.
1. Education
I didn't understand the importance of money before graduating. I always felt that money was endless and I usually spent it on travel, trinkets and food. This was due to naivety and a lack of financial literacy. So the first step you could take to remove debt is to invest in personal finance education. Reading books such as “The Total Money Makeover” by Dave Ramsey and “Retire Inspired” by Chris Hogan and following influencers like Ashley M. Fox and Anthony O’Neal will show you that money is a tool. If you do it right, in the future, you won't have to work for money; your money will work for you!
2. Budget
Ok, you may not like hearing this one, but you have to create a budget. After paying your essential bills, assign a specific amount for groceries, entertainment and special occasions. Sounds complicated, I know. Fortunately, if you have trouble creating a budget, there are plenty of apps and websites that can help. Budgeting not only helps keep you from overspending, it keeps your eyes on the debt-free prize as well. Did I mention “Overspend” is my middle name?
3. Double Up on Payments
Instead of paying the minimum amount on your loans, try doubling your payments. Doubling up on loan payments helps you pay them off faster and leaves you with more money in the long run. Interest rates and fees will no longer apply once the loan is paid in full. I might sound like an infomercial, but we all know that more money in our wallet gives us freedom and time. Sign me up, please!
4. Save
I already know what you're thinking. "Snow, how can I save when I'm already living paycheck to paycheck?"
I hear you loud and clear, but this is where sacrifice comes in. That daily Starbucks iced mocha? Nope. That chili-cheese dog you eat for lunch even though it gives you gas? Nah. It may not seem like much, but these small daily expenses add up. Try skipping coffee and making your lunch for a week and see what you've saved. It may not be millions right away, but the extra money comes in handy.
5. Freebies
Now I'll be the first to admit that I love spending money. But I've had to sacrifice and scale back in some areas. Actually, a lot of areas. But that doesn't mean I can't enjoy fun and entertainment while saving for my goals. Hiking, attending festivals, going to the park, cooking, bike riding and crafts are all essentially free and fun ideas that could replace expensive ones.
The decision to remove debt isn't an easy one. But it's worth it in the long run. Since the original posting of this blog in 2018, I was able to pay off a $15,000 car loan and $10,000 worth of student loans. I had my fair share of setbacks, but following the steps above and staying consistent helped me move even closer to living a debt-free life. Having a written plan and following tried and true steps will help you become debt-free sooner than you think. Is becoming debt-free one of your long-term goals? Which of the steps above will you follow on your journey? Write down where you see yourself financially in three years, follow through with consistent action and watch the magic unfold.