Disclaimer: This is not a post that will tell you just a bit of information about how I eliminated debt and then attempt to have you buy items. This post is exactly how I eliminated all of my debt under 30, and it is solely to help you do the same at whatever stage of life you are in. I hope that you enjoy this post and can take some items from it. These are items that worked for me, though everyone has their own debt elimination journey.

There are many sacrifices in life. In order to gain reward, you must either take risks, or make decisions to truly eliminate any and everything that is not leading you toward your goal. This concept is certainly true in finances. When the term “trimming” the fat is used in finances, it is more or less taking away each and every part that is unneeded and creating your own perfectly fit financial scenario. If an when you truly are ready to make the decision to take away everything that you do not really “need”, this is when you are ready to eliminate debt and grow financially.

I am 28 years old, and I am debt free. I became debt free the day this article was published. I went through a lot to eliminate somewhere around forty thousand dollars in debt that at the time included a car, my undergraduate degree, credit card and even some medical bills. This is something that I am certainly proud of, but as a person who loves to see others happy, I would like to share my story of exactly how I made it possible. I am not by any means your financial advisor, or saying that this is a for sure way to achieve financial freedom. I will be solely telling my story and the ways that I have overcame debt. And as a disclaimer, I did all of this while having an average salary of at or around $38,000/year.

I will break everything down numerically before the end of this post, but first you must look at your lifestyle as well as truly mentally be focused on your goal. Remember, this is how I did this by myself as a single male, not as a couple or as a married man with less expenses, so you can do this on your own if you focus and keep your eyes on the hypothetical prize. And if you have a partner in crime, it will be that much easier. Lets break it down into steps:

Step 1: Set a goal

This is as simple as it sounds. Set a goal that is realistic after looking at the numbers and looking at what you can truly save based on your current wage/pay. If you have a goal to eliminate 15 or 20 thousand dollars in debt, the first step is to look at that number and truly ask yourself “am I ready to do this?” If the answer is yes, you are on your way. Set the goal, create a reasonable time frame to do it and then do the math on how much you’ll need to truly execute on a monthly basis or weekly basis if you would rather do it that way. Creating a reoccurring schedule is what will allow you to meet your goals. Practice does not always make perfect, but it does make routine. Form a routine of knocking out debt or financially meeting goals. Setting a goal and a plan for execution is the key to doing anything, but especially for large lump sums of debt.

In my case, I looked at each and every line of credit I had, prepared a spreadsheet with all of them added up as well as items I had in savings, IRAs (or 401k), other forms of savings and said “I want to have a positive net worth by 30 years of age”. By setting a time limit and a monetary goal, I already had it in my mind that it was possible with numbers. I did not truly aggressively attack this goal until I was 26 and 4 years removed from college. I am now 28 and can say I achieved that goal.

Step 2: Wants vs. Needs

An important step in eliminating debt will be to establish a needs list. Some of these items will be blatant, for example you clearly need to live somewhere. Budgeting and eliminating debt should never put you in an uncomfortable place as far as your livelihood or health. If this is true, that you feel unhealthy or at risk, you have gone too far and need to truly look into how you can save or knock out debt by eliminating other expenditures. Though I said it should not put you in an uncomfortable place as far as living or health, it should put you in an uncomfortable place as far as spending. You should almost be on the cusp each and every time a pay check comes of “I wanna quit this” by the time you are truly sailing in the debt relief plan. Being uncomfortable is when change will come about.

The items I knew were necessities when I began on the path to truly eliminate debt and wasteful spending were: an apartment (1 bedroom just for me), internet (hint: these days we can stream TV, no need for expensive cable), health insurance, a cell phone, transportation and food. Anything outside of those areas I tried to eliminate, as those were expenditures that were not allowing me to knock out debt. Once I consolidated my needs list, I then looked at the most affordable ways to have them. For an apartment, I looked for something that was the lowest price. I ended up finding an apartment for less than $800 within 10 minutes of the downtown area where I worked. I then looked at internet (and TV), with a smaller apartment, I was able to have a decent level of internet that saved me at least $25 to $50 a month on that particular bill.  I had taken the entrepreneur route by this time, so I had an expense of health insurance, for this I did not look for any deal, and it became my second highest bill. And for food, finding a routine food was my ideal choice, I am low maintenance so that was store bought burritos, hot dogs, sandwiches, tacos as well as the occasional going out to eat.

All of this may not be for you. That is why you must allow yourself to have a needs list that makes sense for your sanity. This needs list allowed me to save and this is how:

  • I paid myself $2,400 a month as an entrepreneur (this is likely less than you make at your job)
  • I paid $680 for my apartment
  • I paid $75 for internet
  • I paid less than $200 a month for food and any additional hangouts where food was involved
  • and I paid around $200 for my insurance
    • All of this is relative to your location. The numbers are likely higher in NY, CA, etc, but the ratios are the key to truly making sure you knock out debt because you likely get paid far more than I paid myself.

The above bills amount to only $1,155 give or take around $100 for gas, which is $1,245 remaining each and every month to eliminate debt. Some would say that is crazy, but that is simple math. With over $1,000 a month to eliminate debt, $30,000+ in my case, I estimated less than 30 months (barring any bump in the road) before I was able to be debt free. Once again, I made the goal of being 30 and debt free. I am here now at 28 safely accomplishing that goal.

