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Yesterday after paying down one bill I crunched the numbers and realized that since January 2013 I have reduced my total debt by $50,724.79. I felt as if I had just finished running the New York City Marathon and had shoved the previous winner right out of a guaranteed podium spot. I won.
I could have kept it all to myself and silently celebrated my little victory, but I decided that this was a great opportunity for you guys to learn about how I managed to pay off such a massive amount of debt in a time when I was unemployed for six straight months and then worked as a temp for nine additional months until it turned into a full-time job less than two months ago.
I’ve occasionally read stories about people who repaid large debts and thought that it could never be me, but beginning in 2013 I challenged myself to see if I too could put up a large number in a short time. I hadn’t really planned on my efforts coinciding with what was probably the most unstable period of my work career, but I made it to the finish line despite those challenges and I did so early too.
Get SMART
One of the most important things that I did was made SMART goals to really lock in on my strategy for how I was going to get to the bigger number. SMART goals have five characteristics: Specific, Measurable, Attainable, Relevant, and Time Bound. We use these tools a lot in the human resources field for annual employee goal setting, so why couldn’t I apply the SMART theory to my debt strategy? SMART techniques will help you break down how you’ll get to the larger end goal. Here are examples:
| NOT SMART | SMART |
| I owe my credit card $1,100. I’d like to pay it off. | I will pay my credit card $200 for the next six months to pay off my $1,100 credit card debt. |
| I need to start an emergency fund. | I will save $100 each pay period for one year to start an emergency fund. |
| I’d love to be as fabulous as Sandy. | I will read Sandy’s entire blog over the next three weeks to learn how she is getting out of debt so quickly and apply all of her guinea pig style tests and techniques so that I too can lower my debt by $50,000+ in two years. |
Okay, that last one was a ringer, but still, you get it. Let’s look at what makes some goals SMART while others are not.
I owe my credit card $1,100. I’d like to pay it off.
Paying off your credit card is an enviable goal. I want to be right behind you in line with that, but where is your road map on how to get there? You know that you owe your credit card $1,100, but how much do you need to pay to get rid of that debt? Are you planning on paying it off all in one shot? Are you devoting a portion of your monthly income to the debt? When do you plan on paying it off? Is this a year from now? How about two years? You need greater detail here.
I will pay my credit card $200 for the next six months to pay off my $1,100 credit card debt.
Here’s what makes this SMART:
Specific: I will pay my credit card.
Measurable: $200
Attainable: Depending on this person’s income, $200 each month is completely doable.
Relevant: Everything here relates to the debt. If I had written, I’m buying a dress so that I can pay off my credit card there would be an issue with relevancy here. What does the dress have to do with your credit card debt? Also, if you know that your debt was $5,000, paying $200 per month really isn’t going to pay it off, now will it?
Time Bound: Six months.
This laid out a very specific road map. Now I know that I just have to make sure that I pay that $200 per month and in six months my credit card would be paid off – provided that I didn’t make more charges to the same card.
I applied this technique by setting annual goals for myself. This year my goal is to pay my total debt down by $28,000. I broke this down even further. I set monthly goals. I went even further than that. I set specific goals for each debtor every single month. In fact, I set goals for this year for every single month all the way through December way back in January. This allowed me to make projections as to when I would hit what number. If I didn’t exactly make it one month I would adjust accordingly for the next month, but I left my December goals intact. If I hit my December goal I would have repaid exactly $56,424.79 plus interest in two years.
What sexy tool did I use to get to my numbers? I’m old school so I used good old Excel. If you don’t have Excel you can use Google Docs. I can look back on years of data and look forward for as long as I have made projections. I’ll let you in on a secret – I’ve already made projections and SMART goals for the next four years. Is this revolutionary? Nope. Can you do it? Hell yes.
Block The Haters, Doubters, Naysayers, Never-Gonna-Get-It People
Sometimes, when you have big, grandiose ideas there are people out there who buzz by your ears and put an idea in your head called You Can’t Do That. It’s not that they don’t mean you well, but they just haven’t reached the same mental space at the same time that you reached it. Let’s not kid ourselves, if I had announced to the world that I planned on repaying $50,000 over two years, more than one or two of you would have been skeptical.
That’s what I’m talking about. Steve doesn’t mean the families ill will, but he’s already thinking that the response was so far from reality that he’s not going to waste another second of his energy. Most days, he’s right. Sometimes though, he’s wrong and the wacky response is on the board. Thinking and saying that you’ll repay a massive amount in a short time might get the same kind of response from your family and friends.
I’ve found that keeping these large goals to myself removes the obstacle of someone else putting doubt into my head. In this case the old saying that a wise man (or woman) keeps his own counsel held very true for me. I just bit my tongue and plowed along. Might work for you too…might not.
If you have positive, supporting, life-affirming people in your circle then keep them close and confide in them. Everyone needs a little someone who is supportive because this won’t be easy, and you’ll need someone who can help you recharge your batteries. For me, going to an annual conference of financial writers did this a million times over.
