Today, we have a guest post from Jacob @ Dollar Diligence! He shares his journey to financial freedom, one step at a time.
If you want to pay off your debt extremely quickly, I can tell you that it is not easy, but it can be done.
Debt is a hard word to swallow because it means that you are financially strapped and it will loom over you, especially when you can’t save money to purchase a home, car, or even rent an apartment.
I learned from experience just how scary it actually was, especially when I received my student loan balance statement and saw that after years of making payments on an income-driven repayment plan EVERY month I barely put a dent in my debt. Yep, almost nothing.
I decided that I needed to make a change and quick. I took it upon myself to make sure I set a goal to pay off $25,000 in debt in 15 months. But, how did I do it? I will tell you below.
How I Paid Off $25,000 Of Debt In 15 months & How You Can Too
Set a Realistic Goal
When I tell you to set a realistic goal, I mean it. Whatever you think is realistic, make it your goal. Yes, my goal of $25,000 is quite hefty, but I was willing to make it happen. If you can only set your goal for $5,000 in 12 months, do it. No goal is too small, but I can tell you that whatever goal you set, it needs to be something you can achieve or else you will just feel like you failed.
As a high school math teacher, I knew that I would not be able to pay off my student loan debt with my salary alone. Well, that is if I wanted to live and eat too. Below, you will find out just how I made $25,000 happen in 15 months. Broken down, that is about $1,667 per month I would need to pay.
Limited My Expenditures and Set a Strict Budget
Okay, I get it. You are tired of hearing about setting a budget. While it may seem like a repetitive theme in many articles of finances, it does work and it does help. I set myself a monthly budget so that I would know how much money I had coming in from my day job and how the money would be allocated to the bills and necessities.
I realized that I did not have a lot of money left over each month, which meant that I would not be able to make that $1,667 monthly payment. Uh-oh. At first, I panicked and just assumed my plan was out the window, but then I started to think.
I decided I would move in with my aunt and uncle who lived near where I worked. This allowed me to save a ton of money, actually $500 per month. I did not have to worry about spending a ton in gas driving to and from the school either.
I also cut out all of extra expenses I did not need such as eating out at local restaurants and heading out with my friends. All in all, this saved me $300 per month. Sure…I could have gone out every now and then, but I was determined to get out from under my debt. I definitely lived below my means, even though I might not have had to.
Okay, so now I have $800 per month towards the $1,667, so what about the rest?
Side Hustles to Pay Down Debt
I needed roughly $867 per month in additional income to pay $25,000 in 15 months. This is a lot of money when you start to think about it. For example, $867 could rent you a nice three-bedroom home with a fenced in yard. Crazy, right?
I decided the best way to get the additional money I needed was to take on some side hustles. Since I used to experiment with photography, I chose this as one of my side hustles. I took photos for individuals who wanted portraits done and I often took photos for weddings, engagement parties, baby showers, and similar.
There is a good amount of money to be made in these areas and I was able to net about $400 per month doing this on the weekends and throughout the summer.
The second side hustle I took on was freelance writing. I love to write so it came natural and I was able to do it when I wanted. I would work on the weekends and brought in about $500 per month throughout the school year and about $750 per month when I would work full time in the summer.
Check out this list of great side hustle ideas if you don’t know where to start.
I Reached My Goal
I was able to reach my goal quickly and pay down my debt, especially with my side hustles and sacrifices. Fortunately, I only had to truly sacrifice for those 15 months, which isn’t that long when you think about it. My side hustles allowed me to make some additional money too and I have a small savings account in the works thanks to them.
If you want to pay down debt extremely fast, focus on the numbers and then set goals for yourself. I promise you can do it too!
About The Author:
Jacob tracks his journey to financial independence over at his personal finance blog Dollar Diligence. You can follow him on Twitter for more advice and (questionably) funny jokes.