Life & Culture

Journey to Financial Freedom: How I paid $5K of debt off in one year

Millennial Money

*Disclaimer* I’m no financial planner or advisor. I’m just a Millennial sharing how I’ve decreased my debt over the past year. This is my journey to financial freedom. 

Despite having no student loans, adulting hit me HARD after college and I found myself living off of my credit cards that were steadily racking up interest. I️ also purchased a house, and although my mortgage was cheaper than the average renting cost in Atlanta, I️ was still struggling financially.

In October 2016, I was on the Metro train in Washington, D.C. crying hysterically about my financial situation. I felt like such a fraud that I was on my way to my alma mater, Howard University’s Homecoming with only a few hundred dollars in my bank account. For the first time since middle school, I asked my mom to put money into my account so I didn’t overdraft. That was rock bottom for me, and I knew that something had to change.

Over the past year I’ve been able to decrease my debt tremendously, and I feel like I’m on the road to financial freedom.

Here’s how I did it:

1. Set a goal: Like with everything in life, I got intentional on what I was trying to do. First I set out to aggressively tackle my credit card debt – starting with the card that had the highest balance.

2. Changed my mindset about money: I️ used to say “I’m broke” a lot. Until one day, a woman I️ looked up to told me that I’m not broke, I️ just need to live within my means. She explained that by speaking those words, I was manifesting more “brokenness” into my life. I couldn’t reach financial freedom with that negative mindset.

3. Tracked my income and spending: My friend Niema shared her budgeting tracker with me and it changed my life. I made it my own and created a template of the Brilliant Budgeting Tracker to help you on your journey to financial freedom.

I️ love how it shows where my money is going, and helps me keep track of my bill due dates so I don’t miss a payment. There are tools that you can use to track your expenses, but I like how I can customize the spreadsheet to fit my needs and financial goals, and access it on my phone via the Google Spreadsheet app. I also linked to the site where I pay my bills so it’s an easy process.

financial freedom

4. Audited my expenses: I did a deep dive into where my money was going, and cut out anything I️ didn’t need (like subscriptions I️ wasn’t actively using). I still need to do better at budgeting, but the audit gave me an idea of how much I was spending on bills and living expenses, and how much disposable income I had.

5. Used a balance transfer card to get my credit card debt down: This was a game changer and the main reason why I️ could pay off $5K in a year. I️ noticed that I️ was paying high interest on credit cards that I had for years, and talked to my bank about how I could get my balance down. I️ rolled half of the balance on my card with the highest balance onto a balance transfer card that had zero interest for a year and no annual fee. Over the year, I’ve made the minimum payment on the balance transfer card, and aggressively paid off my card with the highest balance so I could stop being slapped with high interest rates.

6. Enriched my mind: Echoing my disclaimer above, I am no financial expert. I still have a lot to learn in this space, so I sought out content to help me become more financially savvy. Some of my favorites include the Millennial Money podcast, the Budgetista blog and Debt Free Black Girl blog. 

7. Made more money: I started a new job that had a hefty pay increase. I loved my old job, but I wasn’t able to afford my lifestyle on that salary. I also made extra money by selling products and picking up a few freelance projects to help on my path to financial freedom. 

financial freedom

8. Paid myself first and started an emergency fund: It’s a challenge to save when trying to pay off debt, but I started off small – like $25 to $50 each paycheck. Seeing my savings account increase little by little, motivated me to cut costs so I could pay off my credit card debt even more and start investing those extra funds.

9. Did what was best for me: When I left my old job, I used the money in my 401K to pay down my credit card debt. I could only afford to make the minimum monthly payment – and that was pretty much just the interest. At that rate, I’d never make a dent in my debt, so I decreased my balance using funds from my 401K. I am NOT advising that you do the same. When you take out of your retirement fund before age 65, you will be hit with many penalties. I know Uncle Sam will be knocking on my door asking for more money come tax season, but I don’t regret my decision. I would have never paid off my debt without this strategy. I opened up another 401K through my new job, so I could start fresh in saving for retirement.

I’m not there yet, but I think financial freedom is attainable. Everyone’s financial situation is different. What worked for me may not work for you, but most of the strategies on this list can help you tackle your finances.

I hope that was helpful! Please leave a comment or write us on social media letting us know how you’re paying off your debt!

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