Don’t Be Afraid To Try Something Unorthodox
This section is where I might lose some of you, but since it was a part of my strategy I’m going to include it. I’ve listened to finance “gurus” who are so far removed from what my daily reality was that I just felt no connection to them. Yes, I read their advice and there were great nuggets included that I could apply, but I wanted to get to the finish line faster than your average debtor. My student loans was one area where I felt that I needed to ignore advice and break with tradition.
It now takes the average person ten years to pay off their undergraduate debt. Ten years. Ten years of interest can be a really high amount. My undergraduate student loans had been locked in with a mind numbing 7.25% interest rate. When I looked at where my payments went almost 50% went straight to interest based on my income contingent payment. I felt like I would never get out from under that debt, and I had graduate loans on top of that.
What I decided to do was assess my tolerance for risk. I have a fairly high tolerance so I did a fairly risky thing. I transferred $8,000 from my student loan servicer, who I hated and onto my credit card. I’ll wait for your collective gasps.
Let me tell you why I did this. First, my credit cards consistently offer me long-term 0% balance transfer offers for between a period of 12 to 18 months. Second, the tax deductible portion of the interest that I was paying wasn’t more beneficial to me than eliminating the interest at all for that period of time. Third, the balance transfer fee capped out at $50. Finally, I converted a debt that would follow me to my grave and reach into my pockets to check if I had any coins left, into a consumer debt that can potentially be discharged. Are you still with me?
I found myself at Chase one day when my dog partially ate some of my money explaining to a wealth manager why I had done this. By the time I finished explaining I could see that the light bulb had turned all the way on in his brain and he was actually nodding in agreement with me.
I am going to caution that this isn’t for everyone. It really isn’t. If you’re transferring more than you can pay off before the balance transfer period ends, you can potentially end up paying a good bit of interest – none of which is tax deductible. What I did with the balance left was simply roll the amount onto another card with a competing balance transfer offer. Frankly, other than about $150 in balance transfer fees I haven’t paid interest on that portion of debt at all and it’ll be gone much faster than if I had kept it with the student loan servicer.
Shit Happens; Get Over It
Donald Trump and I don’t have much of anything in common. I mean sure, we both breathe air, but that’s just about where the similarities end. Everything from his comb over to his tan and boorish attitude makes my skin crawl, but he does have a quote that I like:
What separates the winners from the losers is how a person reacts to each new twist of fate.
– Donald “This-Is-Not-A-Comb-over” Trump
I got into a major car accident when a teenager was texting and driving and slammed into my car going at a speed of what my insurer estimated was over 90 miles per hour. My five year old car that was paid for was completely totaled. Had I planned on that happening? Nope. Did I cry about it? Nope. I got back on the horse and got a new car within 30 days.
When I lost my job last year I didn’t panic. I was prepared enough that I took a much-needed break from work for six glorious months. In that time I was still able to make serious advancements on my debt repayment. I had prepaid many of my bills so that my car note didn’t have to be paid for three months; my student loans were two months ahead in payments; my mortgage was at least one month ahead of schedule and so on.
Sometimes you just gotta let shit go and say ‘to hell with it’ and move on.
– Eminem
Stuff happens. How you react to it is what determines the ultimate outcome. Yes, you can make all of the best plans in the world, but there will ultimately be things that happen for which you are not prepared. It’s okay. Don’t beat yourself up about it. Just adjust and soldier on…and get smarter for the next random thing.
Every Day I’m Hustling
Nothing in the world can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education alone will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.
– Calvin Coolidge
I’ve had many jobs and lately, the pace at which I change jobs has increased. But this section is not about a job, it’s about a hustle. I’m going to consult my local Urban Dictionary here for those of you who are lost. According to one of their many definitions a side hustle is, “Sideline that brings in cash; something other than your main job. Maybe playing weekend gigs or life coaching.”
I will admit that my accelerated debt repayment would not have been possible without my many side hustles. This blog is a great outlet for me, but it is also a side hustle. I generate a bit of money from this blog, but this isn’t my only side hustle. I also sell cell phone cases on Amazon and though my website. Also, if I find time, I am paid to write the occasional article. What you won’t notice here is an hourly rate or a boss other than myself. Some of my side hustles will pay me regardless of how many hours I work. This is what I mean when I talk about separating getting an hourly pay or salary from your ability to make money.
Over the years I have been the queen of side hustles. Let’s list a few starting back from high school to now:
I have sold candy, Beanie Babies, music CD’s (remember those?), costume jewelry, SIM cards, cell phones, home decorating items, adult novelties, sneakers, high end cosmetics, college term papers, and cell phone cases among other things. I have tutored kids in college classes on statistical analysis for a fee. I have been a telemarketer, stock clerk, secretary, data entry clerk, bartender and other things all before I even graduated college. Been there, done that, got the t-shirt.
I’m willing to try lots of different things outside of my job to made additional money that I can push towards the debt. The key here is to look at this extra money solely from a debt repayment standpoint and not as a windfall that you can use to support a lifestyle outside of your regular means.
