Paying off debt is one of the hardest things most people have to do. It takes a tremendous amount of self-discipline and goal setting to pay back massive amounts of debt- no matter the income. As many people can relate, there is usually too much month at the end of their money; so how in the world are you ever supposed to pay all your bills, much less, pay back debt and dare dream ever to be debt free when you barely make enough money to live.
As the saying goes, where there is a will, there is a way. Sometimes it just takes a little creativity and thinking out of the box to solve your dollar dilemma.
First, let me tell you a little backstory. I am a former elementary school teacher. I have made a ton of financial mistakes, like how I owed $20,000 of negative equity on a Honda; but from each one of them, I learned a little more about myself and life. But thankfully even after mistakes, I have been able to climb out of almost $200,000 of debt. Let me tell you how.
Live at Home
Living at home in your mid-twenties to mid-thirties seems like a death sentence in itself these days. We all grow up and immediately want the “freedom” of our own place. We don’t want our moms and dads knowing every little thing we’re doing, so we opt out and rent apartments.
To go with that apartment, you need things like a couch to sit on, a plate to eat off of and electricity, so you don’t sweat/ freeze to death. All of these things piled together cost big bucks- especially when you don’t really have any bucks to spend. Ironically, your new found “freedom” uses all your cash, and you are then held hostage to your credit card.
My advice, live at home as long as you can and save your money. If living at home is not an option, then get a roommate. Having someone else to split the rent, electric, water bill and whatever else can be such a help.
Get a Side-Hustle
There are 24 hours in a day, why do you only make money for 8 of them? Honestly, it has gotten to the point for me that not having a second job, or side hustle would just be strange. When I lived at home, I didn’t want to spend all of my time hanging around the house, and I had no money to go out, so I got a second job for a few nights a week and on the weekends.
I looked at it as being guaranteed to have something to do over the weekend and as a bonus, I won’t have time to go out and spend money. At the time I did this and lived at home, I was able to save about $11,000 in six months. I ended up buying a house, and one year later I made a 25% increase when I sold it. Talk about an investment!
I figure while I am young and childless, why not just keep busy? As the old saying goes, people who are busy end up getting more done…. Or something to that matter. It is totally true. With working full time and having a side job on the weekends- I have had to become very organized. When I have free time, I do three things: I either meal prep for other nights that I am busy, clean or work on stuff for Chain of Wealth. Since I have such limited spare time, when I do have an extra minute I need to make it count. I am never bored, and I never have trouble falling asleep anymore.
Do NOT use Credit Cards
Only buy in cash, unless you have the discipline to pay off your balance in full every month. This is very important! If you are trying to pay off debt and you don’t make a lot of money, DO NOT:
• Go to the mall- you don’t need any of the stuff there. Don’t torture yourself by “window shopping”. Make what you have work for the time being, besides, in six months, it will be at the back of your closet anyway.
• Use credit cards. Why would you go out with friends to dinner or shopping if you are truly trying to pay off debt? That is just self- defeating. I grew up hearing one money rule: If you can’t afford it in cash, then you don’t need it. Simple as that. It may be hard, but remember how good it will feel to be debt free.
Chances are, you are probably already paying big bucks to be there, so you need to actually be there. Furthermore, with a thousand shows available on Netflix compared to the price of a popcorn and soda at the movie theatre. It is basically a down payment on a house to go see a movie on a Saturday night. Suggest to your friends to come over and bring snacks. This way you all can save. (believe it or not, they probably can’t actually afford going out either)
Or if cocktails are involved, buying at the grocery store is a third of the price of going out. Have a soiree in your pajamas with some cheese and crackers (or beer and video games) and spend $20 instead of $100.
I am so guilty of having gym and spa memberships. The last time I checked I was spending over $100 a month on a spa membership and gym membership- both of which I hardly used. This is over $1,200 a year that I was literally wasting.
Now, I give myself free facials at home and workout at my free work gym. Granted it isn’t as fancy as my gym membership with all brand new equipment, classes, and sauna but considering I only went about once a week, I justified the savings and added the extra money to my debt.
Cutting back on the fun things in life is hard. I have a few more ways to save money, but there is no way around it- it needs to be done. If you don’t do it now, you’ll just have to do it later, after more interest has accrued and you’ll have to be even more of an adult in one, three or five years from now.
Making thousand-dollar student loan payments is not what I expected to be doing five years ago, but I wish I had done it back then. With this in mind, I know for a fact that in five years from now, I will not be paying thousands of dollars to pay off debt, but rather saving thousands of dollars for things that I want. That day will come for me, and if you do some of these things, it will come for you too. You just have to stick to it!
If you are truly motivated to pay off your debt, join my free debt payoff Facebook group. It’s private and only limited to 500 people, so if you want to join, get to it. Here, we talk about paying off debt, celebrate payoffs and motivate each other to keep on going. The best way to achieve your goal is to write it down for yourself and others to see- we might as well make debt payoff a little bit more fun!
Katie Welsh is the co-founder of Chain of Wealth. Follow her journey to pay back her student loans and check out the Chain of Wealth podcast.