As of 11/2021, I basically have $160k of debt due to student loans, private loans, and credit card balances. This page will be about my debt free journey, the lessons learned, and the things I did on a yearly basis (semi-annual if the pay down is faster than imagined. Trying not to make this page too long).
Before you jump down to the astonishing numbers…lemme explain. The federal and private loans came from getting my 4-year Bachelors degree in Biology with a Chemistry minor at Old Dominion University. I did not understand the powerful impact that interest has. I would be less in the hole if I used my extra money to go toward the student loans instead of a car loan for a car that I ended up totaling -_-. The federal loans, thankfully, did have a pause on interest for a while because of COVID. The personal loan was to fund housing for a 13-month program at Vanderbilt University Medical Center to get a certificate as a Medical Laboratory Scientist (MLS). I had saved enough for the tuition but instead of replenishing my savings during the program, I just depleted it in the name of education and exhaustion -_-. I was able to get 0% interest on the personal loan because a family member made the loan. The credit card debt came from understanding its use…and still misusing it lol. At first the plan was to pay off whatever I spent the same month because the goal was to build credit. Overtime I grew tired of not being able to afford what I wanted. So…charge it!…I will figure it out later. The limit on it was $5,000 and I was $300 away from that in December 2021 so yeah.
I honestly did not become motivated enough to start the debt free journey until I became serious about my financial freedom journey. That seriousness came from falling into what I deem to be the lowest point of my financial life. I was transitioning jobs October/November 2021 but it fell through. I was jobless for the first time since high school. I realized how volatile my finances were. I was living check to check and it was something I always knew and claimed to be actively combating but how could that have actually been true when “charge it” became my mentality? I ended up getting money from family, jumping into survival mode to be able to afford the apartment I just moved into, etc. It was stressful to say the least. So “how do we avoid this happening again?” became the question I spent December solving.
Solution being:
Budget better
I was in the “track expenses” part of budgeting for like 2 years. I needed to finally move to a place of dictating where my money goes and holding myself accountable for not meeting expectations. I still do not feel like my plan matches my financial freedom goals…but I have to start at some point.
Increase income
I became a traveling MLS which doubled my income. I also Uber part-time which means that my time and dedication are the limiting factors for my earnings because Uber is endless.
Diversify my income
Before, my only income was my Full-Time job so losing it meant losing my way of life honestly. So now I have 3 sources of income. Traveling job, Uber, and this blog.
Have a plan
I have always known what I wanted to do but I have never sat down to figure out what that looks like. So from the outside looking in, I was just talk. But in this moment in life I realized that what I want will not happen simply because I will it to. I have to put forth some action. My plan is to do the avalanche method which means I pay off debt in order of highest interest (saves money long term) instead of the snowball method which is paying debt in order of lowest balance (gives more gratification to keep you motivated). Either method requires you to also pay the minimum balances on debt that is not the focus.
This means my order of debt pay off is: credit card, private loans, federal loans, and then personal loans. Life happens and I just might acquire a new debt. I will be upset, bounce back, and throw it into the rotation but acquire it only because I HAVE to.
Have an emergency savings
Life happens bro. Who knew the job would fall through? I surely did not because I would have definitely done life differently. Who knew my car would have gotten totaled? I surely did not because I would have definitely done life differently lol. So have a cushion. This could be a month, 3 months, 5 months, 8 months, 12 months of expenses (basic bills) or of income (monthly take home). Whatever makes you comfortable without it becoming an excuse not to start paying off debt. Meaning saving 12 months sounds great but it will take longer than 12 months to save realistically because you still have your bills, debt, and life expenses. During that time of saving you are postponing the impact you could have on paying down your debt. So be realistic and be honest with yourself.
I want to build a savings worth 1-month of expenses + deductibles (because those who know me know that my car insurance is used…often) + 5% of whatever that total number is to account for inflation and provide extra mental cushion…then I rounded that to the nearest hundred because who wants to deal with decimals?
Accept the process
I want a magic wand that rids of all the debt so I can be done. Irritatingly enough, no such thing exists. It took 6 years to get the debt. It will take time to rid of it too. I think in months instead of weeks or checks so a month of bills at a time. A month of income at a time. A month of decisions at a time. That is all I got.
9/2020
| Debt | Balance | Interest |
| Credit Card | $897.48 | 25.24% |
| Discover Student Loans | $75704.85 | 8.44% |
| Federal Student Loans | $27458.03 | 4.29% |
| Personal Loan | $10000 | 0% |
| Sallie Mae | 42704.64 | 10.13% |
| Total | $156765 | 7.73% |
- Goals
- Get used to the “adult” working world
- Lessons
- I quickly understood my job would not pay enough for minimum payments let alone extra payments so I picked up a part time job to supplement
2/2021
| Debt | Balance | Interest |
| Discover Student Loans | $75960.50 | 2.41% |
| Federal Student Loans | $27,458.03 | 0% |
| Personal Loan | $10,000 | 0% |
| Credit Card | $0 | 25.24% |
| Sallie Mae | 43490.14 | 9.88% |
| Total | $156,908.67 | 3.91% |
- Goals
- To start paying down debt but instead I spent the entire year mentally getting myself ready to say “ok. go.”
- Consolidate the private loans
- Lessons
- Truly understood that a credit card is supposed to be used as a replacement for cash, not act as an emergency or splurge fund
- Increasing income is the fastest way to pay down. Passive income is the least time consuming (over time) way to increase income
- My uncle said that if I am going to invest while in debt then I should only invest in something that is going to have a higher rate of return (ROI) than my debt’s interest. Otherwise, I’ll never really be making a profit so I went back and added the overall interest on debt for every year.
- Decided I wanted one job that paid my bills, extra debt payment, and left a little to splurge so I changed jobs
1/2022
| Debt | Balance | Interest |
| Private Student Loans | $117,385 | 5.24% |
| Federal Student Loans | $27,458 | 4.29% |
| Personal Loan | $10,000 | 0% |
| Credit Card | $3,763 | 25.24% |
| Total | $158,606 | 5.22% |
- Goals
- The achievable goal is to build the emergency fund, create an opportunity fund for investments, and pay off the credit card (and keep it paid off).
- The ambitious goal is to do all that AND pay 1/5 of my overall debt.
- Invest in my knowledge via time more so than money not to say money won’t be spent.
- Learn how to calculate the interest on my overall debt in an effort to try the ROI rule my uncle said (try in theory not real life. Just run calculations)
- Lessons
- Learn how to stretch a realistic goal so that it is still motivational instead of creating unattainable goals.
- I met all goals and was $7000 short of paying 1/5 my overall debt. 1/3 of those payments went to interest though so it is a little disheartening.
- Realized my extra money should have been going toward the federal loans since all payments would go toward principle
1/2023
| Debt | Balance | Interest |
| Credit Card | $0 | 27.99% |
| Private Student Loans | $105020 | 5.24% |
| Federal Student Loans | $27028 | 4.29% |
| Personal Loan | $10000 | 0% |
| Total | $142048 | 4.69% |
- Goals
- Pay off the federal loans
- Refinance private loan for lower monthly payment and lower interest rate
- Keep credit card balance at 0 (it is still being used, it just gets paid off every month)
- Find new ways to optimize my credit card with the rewards programs that exist
- Lessons