In April 2018, I sat staring at my computer screen in panic.
I had calculated my net worth for the first time and realized I had $78,511 in debt. I was also close to earning degrees in music education and vocal performance, a career path not usually known for its high earning potential.
My debt consisted of credit cards, private student loans with an 11% interest rate, a car loan for a vehicle that was well outside my price range, and federal student loans. I knew I had taken on more debt than I could handle, and I was determined to find a way to get my financial life under control.
This moment allowed me to improve my financial knowledge and ultimately boost my confidence. By 2021, thanks in large part to my social media bustle, which is now my full-time job, I had paid off $38,109 of my debt.
Here’s how I did it and my top tips.
I listened to my instincts about my career
After graduating from college, I accepted a full-time teaching position as a K-8 music teacher teacher. But even though I loved my students, between the long, underpaid hours and the administrative bureaucracy, I quickly realized that a traditional classroom was not for me.
I knew there had to be a better career fit there. So I quit my job at a public school, started working part-time as an early childhood music teacher, gave private singing lessons, and performed.
On average, I was making about $3,000 a month, before taxes, and I quickly learned the importance of being extremely organized and aware of where every dollar I earned was going. These became key elements that allowed me to achieve my financial goals while working with less income.
I became more intentional in my spending
Once I started generating more variable income, it became important to understand the main areas where I was spending money. I broke expenses into three main categories: necessities, financial goals and wants. From there, I became more specific to my situation.
I started by looking at my transactions over the past few months to see what I was spending money on. Once I figured out how I was spending in these categories, I started asking myself questions like “What do I really want out of life right now? What is important to me? How do I want to feel about my finances?”
With these questions in mind, I started thinking about how I could make the most of my income to spend in a way that aligned with my values, goals, and current situation. I realized that I valued the feelings of security, freedom, and independence far more than a lot of random things I bought every month.
I also learned that I was spending more money on housing than needed in my area. When my apartment lease ended, I spent more time researching different housing options, moved to a less central part of town, and continued to live with a roommate.
It wasn’t the sexiest decision and I didn’t want to live with roommates forever, but finding ways to lower my housing costs opened up $400 in my budget that I could spend on my bigger financial goals.
I started a budget and financial routine
My main goal with my budget was to bring as much consistency to my financial life as possible. Using the data I found while tracking my expenses, I identified what I call my base numbers, the money I needed to cover my needs, minimum debt payments, and a small amount of leisure spending.
Knowing my baseline helped me understand how to make adjustments for low income months and helped me set a clearer income goal for my freelance jobs. Next, I created a workable budget that prioritized necessities, followed by financial goals, then wants.
This way I feel safer, my goals remain a top priority, and I can spend on the things I want without feeling guilty because I know it doesn’t take away from things that are more important to me. .
Video by Helen Zhao
I started using a bucket budgeting system, using multiple designated purpose bank accounts that I transfer money into on payday. It is similar to the cash envelope system, but uses bank accounts instead of cash and envelopes.
For the past four years, almost every Sunday, I have sat down and reviewed my bank accounts and spending, checked my financial goals, made necessary changes to my spending plan, and set financial intentions for the coming week.
I chose a debt repayment strategy
At the start of my financial journey, I had quite high interest debt, where interest charges were piling up almost $200 in interest charges every month, or about 6% of my monthly income.
For this reason, I decided to use the debt avalanche method to pay off my debts. Debt avalanche occurs when you prioritize debt repayment in order of highest to lowest interest rate, which can help you save more money in interest over time.
Video by Helen Zhao
Today, the only debts I have left are my student loans. I’m not focusing on paying them off quickly right now due to their low interest rates. Instead, I first work on creating wealth by investing and growing my income, while making the minimum payments on my student loans.
I may decide to switch gears and work to pay off my loans sooner one day, but right now it’s the informed decision that works best for me.
I started a side hustle that became my full time job
Our income is one of our most powerful wealth-building tools, and I knew early on that I had to find ways to increase my income if I wanted to reach my financial goals faster.
From 2018, I experienced several side hustle ideas from selling crochet scarves on Etsy, beauty blogging, starting a music education blog, and in June 2020 I decided to create an Instagram account called Save, Live, Thrive that chronicled my debt repayment journey.
Video by Lauren Shamo
When the pandemic started and I saw the negative impact it was having on the financial lives of so many people, I felt even more grateful for the financial education I had put in place over the last years. I wanted to share what I had learned with others and create a financial literacy platform that talked about personal finance in a positive, welcoming, inclusive and non-judgmental way.
This personal finance Instagram account grew into a financial literacy business that I now run full time. I’m completing my certification to become a Certified Financial Advisor, and Save Live Thrive has allowed me to make more money than I ever imagined as a music teacher.
Although I no longer teach music, I still perform locally with professional ensembles and opera companies nearby.
By trying different side businesses, I was able to use the extra money for my debt repayment goals and eventually realized the passion I have for teaching other women about personal finance and inspiring them to take charge. their financial future.
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