Three little-known strategies I used to pay off my $30,000 debt
Are you struggling with a debt it feels like you can never possibly pay off? Or even frustrated at living from pay check to pay check, and would love to find more money to spend every month?
Financial coach Jill Davi from Abundant Finances knows how it feels to struggle with money – and what it takes to escape that financial trap.
She explains how she managed to rack up $30,000 of debt, and the three little-known strategies she implemented to clear that debt and acquire healthier money habits.
I went from $30,000 of debt to six-figure savings
Over a decade ago, I found myself in quite a financial mess. I’d racked up $30,000 worth of credit card debt and couldn’t make heads or tails of my finances. And like an ostrich, I buried my head in the sand hoping my financial problems would magically disappear.
But unfortunately, life doesn’t work that way. At some point, you’ve got to pay the piper (or pay a bankruptcy attorney).
Creditors were calling and I eventually decided to fight back. Face the music. Figure out what was coming in, what was going out and map out an escape plan.
I needed to earn more and I needed to get my cash flow under control. And I needed to summon all my inner courage to do so. And I did. After 18 months, I proudly paid off every cent, and have now been consumer debt free for 11 years.
In that time I’ve gone on to amass multiple six figures in savings (not including 401k), kicked my habit of under-earning, launched a thriving profitable coaching business and bought a home. But none of this would have been possible if I was still stuck in debt, under-earning and feeling the despair of suffering alone.
A bit of background on my situation
I’d love to share how I achieved this with you. But there are a few things you need to know first.
I always find when people write these type of articles, they discount some of the assets they had going for them before they put their new actions/weird tricks into action. Assets that unless you too have, mean that their solutions won’t work for you.
So, to give you a complete picture, here’s the background to my situation, with factors that influenced what I did and was able to achieve.
First, I was in my 20s, so my finances weren’t all that terribly complicated. No kids, no pets, no husband. If your life is more complicated financially, you’ll have to commit to scaling back dramatically. Many money woes stem from some form of financial clutter. This makes change more difficult because we’re overwhelmed with the complexity,
Next, I was living in New York City, a city of plentiful job opportunities. In other words, geographically I lived in a great place to kick my under-earning habit.
Many women I speak to are doing the best they can with the money that’s coming in. Their issue is really under-earning. This happens for a few reasons:
- They don’t live in areas where wages are typically all that high.
- They work in industries where wages are historically low or depressed
- Their specialized skills are simply not in high enough demand to command high wages.
- And of course, we get paid 75 cents on the dollar for the same work as men.
Luckily I had a specialized skill set in market research that was in high(ish) demand at the time. So when I woke up to the fact that I was underearning, I immediately decided it was time to look elsewhere for a new, higher paying job.
Three little-known strategies I used to pay off my $30,000 debt
So those were the assets I started with. Now here’s what I did to dig myself out of the financial hole.
1) I created a “Play Money” budget
When I was creating a budget for myself, I realized the only number I actually cared about was: “After all my fixed bills are paid for, how much money do I have left during this pay period to play with (aka spend as I please)?”
In other words, I was trying to figure out how much money I really had left to spend after all my responsibilities were paid. To do this, I would pay only the bills that were due during my paycheck period, and kept a running tally on how much “Play Money” I had left over until I was paid again.
I’ve heard this described as a “zero-sum” budget because I was working ONLY with cash and checked my account balances daily to make my spending was up to date.
2) I blamed everyone else for my problems
Stay with me on this one. Every self-help book on earth tells you to take responsibility for your problems, which is excellent advice. Except women tend to take on too much responsibility for problems that are larger than ourselves. For structural problems, economic issues and family dysfunctions.
The key to making change is to create some emotional distance between you and the problem. In fact, there’s a whole area of psychology called “Narrative Therapy” that helps people to disassociate from their issues in order to make powerful breakthroughs in solving them.
When it came to my finances I asked myself: “How much of this is my fault?” I did my research on the credit industry (and it’s predatory practices at the time). I reflected on my family history and how I saw my parents manage money growing up.
We didn’t speak about money yet it was always a source of pain and stress. I also looked critically at how my friends and other 20-somethings around me were handling money.
When I did this exercise I was able to realize that, while I was ultimately responsible for the financial decisions that caused my issues, many external factors heavily influenced those decisions. The access to credit, little financial education, plus the “live for the moment” mentality of my family and friends contributed greatly as well.
When I started realizing this, I was able to stop beating myself up and start taking powerful actions. “Given all these external factors,” I told myself, “it’s totally understandable that you’d be in this mess.” And I felt relieved.
When you distance the “You” from your problems, you free up energy to make progress towards changing things.
3) I reached out to my friends, colleagues and associates
I’m not suggesting you ask people for money to pay your bills here! But instead for support, for guidance, jobs, opportunities and resources; the worst thing you can do when you’re staring down a big ole pile of debt is to isolate yourself.
One thing I know for sure is that everything you need (a book, a website, new job opportunities, support) all show up if you spend time with other people and ask for what you’d like.
I realized I was under-earning after looking at all my bills in one place. It was terrifying. My debt was going to continue to soar if I didn’t start paying it down and earn more. A week or so later, I was out having drinks with an old coworker I hadn’t seen in a few months. I didn’t talk about my finances, but I did mention I wasn’t all that happy in my current job.
The next morning, my old coworker was riding the elevator with the head of the marketing research department at her firm. The woman mentioned to my friend that one of her managers was leaving asked if my friend knew anyone. Because we had just gone out for drinks the night before, my old coworker recommended me. Two months later, I was hired at the highest salary I’d ever earned.
Remember, everything you need is well within reach. Someone you know always knows somebody. So if you’re in a financial pickle, you need to earn more, or you need help finding cost effective ways to get what you want, or you want to connect with more inspiring people, or you need a book or blog or resource, or anything, just go through all of your contact, and take 10 of them out for coffee or tea.
And see what happens when you’re willing to help others get what you need and be brave enough to share what need too.
What are your financial tips?
Those are the three ways I jump started my way towards paying off debt and earning what I was worth. What ideas can you come up with to help your financial situation if you think creatively?
And you don’t just need to be shouldering debt to take a new approach to money – it can also help you save up for something you’ve always wanted, or simply give you the financial buffer you need to make the career, freelance or business leap you really want, but can’t afford right now.
Jill Davi is a financial wellness coach helping her high achieving clients earn what they’re worth, keep it and grow it. To learn more proven strategies, please visit Abundant Finances.
Photo by NeONBRAND