Lessons From Paying off $25k of Debt In One Year
This article was first reported in Business Insider about a guy named Brandon. Brandon is just like you and me; he's got an affinity for technology, loves to have a good time, and is a self-described "electronics guy."
But by the early age of 18, Brandon started to creep into debt without even really realizing it.
His story is similar to many of ours. First getting into debt due to his student loans, Brandon finished college with a job in hand. Once employed, he used his income to purchase a car, furnish his apartment, and lived as many young people with extra cash do - carefree and without much thought regarding finances.
While fun, these spending habits added to his financial burden and almost sent him down an irreversible path of being in debt without a clear plan on how to get out of it.
After expressing that he wanted to buy a house (as many of us do), he received some surprising advice from his financial consultant who advised him to drop those plans (for now), move back in with his parents, and pay off his debt as quickly as possible.
It definitely wasn't the advice he was expecting to hear, but after thinking about it for a while, he took the advice to heart and moved back in with his parents.
Make a Plan
To jumpstart his debt-paying plan, he created a spreadsheet with amortized schedules to show his parents when his debt would be paid off and when he would be moving out.
Brandon admitted, "At 25, when you're living at home, it's kind of dorky, but it was for a purpose and I was dedicated to that. Yeah, there were some sacrifices I had to make, like my social life. It was ultimately worth it."
Eyes on the prize (aka keep your priorities in check)
He prioritized his highest debt payments first and lived a frugal life. True to his word, he didn't purchase many new things, go out all night or spend frivolously. He lived within his means to accomplish his goals as quickly as possible.
And at the end of just one year, he had paid off $25,000 of debt.
Don't be silly enough to think it could never happen again
Now living with a clean financial slate, Brandon keeps it real and admits that it would be easy for him to go back into debt.
He's gone through salary cuts where he didn't adjust his spending, he has expensive hobbies like skydiving that require around $5,000 to purchase equipment, and other lifestyle comforts.
The different this time is that he now follows one simple philosophy.
Always keep yourself at a zero balance.
It's okay to purchase things, but before you go overboard, make sure you get back to a zero balance.
The joy of having no debt is greater than getting what you need (promise).
With his debt paid off and a little more wisdom with age, Brandon also keeps a rainy day fund - just in case he feels himself creeping into debt again, even though he's near positive that it won't ever happen again.