My financial journey started when I graduated college in 2012.
Before that, I thought I had a good idea and grasp on handling my personal finances. Looking back, I realize all the thoughts I had were “normal“.
“you need to borrow money to get ahead”
“a good credit score means you manage your finances well”
“there’s good debt and bad debt”
“everyone has car payments and always will”, etc.
my first debt…student loans.
I remember in college signing for my student loans thinking it wasn’t a big deal. I would just pay it off once I had a job and made money. I had no idea how much I was borrowing in total, how much I would have to pay back, or what the interest rate was ?.
I’m embarrassed to admit that once I graduated, I didn’t have the slightest clue about how much I had borrowed. As soon as the 6 month grace period ended, those loan statements started rolling in. I would open them up hoping that was the last one I was going to see. It ended up being $25k, honestly I’m grateful it wasn’t more.
my first encounter with dave ramsey
Once I graduated and landed my first job, I started feeling like a slave to my student loans.
and I HATED it.
All the hard earned money I had to give up every paycheck would make me cringe. Regardless, I still made the mistake of financing a $15k used car a few months later.
It was during this time that my mom introduced me to Dave Ramsey. She would try and talk to me about him, after she had found him on the radio, but I was reluctant to listen.
Finally, one day she gave me Dave Ramsey’s The Total Money Makeover book and told me she would pay me $20 to read it. I read it in two days and loved it! It all made so much sense and the thought of not having my money go out in loan payments every month excited me.
So I started his plan… BUT I made one mistake.
I didn’t cut up my credit cards. Credit cards I had gotten “just in case of an emergency.” And I ended up adding a bit more to my debt. Having them made me feel like I had a safety net but now I know they aren’t truly necessary.
I started to gain traction
Some time in 2013, I finally cut those credit cards up. Once I got rid of them was when I really started seeing traction. I made a plan and during the next 3-4 years, all of my extra income went straight to debt.
To pay off my debt, I started an Etsy shop, I quit borrowing money, I budgeted every. single. month. & I used cash envelopes.
Slowly, I found ways to spend less money so I had more to throw at debt. I started an Instagram profile and blog where I would post monthly debt payoff updates which would help keep me accountable during my journey.
I became debt free
Finally, in October of 2017, I paid off my last loan and became DEBT-FREE! It took me 5 year, after I graduated, to finally achieve this milestone.
If someone were to come to me and tell me, “I’m in debt, I don’t know how to budget and I need help,” this is what I would recommend:
tips to help you get started
- Figure out your “why”
Be clear on the reason that you want to become debt free. This will help you stay motivated when times get tough.
- Add up all of your debt
It can be so daunting when you know you owe money but don’t know exactly how much. If this is you, you need to face your fear and add it up so you have a number to compare and track month to month.
- Save up for an emergency fund
Make sure you have enough money in an emergency fund before you start throwing your extra cash at debt. The reason is, if an unexpected expense comes up, you want to be able to cash flow the emergency and not go right back into debt.
- STOP borrowing money!
Learn from my mistakes and cut up those credit cards!
- Track your spending
Get an idea of where your money is going every month so you can get better at budgeting. Once you’ve tracked your spending, it’s easier to create a budget and assign numbers to your spending categories.
- Create a budget every month
The more you do it, the better you get at it and the easier it gets. Trust me, it’s very hard to pay down debt without a budget!
- Throw all your extra cash at your debt
- Keep working at it, keep working at it , keep working at it!
You’re going to make mistakes, you’re going to fail some weeks but the only thing that matters is that you don’t give up and keep going.