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- During my twenties, I believed that living well involved frequently going on vacations that were beyond my budget.
- I recognized that getting rid of my debts could significantly improve my life, so I created a three-part strategy.
- I began with a zero-based budget, followed by attempting the “debt snowball” and “debt avalanche” techniques.
In my late twenties, living well equated to exploring every corner of the globe regardless of expenses.
This also implied occasionally being okay with delaying a payment or two, fully utilizing a credit card for a vacation, or perhaps liquidating stocks or taking out a loan.
retirement accounts
In my thoughts, travel seemed like an essential requirement—a must-do activity to fulfill my spirit. I was making the most out of life and enjoying it thoroughly.
What I truly enjoyed was the build-up before a journey and the thrill experienced throughout my travels or vacations. For me, travel epitomized sheer enjoyment, and I reveled in it immensely—however, all of that would abruptly end once I exited the aircraft and returned to everyday life.
I became quite skilled at brushing off the pressures of adulthood and handling bill payments. Moreover, I mastered occasionally neglecting my responsibilities and turned into an ace at splurging all my earnings as though they might vanish tomorrow, leaving little room for future planning. This just piled more anxiety onto my plate.
Once I understood that eliminating my debts – totaling $57,000 with $48,000 being from student loans – would result in reduced stress and greater capacity to enjoy life fully, my concept of leading a good life changed.
I used 3 strategies to pay off $57,000 in debt
After a few days of Googling and piecing together a lot of personal-finance research and advice, I crafted a plan to help me get out of debt.
1. I discovered a budgeting method that suited my needs.
There are plenty of
budgeting systems
out there, and you have to spend a bit of time trying them out before you find the one that works best for you. The framework that was the stickiest for me was a zero-based budgeting system, used in tandem with cash envelopes.
To implement a zero-based budget, all you have to do is grab a sheet of paper. List your monthly take-home pay (after taxes) or your take-home pay for a given pay period. Then list the things you typically spend money on in a month, like food, rent, transportation, utilities, and phone plans.
Once you have all your categories written down — make sure to include things like debt payoff or savings — allocate every dollar of your take-home pay to a category until you have no more money left to allocate. The idea of a zero-based budget is that every dollar is accounted for. Use that list to guide your spending for the month.
I utilized Excel for handling my finances and ultimately developed a spreadsheet setup to oversee every aspect, ranging from eliminating my debts to establishing a zero-based budget. My proficiency with Excel grew to the point where I crafted an entire financial control hub aimed at making managing money enjoyable.
Build a Budget
The
best budgeting apps
can assist you in organizing your finances and monitoring your monthly expenses. Leading options encompass
Rocket Money
and
Simplifi by Quicken
.
2. I discovered a debt repayment plan that I could actually follow through with.
The $57,000 of debt I needed to address appeared overwhelming at first, but once I laid it out in writing and created a strategy to deal with it, it felt far more achievable than I originally imagined.
What worked best for me was a mix of the
Debt Snowball” and the “Debt Avalanche
Debts repayment methods. During my financial journey towards eliminating debt, I shifted between these approaches. Typically, the debt avalanche method—where you pay off your loans starting with the ones having the highest interest rates irrespective of their balances—is considered a more economical strategy for managing debt.
3. I carried out the plan and made adjustments as needed throughout the process.
After establishing a budgeting system to steer me and devising a method for eliminating debt, I put the plan into action. Though not always smooth or easy, I managed to get my financial figures into a healthy position, enabling me to make additional payments towards my debts.
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Now I possess a superior method for living healthily.
Ever since I settled my debts, my life has changed dramatically from one of shortage to plenty.
Clearing my debts significantly improved my psychological well-being and enabled me to exit circumstances that were no longer beneficial. This also encouraged me to undertake ventures I would have hesitated to try before. Alongside my spouse, we managed to buy a house; I transitioned from working in finance to pursuing a career in technology, and over several years, I ran my own business assisting others with financial planning.
Even now, I stick to my budget and continue doing what got me out of debt. I keep an eye on how much I spend and make sure each purchase lines up with my principles. Thanks to adhering to a budget, giving priority to my fiscal health, and working towards saving additional funds, I’ve managed to lead a significantly less stressful life.
Not sure how to begin? Think about consulting a financial advisor.
Finding a financial advisor
It doesn’t have to be complicated. You can use SmartAsset’s free tool to find up to three fiduciary financial advisors in your area within minutes. These advisors have been reviewed by SmartAsset and must adhere to a fiduciary standard, ensuring they work in your best interest.
Start your search now.
The article was initially published in March 2022 as part of
Women of Means
a collection centered around women asserting control over their money management.
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