Today, I want to share how I got out of debt!
How I Got Into Debt
So, like many people today, I graduated with student loan debt that followed me for years. Even though I had a scholarship and went to a commuter school, I still took out student loans to help with off-campus housing since I could not mentally live with my family.
So, while I only graduated with around $20,000 in student loans (I say ‘only’ because I know some people have much more, and I am grateful), I dug my debt deeper by not having any finance knowledge about credit cards, interest rates, and all the basic finance knowledge that could have saved me many years of financial stress and worry.
Because I lacked basic financial knowledge, I developed the habit of buying things with credit cards - again, not understanding interest rates and holding balances. I was doing a good job meeting my minimum payments on my loans and the cards, but slowly, the debt was creeping higher.
To compound this, I took a job that had me traveling frequently, and because it felt great to put things on my card and then have the company pay it off, I started mismanaging this money, too! I would book hotels and flights for company travel to earn the credit card points instead of paying these things off immediately. Then, I would hold the balance until months later while I ‘managed’ the money to do other things!
The money mismanagement got me into more than $15,000 in credit card debt.
How I Got Out of Debt
My journey out of debt started very unorthodoxly. In late 2022, a friend invited me to take a 21-day financial mindset shift challenge. Every day, there was an activity to help shift your mindset with money. I already dabbled in affirmations and the law of attraction, so my mind was willing to say the least. I also was fed up with struggling. I moved from Michigan, where my rent and expenses were only around $800 a month, to Southern California, where my rent alone was $1600. I started a budget to help me manage my newfound HCOL but I realized I was a paycheck away from ruin - which is my worst fear.
So, when I started the mindset shift challenge, I was ready to make some money moves, literally. I made that challenge and shifting my mindset my priority. I began budgeting and making a real plan to get out of debt and tackle my finances. I took action by applying for jobs that could increase the income coming in, reduced my overhead expenses as much as possible, and, got a roommate. Then, not even a few weeks after that challenge ended, I got the break I needed. I got a job paying in the 6 figure range!
Everything aligned for me to take advantage and begin my climb out of debt, and then the pandemic hit. While the pandemic was horrible in many ways, it was a blessing financially because I took advantage of the no-interest and no payments to start aggressively tackling my debt.
My Debt-Free Life
I’m happy to say I am debt-free and now have a net worth of 6 figures, which is opposite where I was in my mid-late twenties. I still abide by my budget plans; they have shifted to incorporate my long-term goals, like retirement and buying a home.
Now, I am using my experience to help others! If you want to learn more about my strategies to pay my debt and overcome my fear and ignorance of managing money, I’ve put all my knowledge into this Budgeting 101 online course! The course is designed to make starting and maintaining a budget simple, easy, and effective. If you want to start somewhere simple, I also have this helpful budgeting worksheet available for download.
Thanks for reading, and here’s to your financial journey!
-Yael
Summary | How I Got Into Debt
I graduated with $20,000 in student loan debts from taking out loans to pay for off-campus housing.
My lack of basic financial knowledge led to buying things with credit cards and mismanaging my money, increasing my debt and led to more than $15,000 in credit card debt.
Summary | How I got out of debt
I took a 21-day financial mindset shift challenge to shift my money mindset.
I took action to increase my income and reduce my expenses,
I took advantage of no-interest and no payments during the pandemic to aggressively tackle debt.
Summary | My Debt Free Life
I am now debt-free and I have a net worth of 6 figures and growing.
I still follow my budget plans and have shifted my goals to incorporate my long-term goals and savings
I am using my experience to help others by offering a Budgeting 101 online course and a budgeting worksheet for download
Notes: For help with my writing, I asked Grammarly to respond to these AI prompts: Prompts created by Grammarly - "Create a TL;DR."
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