If you’re like most Americans, you probably don’t believe that you can pay off your debts at all — let alone within a few years. While everyone has a different situation, please know that paying off massive debt is possible. How am I so sure of this? Well, I’ve done it myself, of course! Here are ten valuable lessons I’ve learned from my debt-free journey:
I was just a freshman in college when I got my first credit card. I just wanted to cover a spring break trip, but it sent me down a financial rabbit hole. It seemed like the credit card companies were giving me free money. But, as I entered the professional world, I had a mountain of debt and no emergency fund to back me up. I didn’t know what to do, but I know I needed a change.
The first step my debt-free journey, was when I decided to start looking at money differently. Before, I used to see money as something only to be spent and enjoyed. That kind of mindset is what got me into my financial rut in the first place.
Instead, I started to look into developing a wealth-building mindset where I would focus on saving my money. This mindset helped me pull myself out of debt while also keeping me on track to build generational wealth.
One misconception people have about being more savings-oriented is that it makes you a boring person. While I did say no to a few vacations, saving my moneyhelped me become more fun. Now, I can travel and shop without having to worry because if an emergency happens, I’ll have it covered!
Besides, there are tons of ways to have fun without spending money. Check out my article on family game night ideas for some great ones!
Every journey needs a guide, and mine just happened to be my budget! Before I sat down and made one, I would end up having to resort to debt just to pay my bills. My budget helped me realize that I was actually overspending by a few thousand dollars! Since then, I’ve never let a month go by without planning out every cent.
If you need a tool to help with your budgeting, my article on making a budget binder can be a huge help.
Smalllifestyle changes can add up in big ways. When I was working out ways to pay my debt, I cut my grocery bill from $800 to $500. In 12 months of saving, that’s $3,600 a year! When you’re paying off debt, every little bit of extra savings counts.
Interested in cutting down your grocery budget the same way I did? Check out my list of apps and websites that give coupons!
Debt isn’t always as simple as giving your friend back the money you owe her from your last night out. When you get to credit card debt, mortgages, and auto loans, things get a lot more complicated.
That’s why I used a debt-elimination strategy, the snowball method. With this strategy, I paid off the smallest debts first and then worked my way to paying the larger ones. Doing this helped tremendously in my debt-free journey because it made paying multiple debts manageable.
The biggest misconception about debt is that paying it off means you have to sacrifice your happiness completely. This is not true, and approaching debt payments this way will only make you dislike the journey even more.
Paying yourself first should be a priority, but it doesn’t always mean what you might think it does. Instead of spending your paycheck on clothes, food, or partying, you should put a portion of it into your savings. By saving your money first, you’re paying yourself because you’re giving yourself peace of mind —the best thing money can buy.
During my debt-free journey, I did a lot of reading and research about money and finances. Many of my friends and family actually ended up asking me for financial advice. I hadn’t realized that so many people are not aware of the importance of saving money
During my debt-free journey, I actually ended up getting laid off from my old job as an industrial engineer. Thankfully, I was smart with my money and was financially prepared for that possibility.
I took that chance to start my own financial education company, Dollars Makes Cents. Now, I provide coaching and services to people who want to become financially independent.
A debt-free life is one where you have full control over your finances and how you can spend your money. Imagine spending your money on travel, good food, and experiences while still paying the bills every month. That’s the kind of life everyone wants, but can’t have unless they go on their debt-free journey. Here’s how you can start yours:
I used the snowball method to pay my debts, but there are other strategies you can use on your debt-free journey. One of them is debt consolidation, which can be useful if you have multiple debts to pay. With this strategy, you take one big debt to pay off your other debts. This helps reduce the number of payments and interest rates to track.
The hardest part about paying off a debt long-term is staying on track. Life will inevitably throw a few challenges in your way during your debt-free journey. Emergency expenses and accidents will happen along the way. Do your best to make sure that you’re still making progress towards a debt-free life in spite of them.
Don’t wait for the perfect time and opportunity to get started on your debt-free journey. You can already start taking the steps towards a debt-free life as early as right now! How? You can join the money squad, and you’ll receive personal finance tips from me every week! The best part? Signing up takes less than a minute and is 100% free!
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Dollars Makes Cents by Shaquana, Financial Coach and Wealth Expert, resources helps professional millennial women of color with the tools and skills they need to eliminate their debt, amplify their savings, and build generational wealth — without having to compromise their lifestyle.
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