How I paid off $25k of debt lightning fast– and how you can too

Growing up, Hollywood had me believing that 20s were going to be the most exciting part of my life. I’d find true love, go on a life-changing trip to Europe and start a successful career all in this magical decade.

If only life was a movie. By 28, I found myself beaten down by the all-star team of credit card debt, student loans and a monthly car payment. Like millions of Americans, my journey towards a crippling debt started once I moved out of my mother’s house at 21. Being overwhelmed by rent and utilities, failing to manage my personal spending — I went back to my worst personality trait; running away from the problem.

Things went from bad to worse when I stopped logging into my checking account to see the available balance. With my head now completely buried in the sand, I continued to use my credit card to make up for the money that wasn’t in my account.

The interest rate on my credit card was exceptionally high, and my student loan program wasn’t so forgiving either. This combined with my love for fashion and eating out build up thousands of dollar’s worth of debt in no time.

If things had continued this way, I would be staring down at potential bankruptcy. So I decided to get my act together, make some life adjustment and used a mixture of strategy to achieve a single goal: paying off the debt before turning 30.

My Debt-Free by 30 Plan

1. I Started by Putting Every Extra Dollar into Debt

I’ve earned quite a few bonuses since starting my career, but this money never lasted for long. And, I’ll be totally honest, all bonuses were not treated equal—some went into a short trip to Miami while others paid for a fancy dinner or two.

Looking back, one of the biggest financial sins was not making the best of these bonuses early on. In the end, every dollar counts. So one of the bigger changes I had to make was dedicate every single bonus I would earn toward paying off the debt. This meant no nice vacations for a while but it was a sacrifice I had to make.

Beyond that, I developed a habit of cashing in any gift card I had and using it for paying off the debt. My overall perspective on extra money had now changed. I was living within my means and using all additional amounts for the account that had the highest interest rate; my student loan (however, I would change this strategy later). Now you can earn some extra cash right from your phone. Here are 25 ways you can (Extra Cash) today.

2. I Gave Myself Small Rewards Along the Way

Dedicating all extra money toward loan payments made me realize what a big difference $5 can make. I became all but consumed with saving any penny I could and started to live a ridiculously minimalistic lifestyle.

Whether you’re trying to lose weight or save money, an extreme change always ends in a disappointment. Giving up spending on everything that makes you happy is never good for your mental health.

Even something like a one dollar chocolate seemed like a luxury to me. But soon enough, I realized this approach was too radical and unsustainable.

It’s the same with any personal goal. Whether you’re trying to lose weight or save money, an extreme change always ends in a disappointment. Giving up spending on everything that makes you happy is never good for your mental health.

So occasionally I would give myself a treat after making a payment. It ranged from baking for myself to joining friends for night out. I would push them for cheaper activities and join only when they agreed. This allowed me to have a social life without being too careless with my money.

3. I Actively Looked for Discounts Before Ordering Online

It’s a simple trick but sadly most people don’t use it. While shopping online, most of us either wait for the retailer to present a discount at the checkout, or we are lured into buying after seeing an advertisement.

But there’s so many ways to save on your bills and purchases. Once you find a retailer that has what you need, open Google in another tab search for “coupon”, “promo code” or “discount” with the name of the said retailer.

Most people don't know there is an outlet store on amazon. They offer up to 50% off on overstock items. And at times you will be able to find a promo code that will make the purchase somewhat cheaper. Small discounts here can accumulate into a pretty significant amount. One can save on pretty much anything by actively seeking discounts rather than waiting for a retailer to hand it to you on a platter.

4. I Used “the Snowball Method” and it Worked

The snowball method is perhaps the most popular debt repayment and for a good reason. At first, I was skeptical how paying the smallest debt first and dedicating minimum payment to other debts will make any difference.

However, once my credit card debt was paid off and I had additional money to pay the car loan —it felt as if the weight of the world had been lifted off my shoulders. Yes. It’s a cliche but it perfectly describes the feeling I had on this fateful day.

The snowballing effect was visible as I moved on from smaller to bigger debts and eventually achieved my dream of being debt-free.

One important thing the snowball method did was set the benchmarks for loan-repayments. Once the car loan was repaid, I knew that I could repay my other loans too.

While I may not have saved the money on the interest rate, the motivational factor alone made the snowball  method worth it. But now you can find cards with 0$ APR for 12-24 months. See these offers from our friends at CardRatings

My Debt-Free Life

My life is all about developing a healthy relationship with money. There’s a fine line between seeing money-spending as pure evil and spurring large amounts as if there’s no tomorrow.

Fortunately, my fight against a mounting debt helped me develop long-term spending habits that help me control my finances to this day. Even though I’ve paid the debt —I still search for discounts, create budgeting goals and save bonuses instead of making a dinner reservation right away.

But this doesn’t mean I don’t occasionally travel to Miami or take my friends out to dinner. After all, what’s the point of life you’re not having a little fun?

Frequently Asked Questions:

1. How effective is dedicating every extra dollar to debt, and how can I start?

Dedicating every extra dollar towards debt is highly effective for accelerating debt repayment. This approach leverages all additional income, such as bonuses, tax refunds, or even cash gifts, to pay down the principal balance faster, thereby reducing the amount of interest paid over time. To start, review your budget to identify any extra income or savings, then prioritize your debts, focusing on those with the highest interest rates first.

2. Can small rewards actually help in managing debt repayment?

Yes, small rewards are beneficial in maintaining motivation during debt repayment. Setting small, achievable milestones and rewarding yourself upon reaching them can create a positive feedback loop, encouraging continued effort towards debt elimination. These rewards should be budget-friendly and not counterproductive to your overall goal.

3. How do I find discounts and deals to save money while in debt?

Actively looking for discounts, promo codes, and deals can significantly reduce spending. Before making any online purchase, search for discounts using search engines or visit coupon websites. Additionally, consider shopping through cashback sites or apps to earn money back on purchases. Signing up for retailers' newsletters or loyalty programs can also offer access to exclusive discounts.

4. What is the snowball method, and why is it effective for debt repayment?

The snowball method involves paying off debts from smallest to largest, regardless of interest rate, while making minimum payments on all other debts. This method is effective because it creates quick wins, boosting motivation and commitment to continue paying down larger debts. The sense of achievement in paying off smaller debts can energize individuals to tackle bigger debts with greater confidence.

5. How can developing a healthy relationship with money aid in maintaining a debt-free life?

Developing a healthy relationship with money involves understanding and managing your finances wisely, recognizing the value of saving, and spending within your means. It requires discipline, budgeting, and setting financial goals. This mindset not only aids in becoming debt-free but also helps in building a solid financial foundation, preventing future debt, and enabling more informed decisions about spending, saving, and investing.