How I paid off $47,000 of debt in 20 months
THE STACK #26Four years ago, I got laid off and was devastated because I had $47,328.24 in debt and no emergency savings.
I vowed never to put myself in that situation again and became intentional about my finances.
My journey towards debt and financial freedom is what birth this platform to teach others how to do the same.
In today's STACK, I will share the steps I took to become debt free.
THE STACK
1. I created a plan
I prioritized my debt in order of the debt that annoyed me the most instead of focusing on the debt with the smallest balance or the highest interest rate. This is what I call the Debt Tornado Method.
By focusing on the debt that annoyed me the most, I started to feel the weight of debt being lifted off my shoulders. It also allowed me to let go of the shame and guilt that comes with debt more quickly, which helped me stay focused and motivated.
2. I reflected
When I first compiled my debt, I was shocked! I knew my balance was increasing, but I didn't think it had risen to a whole $47,000.
I had to take time to process how I got to that point.
Doing this allowed me to understand why I acted the way I did with money and my spending triggers.
One of my primary triggers was stress. Whenever I get stressed, I want to book a vacation or buy something new.
Instead of indulging in retail therapy and escapism, I started looking to other avenues to help relieve stress, such as journaling, exercise and therapy.
3. I stopped borrowing
I stopped using my credit cards and did not borrow anymore. I only used cash, debit cards or prepaid credit card.
Doing this helped me see my balance go down faster; it also helped reduce my spending.
4. I increased my income
Getting laid off at the start of my debt-free journey was a blessing in disguise because it allowed me to focus on jobs with a salary that would help me pay off debt faster.
I worked all the overtime I could get and Ubered to help increase my monthly payments.
5. I reduced my spending
I cut back in the areas I was overspending and negotiated all my bills to a lower plan.
I didn't buy any new clothing for almost two years.
6. I got accountable
I had a friend (Hi Chite) that was also paying off debt. We both held each other accountable. We started a podcast and Instagram page where we documented our journey.
Knowing that I had people watching my journey helped me stay motivated to keep pushing even when I felt like giving up halfway.
7. I tracked my progress
I had a hand-drawn thermometer on my fridge where I tracked every 5% progress I made on my debt. Doing this helped me stay motivated, as I was always eager to get to the next 5%.
THE TOOL
DEBT-FREE FOR LIFE CHALLENGE
I know what it feels like to see your world come crashing before your eyes. I never want anyone to have the same experience I had four years ago when I was jobless with a mountain of debt and no savings. So, I created a debt-free challenge for those ready to make 2023 their debt-free year and work toward financial freedom.
This challenge will give you the resources, motivation and accountability you need to pay off debt and stay out of debt.
Some of the challenges we will execute are:
💪🏾 Freezing your debt
💪🏾Optimizing your cash flow
💪🏾Inceasing your income
💪🏾Building an emergency fund
💪🏾Reducing your interest rate
💪🏾Understanding your relationship with money
and so much more.
If you're ready to finally ditch debt for good and say yes to debt and financial freedom, JOIN THE CHALLENGE!
THE ACCOUNTABILITY
Finding an accountability partner is the best way to stay accountable to your goals.
One of the biggest things that helped me stay focused on paying off debt was having someone to hold me accountable.
I could talk to her about my debt without feeling judged and rant whenever I felt frustrated with the journey.
If you have a friend ready to pay off debt, share the DEBT-FREE FOR LIFE challenge with them, and you can hold each other accountable!
THE COURAGE
THE KNOWLEDGE
REVOLVING DEBT
Revolving debt refers to credit that a lender can leave open and allows you to withdraw continuously as long as you don't exceed your limit. With revolving debt, your balance starts from zero and increases as you draw from the account.
Revolving debt stays open even after you have paid off the balance owed.
Examples: Credit cards and Lines of credit
NON-REVOLVING DEBT
Non-revolving debt is a one-time fixed loan that stays open until you pay off the loan balance. The loan balance starts with the amount you borrowed and reduces as you pay it off until it goes to zero.
Your account will be closed once your non-revolving debt has been paid in full.
Examples: Student loans, Car loans, and Mortgages.
Enjoy the rest of your week, and looking forward to seeing you in the challenge.
But until then...Keep Stacking!
about the newsletterEvery Saturday, subscribers will receive one money tip, one tool, one actionable step, one word of courage and learn a new finance term to help you gain control of your finances in less than five minutes.
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