Living My Best Life: How Unpaid Debts of $57,000 Reshaped My World

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• During my twenties, I believed that living well involved frequently going on vacations that were beyond my budget.
• I recognized that getting rid of my debt could significantly impact my life, so I created a three-part strategy.
• I began with a zero-based budget before experimenting with both the "debt snowball" and "debt avalanche" techniques.

In my late twenties, the idea of doing well involved exploring every corner of the globe regardless of the expenses.

This also entailed occasionally paying bills tardily, fully utilizing a credit card for vacations, or perhaps liquidating stocks or taking loans. retirement accounts In my thoughts, travel seemed like an essential requirement—a must-do endeavor to fulfill my spirit. I was making the most out of life and truly enjoying every moment.

What I truly cherished was the build-up before a journey and the thrill experienced throughout my travels or vacations. For me, nothing compared to the enjoyment found in travel, which was immense—yet this exhilaration would abruptly cease once I disembarked from the aircraft and returned to everyday life.

I became quite skilled at tuning out the pressures of adulthood and handling bill payments. Not only did I master the art of occasionally neglecting my responsibilities, but I also excelled at splurging my entire salary as though it might vanish tomorrow, leaving little room for future planning. This just intensified my anxiety further.

Once I understood that eliminating my debt – totaling $57,000 with $48,000 being from student loans – could lead to reduced stress and greater capacity for fully enjoying life, my concept of what it means to thrive changed.

I employed three tactics to eliminate $57,000 worth of debt.

After a few days of Googling and piecing together a lot of personal-finance research and advice, I crafted a plan to help me get out of debt.

1. I discovered a financial planning method that suited my needs.

There are plenty of budgeting systems Out there, and you might need some time experimenting with different options until you discover which one suits your needs best. For me, the most effective method involved using a zero-based budget alongside physical cash envelopes.

To set up a zero-based budget, simply get a piece of paper. Write down your monthly after-tax income or your earnings from each paycheck cycle. Next, jot down typical expenses such as groceries, rent, transport costs, utility bills, and cell phone services.

After jotting down all your categories—don’t forget to add items such as paying off debts or saving funds—assign each dollar from your remaining paycheck to one of these categories until you’ve used up all available funds. A key principle behind this zero-based budget approach is ensuring that every single dollar has been allocated somewhere. Refer back to this list throughout the month to keep track of where your money goes.

I utilized Excel for handling my finances and ultimately developed a spreadsheet system to oversee all aspects of managing debts and crafting a zero-based budget. My proficiency with Excel grew to such an extent that I designed an entire financial control hub aimed at making money management enjoyable.

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The best budgeting apps Sure, I can assist you with organizing your financial matters and monitoring your expenditures each month. Leading options encompass Rocket Money and Simplifi by Quicken .

2. I discovered a debt repayment plan that I could actually follow through with.

The $57,000 of debt I needed to address appeared overwhelming at first. However, once I laid it out in writing and came up with a strategy to deal with it, it felt far less intimidating than I originally imagined.

What worked best for me was a mix of the "Debt snowball" method and the "debt avalanche" technique Debt-repayment methods. During my repayment process, I transitioned between different approaches. Typically, the debt avalanche method—where you tackle your loans starting with the ones having the highest interest rates irrespective of their balances—is usually a more economical strategy for managing debt.

3. I implemented it and made adjustments as needed throughout the process.

Initially, once I established a budgeting system to steer me and devised a method for eliminating debt, I put the plan into action. While this process was not always smooth or easy, over time, I managed to get my financial figures into solid territory, allowing me to allocate additional funds towards reducing my debts.

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Now I've found a superior approach to living well.

Now that I've cleared my debts, my life has dramatically changed from one of shortage to plenty.

Clearing my debts significantly improved my psychological well-being and enabled me to exit circumstances that were no longer beneficial. This also encouraged me to undertake ventures I would have hesitated to attempt before. Alongside my spouse, we managed to buy a house; I transitioned from working in finance to pursuing a career in technology; and over several years, I ran my own business aimed at assisting others with managing their finances.

I continue to stick to a budget and follow the strategies that assisted me in escaping debt. I remain conscious of my expenses and ensure my buying decisions reflect my personal values. Thanks to adhering to a budget, giving priority to my fiscal health, and implementing measures to increase savings, I have managed to lead a much less stressful life.

Not sure how to begin? Think about consulting a financial advisor.

Finding a financial advisor It doesn’t have to be complicated. Utilize SmartAsset’s free tool to connect with up to three financially accountable advisors serving your locality within minutes. These advisors have undergone scrutiny from SmartAsset and adhere to a fiduciary standard, ensuring they work in your best interest. Start your search now.

The article was initially published in March 2022 as part of Women of Means a sequence focusing on women asserting control over their money management.

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