Today we’re hearing from Kristina about her experience paying off over $50K in debt in her late 20s.
Kristina is a personal finance blogger and Certified Financial Planner. (But don’t worry — that doesn’t mean you need to have a financial background to get out of debt. You just need to stick with it.)
Let’s get started with Kristina’s story.
Why did you get into debt?
I wish I had a really great reason but the truth is I don’t. I moved to a new city and I was lonely so I spent money to make me happy. I ate out in restaurants, I furnished my apartment and bought expensive decor. I was also a huge fan of online shopping when it first came out. I thought “stuff” would make me happy when really all it did was make me depressed because I ended up over $50k in debt. I bought a car because I thought that’s what a 27 year old professional should do. Never mind that I didn’t need the car, ever use the car, and couldn’t afford the car.
How long have you been debt free?
I have been free of student loans, car payments (because I sold it) lines of credit and credit card debt for just over a year or so. I keep one credit card and use it throughout the month so I don’t actually feel like I am debt free. Although I always try to pay off the balance in full. The longest I ever carry a balance on the credit card is three months because I’m afraid to fall back into bad habits.
I’m curious: Why 3 months?
I usually limit my credit card spending each month to ensure the payment fits into my budget. But last summer we took a vacation and spent a bit too much. I didn’t want to dip into my savings to pay off the credit card balance and it was more than I could afford to pay off in one month so I paid it off in 3 months, but I made sure it was paid off within 90 days. I figured one small slip up is not that big of a deal as long as it doesn’t become a habit. (Jackie’s note: Getting back on track and adjusting for the future are what’s important.)
What was your biggest challenge when paying off debt?
Paying off debt was a really sad time for me. When I realized I had a debt problem I got really depressed because at the same time I didn’t have a lot of income after the market crash. I was sad because I didn’t know how I was going to get out of debt and I was depressed because I was ashamed that I couldn’t manage my money.
Calling the credit card companies and trying to negotiate rates, actually begging for forgiveness was the biggest personal challenge for me. I felt so worthless and so embarrassed that I let my spending get this far.
When I realized no one would help me I decided to do it on my own. I cut my expenses, got a second job and set up automatic payments every two weeks. That was also really hard for me because a large chunk of my income was going towards debt instead of spending it on myself.
How did you feel while doing so?
When I first started paying off my debt I felt defeated. I thought it was a never ending goal and seeing money go towards debt every month made me sad because I would have preferred to be spending it. I felt like paying off debt was wasting money because I wasn’t spending it on me, when in fact paying off my debt was the best way I could have spent the money. But at the time I didn’t see it that way.
As a year and two passed I started to get excited about paying off my debt. I saw the balances start to go down and I started to get $0 balance letters in the mail and it was awesome. I realized that the goal was achievable and that gave me motivation to make more payments.
How do you feel now?
Now I am afraid of debt. I don’t ever want to go back to that dark place so I am always mindful of my spending and credit card balances. Springtime is always hard, I always get shopping fever in the spring and have to control myself so I start wasting money again.
What changes in your life did you make while getting out of debt that have stuck with you?
OH the fear of debt is like no other. I changed my habits drastically at the beginning and they stuck with me for a long time. I wouldn’t spend money on anything, I wouldn’t go out with friends, I wouldn’t go to the movies, I learned to cook (sort of) and I didn’t buy clothes for two years. It helped me free up money to pay off my debt but I was miserable.
After my debt balances started to decrease I had to force myself to spend money. I told myself it would be OK to spend money on myself as long as the purchases were not frivolous and as long as I didn’t overspend. But I never lived in a world where I said NO to spending so I was afraid that spending, even a little bit, would lead back into old habits.
Thankfully I grew up and became financially responsible. Now I enjoy my money on traveling and avoid buying “stuff” just because it’s on sale or just because I have the money.
What would you tell someone who was discouraged or felt like they were never going to get out of debt?
I would tell them you have to start somewhere so why not start today. Your debt will never get paid off if you don’t start making payments. The sooner you start the sooner it will be over. It’s not always fun, you will have to make sacrifices and there will be tears (at least there were for me). You can’t expect your life and your expenses to stay the same when you are allocating a portion of your income towards paying off debt. So be prepared for change.
What tips do you have for someone who is working to become debt free?
Try not to let the emotions overcome you. Keep in mind that debt is about numbers, it’s financial. Don’t get emotional like I did or the sadness of debt will consume you in every aspect of your life including work, friends and your relationship. It’s hard to succeed at life if you are stressed out over your debt.
Remember that paying off your debt is the best thing you could ever do for yourself. Be proud that you are paying off your debt, not sad.