My Debt-Free Journey: Part 7

On December 11, 2020, I became debt-free outside of my mortgage!

I paid off $32,511.92 in debt this year…

  • A credit card balance of around $375

  • A federal student loan around $8,000

  • A private student loan around $16,500

  • A Thrift Savings Plan loan around $7,000.

If you asked me last year whether I thought I would be where I am now, I would tell you no. Tuh!

Over the last few years, I’ve developed an interest in personal finance and wealth building. I used to post financial blurbs on my Instagram and would tag them as #WealthWednesdays, read articles about money, attempted to start a women’s wealth group/series a few years back, and thought a lot about how finances affected marriages and raising kids. I was once told, “You’re always going to have some kind of debt.” Even before making the choice to obliterate my non-mortgage debt this year, I knew that that didn’t have to be the case when it was said to me years back. I still knew that it was possible even though I wasn’t committed to paying off my debt as quickly as I could back then.

All these things (and others that are too personal for me to share right now) led me to a moment. January 2020…

At the beginning of every year, a few of my friends come together to make vision boards. This year wasn’t any different. My themes were focused on financial, emotional, and mental health. One of my specific goals that tied into my vision board was paying off my federal student loan by the end of 2020. Once I paid that off in June of this year, I realized that I could probably pay off all of my non-mortgage debt by December 31 if I kept the same momentum.

Ok, but how did you do it?

  • God’s grace…

    At the end of the day, it’s God. He has given me wisdom and discernment. Those two things definitely helped on the journey out of debt. I was able to see beyond this year, and I made a short-term sacrifice for a long-term gain. I refuse to be bound by poor money management that will keep me from living my dreams.

  • Debt snowball…

    I learned this debt payoff strategy from Dave Ramsey. With this method, you pay the smallest debt balance first with as much intensity as you can regardless of interest rate. You do this while paying the minimum on your other debts. After the first debt is complete, you move to the next debt with the smallest balance and repeat until you’re done.

    (I watched A LOT of his videos on this journey and was mostly following his plan. His Baby Steps really kickstarted my journey, and, strictly speaking, I think that most of his financial advice/practical steps can lead people to success in that arena. However, he has some beliefs and has said some things that I don’t align with. So, I haven’t been watching his videos lately.)

  • Decreased expenses during COVID…

    It’s been a blessing that I was able to keep my job with everything going on because I know a lot of people were not as fortunate. Right now, I am able to do my job fully at home, which has saved me a lot of money. I didn’t spend as much money on gas, makeup, or clothes. Social distancing, safety precautions, and being on the debt-free journey kept me from going to the nail salon and spa (I haven’t been since March). The zero percent interest for federal loans REALLY helped me. We all know that interest seems to make paying back debt a little harder. Once you see how much is going toward interest without making a dent in the principal, it can be disappointing. I took full advantage of the zero percent interest rate and paid down that federal student loan as fast as I could.

  • Promotion and awards…

    From April to August, I received a temporary promotion that increased my salary. I used that extra money to aggressively pay off my debt. Additionally, I received two awards this year, and they also went toward my debt.

  • Monthly goals…

    In January, I made monthly financial goals for the entire year. Throughout the year, I adjusted or revised some of the goals if I didn’t think I could make them or if they were too ambitious (I didn’t make two of my monthly goals this year). I made a chart, a debt thermometer to track the numbers, and a debt snowball so that I would be reminded every day of what needed to happen. I’m a visual learner, and this helped a lot.

  • Accountability, Commitment, Discipline, and Consistency…

    I talked about my journey A LOT this year. At times, I was hesitant (“Am I putting too much of my business out there?”). I remained accountable by talking with friends and posting on Instagram. I knew that people were waiting for the countdown. I stayed consistent, and I tried to apply as much money as I could toward the debt every paycheck I got. If I believe in something or if I feel it’s a duty, I’m going to be committed and disciplined if I have the accountability to seal it.

  • Paycheck calculation…

    Most of the time, I left around $1,000 in my checking account to live off of for two weeks at a time. That was enough to make me feel comfortable while I put the majority of the rest of my income toward debt. Most of the time, I didn’t spend the entire $1K, I just had it there to make me feel secure. Managing the last paycheck before the last debt payment on December 11 was tight, however. The TSP loan (refer to my previous posts) had to be mailed, and there was never an exact time for processing (it could take a few days or a couple of weeks). So, for the last week, I transferred money from one of my savings accounts to put in a buffer to make sure that the checking account wasn’t overdrawn, just in case. Additionally, I did drain some sinking funds that I no longer needed this year because of changed circumstances. For example, I have a fund for travel. I didn’t need that this year because of the pandemic, so I applied most of that to my debt.

  • Listened to or watched something related to finances every day…

    I was not playing about this goal. I was obsessively listening to podcasts, watching YouTube/Instagram videos, and reading social media posts every…single…day. Multiple times a day. If I was on a run, I was often listening to a podcast. Typing something for work? I had a motivational video playing in the background. I searched YouTube for people who were on this journey or had been. Many of them were young like me, and many of them were BLACK, which is cool. Married, unmarried. Kids, no kids. Low-income, high-paying jobs. They’re all out there, and I’m glad that social media has given us the opportunity to find like-minded people who are on all types of journeys in life. These constant reminders helped me to stay laser-focused on the mission. It was do or die.

I saw this year as an opportunity, and I went full force. No excuses. I was all in. I could’ve done other things with $32,000+, but I didn’t. It was a choice.

Throughout my debt-free journey, I realized my “why” is about having options. I want to decrease the limitations that bad money habits can bring. I want the option to stay at home with my kids one day. I want the ability to save for their education. I want to be the great-great-grandmother whose wise money decisions positively impacts her descendants. I want to make sure that I am as financially prepared as I can be before I get married. I want to pay off my house in the next few years. I want to be a millionaire. I want the option of owning multiple properties. I want to help close the racial wealth gap. I want to build a scholarship fund for a student who wants to attend Howard. I want to show other black people and generations to come that this money thing is possible by telling my story.