I cashed out my small 401k to start my self-employment, which also allowed me to eliminate a few thousand dollars that remained on my car. I did not want a car to be on my expenses while starting a business and eliminating debt. That is not something that I would advise, though it worked out perfectly for me. Making only $38k my 401k was not growing, despite investing aggressively. In fact, my 401k collapsed a little with a market scare during my 9-5 days, so I used it to do something I could measure and ultimately decided to use a portion of it to open my own IRA. Be mindful, that no matter what, all you can save in a 401k is $18k a year… that is now less than I am able to save personally and invest how I’d like. Needless to say, I made all of that money back in a matter of months and began re-investing in the market, as retirement must still be a part of your thought process no matter what. I personally figured, I can make all of that back in a matter of months when I have no debt and turn my debt elimination money into investments, savings and more and I was right. I would not advise this for anyone who is over a certain age, as time and being only 26 clearly allowed me to weigh options a little differently.

At the end of the day, I used the same amount that was in my 401k when I “took that chance” to pay for my fiancés engagement ring, so it paid off oh so well!

Step 3: Know where your money is going

Have a very defined budget and do not waver. If you know where each and every dollar is going you will never lose any of them. The problem with many millennials that I have spoken with is that they do not have a lined item budget to truly ACCOUNT for their money. If you are not your own personal accountant, then it’s highly likely no one is going to be that for you at this age. I have attached a snippet of my budget. I recommend to at least do a biweekly budget based on when you get paid and update it based on actual costs. I had the example for each quarter and each year bi-weekly as that is how I arranged my bills and payments of loans and more.

Another helpful suggestion, make sure you set up your bills to work with your plan too. You can easily call in to creditors, banks, electric companies and more and have your bills changed to a certain date so that if flows best for your pay dates and more. I figured that out and made all of my payments on the 15th of the 30th of each and every month. This allowed me to account a bit better and allowed planning to be almost exact as I knew that things would be taken all at once or on the dates I planned for them.

Making a budget is the biggest part of financial planning and eliminating debt. You will begin to learn where you are spending money outside of your budget and begin to eliminate extra spending habits. If your budget is correct, you will see it align each and every time. If you begin to spend outside of it, you will see yourself literally taking money from your own plan and will hopefully learn fast to stop the bad habits. You will be your biggest helper and largest threat to not achieving your goals. Remember, the overall task at hand is financial freedom, you must set yourself free with ample planning and execution on a day to day, week by week, month by month basis.

Check out a basic bi-weekly budget HERE. And please believe I put my fiancé on to this as well and we are going to knock out her student loans next!

Step 4: Create other sources of income

Try to find a secondary and even tertiary source of income that can compliment a hobby you have or even the current profession you are pursuing (for me, I was handy with a camera). I was able to utilize that as a secondary form of income, by taking photos at events and shooting videos for things from personal branding to even weddings, which actually became a nice stream of income. There are several ways to generate new streams of income that you can then use to decrease your debt. For example, by simply using your additional time to be helpful, or even extending what you do at work into a small freelance version can turn some extra effort into extra cash.

As millennials we are not afraid of the “side hustle”. Do not be afraid to take a few hours a week to watch a friend’s kid, take photos, teach/tutor, organize small events, etc. Earning that extra side hustle money will allow you to nip away at the excess fat called debt. Now that I have my MBA, I will continue looking for additional streams of income.  I’m currently pursuing teaching and even speaking engagements, in addition to my camera work, blogs and young professional events. These secondary streams have added thousands to my income and allowed me to put that directly towards my college debt. At one point I was bringing in an additional $3k a month from these other streams of income! Needless to say, those have become my secondary and tertiary forms of income, and most importantly my primary source of debt depletion. This is what allowed me to expedite my debt elimination by 2 years.

There are so many freelance sites at this point where you can find a niche and get paid for it in your spare time. When saving for an engagement ring, I went on upwork.com and grabbed a few jobs to not discontinue my debt alleviation tactics.

Look at it this way, if you can do something here and there that even allows you to make another $500 a month, that will allow you to knock off $6k of debt a year or of savings. That is a lot, considering that the average millennial only has $1,000 in savings.

Step 5: Still remember to save

While doing all of this, make sure to save and think towards the future. A friend of mine once said “What is no debt with no capital”, and that always resonated with me. Capital is key, you want to be able to have the hypothetical rainy day and be fine. During all of this, I still made sure to save for long term plans, short term adventures as well as for retirement. With the cushion I explained earlier, I have taken trips to Europe, purchased an engagement ring for my now fiancé, and much more. You will have cushion, even though you might feel you will not. Know that your money will go further than you think. Your salary, when truly used, can do amazing things no matter how small.

Additional Disclaimer: I was doing more than this

All while I was doing this, I was obtaining my MBA, getting engaged, traveling the world a few times, saving for a wedding, as well as saving to purchase a house (hopefully in the next year). So this is not all you’ll be able to do. You can do so much with your money, just do not allow it to be lost in the sauce! So many people just do not know where their money is going, but you have the knowledge to tell yours where to go. It’s never too late to start and do it all, you can!

FAQ: “Will eliminating your debt decrease your credit score”

Yes, it actually will. My score was hovering around 800 prior to completing my debt and has dropped closer to 750 due to the closing of those accounts. Make sure to have a hold on your credit and have a good mix or this may be even more drastic. I have learned a bit about credit during this journey as well.

Thank you!:

Thanks for taking the time to read my post. I hope that is helpful and inspiration that you eliminate debt no matter your income. Please make sure to share if you can with others that are looking to truly eliminate debt and get serious and selfish with their financial future.