One of my debts was a $9,000 loan that I had taken from my mother last year. Every time my product sale profits hit $500 I sent her the money electronically. Sometimes I only sent her $500 for the month. Some months I sent her $2,000. Either way, I paid her back quickly, efficiently and with more interest than she would have earned by keeping her money in the bank. Mom is a loan shark but she knows that I’m good for it and I always pay my debts.
I convinced my brother to ditch his old clunker and buy a new car using money that he made off of sub-wholesaling sneakers to me. The result? I sold enough sneakers to pay 100% of the cost of his brand spanking new car in less than two years. The total cost of ownership of the new car was less than one fourth the cost to just maintain and service the old car.
I’m a hustler baby. I just want you to know. It ain’t where I’ve been, but where I’m about to go.
– Pharrell Williams
“I Can’t Do That Like You Rich People”
Someone actually said this to me on a Twitter debt chat hosted by Money Crashers when I mentioned that I had seriously begun making inroads on my debt repayment when I mentally separated my ability to make money from having a job. I nearly fell of my chair after I saw the tweet and then I realized that although she had mentioned me when making that comment, she clearly hadn’t mean to say it to me. For a second I glanced over my shoulder before re-reading because rich and @yesiamcheap did not belong in the same sentence.
But no, it was on my screen. I responded back to the individual outside of the chat with a link to my about me page to show that no, the person behind the Twitter handle and website was and is very far from rich. What I am though is focused like a hungry zombie on the hunt for the next fresh brain to eat. That and I have been on this journey for five years already. I have tried everything to get out of debt and realized that it wasn’t about how many more hours I could work in a day or how many jobs I had.
But she didn’t know me from a can of paint. She didn’t know about me growing up poor, getting hand-me down clothes from the boys in my family and plugging holes in my sneakers. She didn’t know about me dodging bullets and crack vials to make it to elementary and middle school. How could she known that I had been working since I was 15 – often going to school and working another 25 hours each week while I was in high school…or that by the time I was 17 I had two jobs and high school to contend with? How about paying for all of the ancillary things that teenagers need like books and clothes and transportation and food for both my brother and I before I was 18?
What about fast forwarding a decade later to right before I started this blog when I had reached a point where I was afraid to deposit my pay check into my bank account for fear that it would be garnished? Or that I was supporting a family of four – none of which were my children since I didn’t believe that I had a right to have kids when I couldn’t afford them – on a craptastic salary for years before I finally woke the heck up just slightly before maybe jumping off the nearest bridge since the stress was killing me anyway?
The burden of poverty isn’t just that you don’t always have the things you need, it’s the feeling of being embarrassed every day of your life, and you’d do anything to lift that burden.
-Sean “Jay-Z” Carter
I realize that my story isn’t unique and that there are thousands and thousands of people living my past story right this minute, but I am so happy that I am blessed enough to have escaped the thought processes that would have kept me in the cycle of poverty. It’s amazing how much my life has changed in the past two years let alone the past five years…and it all started when I began this blog and was exposed to a world of different people and different thinking where money was concerned. My net worth made a 180 degree turn in that short time, but if I had kept thinking that I needed to add another job like that individual did, or that my income was tied to my employment then I would not have made it this far.
We are trained to trade little bits of our lives in hourly increments for money. We call that our hourly pay or annual salary. But what if I said that yes, $15 per hour is great, or working two and three jobs to make money is honorable, but you can make money outside of your regular employer? What if you controlled how much you were paid by adding a side hustle? I know that this takes a serious mental shift because entrepreneurship isn’t for everyone, but if you have a talent, you should exploit it.
What Else?
I don’t know! I’ve really said all that I have to say here. Beyond making sacrifices that you already know that you must make, I have no additional nuggets of information to add. You already know that maybe you should skip a fabulous vacation to sock money away for your debt. You already know that maybe ditching your expensive phone can save you serious money over the course of a year.
I’ve spoken about how small changes add up over time and even about the lengths to which I will go to fool my family into helping me save money. This site has a ton of resources that will help you cross off a large debt repayment number too. I have been a serious guinea pig for just about everything from negotiating my own debt settlement to skipping health insurance for about a year to save the $7,200 annual premium. Luckily, it was a serious gamble that I took that paid off. I only had to pay for one annual check up out of pocket. That was $250 including blood work. Millions of people go without any health insurance at all and it’s not by choice.
If you hate my site – and honestly, why should you, it’s fabulous – then I’d love to point you in another direction for someone else to help you. You should know that I take a tough love approach to getting out of debt because no one coddled me and you have to own it, internalize the knowledge, sort through the BS finance guru advice from people who have no idea what it’s like to be a broke and hungry college student inventing ways to eat ramen noodles (been there, done that too) to move past it and ultimately conquer your debt.
I hope that you’ve enjoyed this long lesson. Drop me a line sometimes or connect with me on Twitter or Facebook.
Keep the conversation going. Take a listen to me on credit.com talking how I began this journey and some of my additional debt repayment strategies.