As a kid, I was always the one good with money. I started mowing lawns at 12, I got my first summer job at 14, and I’ve pretty much been working ever since. I saved up and financed my first vehicle, and payed it off rather quickly.
When I became an adult, however, I soon learned it wasn’t just about saving money and working. Long story short, I had gotten my first credit card and blew through my savings rather quickly and eventually ended up $20,000 in debt. It seemed like it was so easy to fall into the trap that everyone else seem to be getting into. I simply wasn’t making enough to get by, let alone pay off everything. (keep in mind, at this time I wasn’t even spending on anything unnecessary)
Despite my low income and debt to income ratio, I always made sure I never missed a payment (always paying at least the minimum) and today I have perfect credit to show for it. Eventually, I had everything payed off and was able to start saving again.
Looking back, it’s easy to see the simple mistakes I made – from spending like a carefree teenager making random road trips to California, eating out every night, to just plan careless spending. These spontaneous spending impulses would continue to fuel my debt over the next ten years, with nothing really ever to show for it.
Eventually, I told myself enough was enough, and I got a real job and started making more money. Long hours and lots of hard work later, I managed to pay off everything, buy my first house, and start saving money again.
Over the ten years I was in debt, (considering debt as negative net worth), I had tried several things to get out of debt that I had either read about or thought might work. In reality, the only things that seemed to do the trick is hard work and time. This is what no one wants to hear, but it is the truth. If you really want to become debt free, there is no simple solution other then to make sacrifices, work hard long hours, and prioritize specific aspects of your life. And give it time and persistence.
Still, there are some things you can do to help yourself out; and from the several years I was in debt, this is what seemed to work the best for me.
Stop UNNECESSARY spending
I believe this was my most important step. I sat back, and decided enough was enough. I’d go to the store and found myself spending way more on groceries then I thought I should be. This is where I began to cut back. I tried to only get what I needed and nothing else. I tried to cut back other places as well, and took a step back and tried to figure out where I can cut costs the most.
begin to pay it off
This obviously took me awhile, because I still was not making much. I have tried personal loans to save me money in interest, and they were a good way to do so. I used them to pay off my highest interest balances first (pay attention to your rates) and then paid on my next highest balances, until they were paid off. Then, I’d move onto the next highest and so one. However, I believe I still ended up recharging some of my cards (dumb kid mistake) because I was still struggling with my monthly income to debt ratio. Which leads to the next topic…
Increase income
Easier said then done, yes. But if you continue to find yourself struggling, perhaps it’s time for a job or even career change altogether. You are never too old to learn a skill. And it was my time to enter the grownup workforce, and lean a ‘skill’ (trade). Although I never really seen myself working in trades, it was a great way for me to get a ‘real’ job. I was also able to double my current income, and give me some sense of job security and stability. A lot of trades do not require the long collage hours as professional degree required jobs, and some trades even pay more and are usually in better demand. This was a great way for me to finally get ahead. I still remember my first ‘real’ paycheck, and what a feeling that was!
Pay off all debt, including Auto loans and Start Saving
For the first time in my life, I was finally making decent money and I begin to finally see quicker results. I paid off my schooling for my trade, paid off my remaining credit card balances, and on the third year of doing this finally paid off my auto loan.
Once my auto loan was paid, since I no longer had any debt or unnecessary expenses, it didn’t take me long after that to start saving money again. I was also able to buy my house and this time frame.
Even after starting a career and increasing my income, it still took some time to pay everything off. And you need to be realistic about these expectations. Although it is obvious the more you make in the list that you have the quicker it’ll be paid off, but your cost of living and life essentials also play apart. For me, it took about 3 years to pay everything off and buy (finance) my house. and then an additional year to build up a saving again.