I wasn’t always nerdy about money. In fact, when I decided to take control of my finances in January 2015, I didn’t even know how much debt I had.
My mom gave me a personal finance book that year for Christmas. I read it in two days and went from being oblivious about my finances to starting an emergency fund and creating a budget. My ultimate goal was to pay off all of my debt, and I gave myself 30 months to do it.
I still remember when I sat down to crunch the numbers. I honestly had no idea how much my car, credit cards, personal loans and student loans would come to. I was shocked when I discovered I owed more than $55,000.
This was especially distressing because I had recently moved to Washington, D.C., and was already nervous about the expensive city I had just made my home.
Watch: How to balance saving for retirement and life in your 30s
Creating a budget and cutting expenses
I was fortunate to have a secure job with the government that paid well. At the time, I worked for the Navy as a civilian and served in the Navy Reserve as a public affairs officer. By the time I paid off my debt in March 2017, my total annual salary was around $100,000.
I used a zero-based budget, which means each month my income minus my expenses, debt payments and savings equaled zero. This gave me a clear plan for spending and saving every month. For example, when the money I budgeted for entertainment ran out, I stopped going out for the rest of the month. I also used cash to pay for certain spending categories — like eating out, groceries and the rare occasion I went shopping — to make sure I didn’t overspend.
Even though I was making a good income, I still felt stretched every month because of my monthly minimum payments and the high cost of living in D.C. My 600-square-foot studio apartment cost $1,800 a month.
After learning how to make and stick to a budget, I got serious about cutting my expenses. I moved in with a roommate, which reduced my rent by $600 per month. I rarely ate out, and when I did, I ordered happy hour specials. I stopped buying clothes and even canceled my Amazon
Prime membership. These changes weren’t easy, especially after moving to a new city and wanting to get out to explore and meet new people, but I knew they weren’t permanent.
Paying off debt
There are two popular methods for paying off debt: the debt snowball or the debt avalanche. If you use the …….