It had been six years since college. I was living in a fun city, making progress in my career, and building a great relationship with my new boyfriend. The whole #adulting thing was going pretty well. But there was one problem—I was $13,000 in debt and had no idea how long it would take to get out of it. Here’s how I did.
Thinking beyond minimum payments
Don’t get me wrong, I knew I owed the money. And I made my minimum student loan and credit card payments on time each month—which is fine if that’s your only option. But I felt like I was just going through the motions, without understanding the consequences. I didn’t have a comprehensive view of my finances and where my money was going.
After a little encouragement from my budget-conscious boyfriend, John, I took a hard look at the numbers—and the interest that was adding up as I made only those minimum payments.
I took John’s recommendation and started using a budgeting app called YNAB, which helped me take stock of my expenses, including my student loan and credit card debt. It was eye-opening to see them all in one place. That’s when I decided to take action. I went full snowball.
The snowball approach to paying off debt
Taking the snowball approach to paying off debt means I started by paying off my smallest debt. Then I would roll the money I was paying toward that debt into my next largest debt. It was a good way to gain momentum and a sense of accomplishment. Pretty much, I worked from smallest to largest with a couple exceptions.
To help me put more money toward my debt, I also cut costs. And there’s no magic trick here. I cut cable and got rid of a few subscriptions. I started planning my meals, shopping for the week, and eating out less. Basically, I used the same old budgeting tips we’ve all heard before—and they worked!
In less than two years I was debt free and switched gears to creating an emergency fund.