How I got out of $60,000 of debt in 18 months by the age of 25

Getting out of debt is not easy, but to set a goal to eliminate $60,000 in 18 months is daunting to say the least, but I managed to do it by the age of 25.

My debt was student debt, which makes it a little more socially acceptable than let’s say consumer debt where you spend it on credit cards buying crap you don’t want or need, but still.

Debt is debt.

This is how I did it.

I WOKE UP AND FACED MYREALITY

I saw my debt, I saw my debt repayment schedule and said:

This is not a life. I am not living like this, so heavily in debt. I am going to do what it takes.

I got angry at myself, and then at my debt, had a small little pity party, and then narrowed my focus into eliminating every penny of it, ASAP.

I basically got angry with it, and made it my focus to be eliminated.

I STARTED STUDYING PERSONAL FINANCE

I devoured every article ever written on MSN Money, and discovered a whole society of ‘personal finance bloggers’ who talked very openly about how they got out of debt and saved money.

I even started a blog to talk about my journey out of debt (which I eventually sold) and now I’m back blogging again but this time in a more relaxed manner in regards to money.

It sounds so banal and simple to me right now, but I had no idea how to do any of that. When you don’t know what you’re doing, you have to start arming yourself with knowledge to learn what you don’t know.

I was not used to budgeting or tracking my expenses, and I definitely spent unnecessarily because I felt entitled to do so.

I worked for it, why couldn’t I enjoy it?

As time went on, I became better and better at it.

Like a muscle, willpower and sheer determination becomes stronger and stronger each day you exercise it.

I NEGOTIATED MY SALARY FROM DAY ONE

I started at a gross salary of $65,000, but it wasn’t what they offered me — I had asked for it.

When I got $50,000 as a softball salary from the hiring manager, I was cheering for joy, knowing I was $60,000 in debt…. but my golden rule has always been to never accept what their first offer is.

If they offered you the job, it means they want you.

You can always try, and if they say “No” what’s the worst thing you can do?

Accept the original offer and ‘lose face’ to a hiring manager?

WHO CARES.

Sounded like a win-win to me.

Also, I knew that my first salary would matter for bonuses and even retirement contributions.

A 5% bonus for instance, on $50,000 is $2500.

A 5% bonus on $65,000 is $3250.

That’s a difference of $750 off the bat. $750 that could have gone straight into debt repayment.

The less money you start with, the less you will get if your bonuses are percentage-based.

MY SALARY WAS NOT TRAGICALLY LOW

Luckily, my salary was pretty great for a new graduate. I went to a good business school and this was the payoff.

The math is simple:

The higher income you make, the faster you can get out of debt.

You simply cannot make a tragic salary and expect to achieve the same results as someone who makes double or triple what you do.

On the plus side, if you make a good salary, you can get rid of your debt a lot quicker than you think.

I started out making $65,000 a year.

MY JOB WAS LIVING OUT OF A SUITCASE

I was a consultant who lived out of a suitcase.

I became a modern nomad, gave up my apartment, sold or stored what I had and moved to where my projects were.

This was perhaps one of the best things I have ever done in my life because not only did I have no living expenses to speak of, I became a minimalist out of it and really discovered what I needed to own to live.

(Not much.)

It wasn’t all rainbows and sunshine however because I stayed in random cities in the middle of nowhere all across North America for months at a time. I had no personal connections in any of these cities to speak of, and I was completely cut off from my social network.

I didn’t go to any parties, events, see my family or friends or have a life.

I worked. I ate alone in a restaurant. I went back to the hotel and watched TV. I didn’t spend any money because I. Was. In. Debt. then I slept, and did it all over again, 5 out of the 7 days.

The 2 days I had off on the weekend, I would try to just take walks, avoid temptation by refusing to go to the mall, and I would scrimp as much as possible.

I threw myself into blogging about my journey out of debt and did it a year and a bit before I took my next big risk….

I QUIT MY JOB AFTER A YEAR TO FREELANCE

By all counts, I had a great, stable job, great salary, excellent perks, and was knocking down that debt on track to be done in 5 years.

… but I didn’t feel like it was enough. I wanted more and was confident enough in a rather hot market at the time, that I could do all of this on my own.

I quit my super stable job, said “goodbye” to the security of a large firm and became a freelancer.

I only had $2000 saved in cash in the bank, plus two weeks of severance coming, and I had absolutely zero prospects or idea of how to get into freelancing.

I spruced up my resume on LinkedIn, and in two days, my hunch paid off and I snagged a contract, making quadruple my salary.

I made about $90,000 in 3 months, cleared the rest of my remaining student debt in 2 weeks, (about $18,000 at the time) and banked the rest.

My only thought at the time was:

What do I have to lose?

Not much in my eyes.

I was young, I lived on very little due to my newfound modern nomad ways, and I figured I would either eat through my savings bit by bit, maybe go back into debt, and then the worst case scenario would be to end up re-joining that firm or another big one again.

Now, I know this is not something everyone can replicate as you needed all the stars to align to have done what I did, but I did learn a few things along the way about getting out of debt that I know will be helpful for others.

10 LESSONS I LEARNED WHILE GETTING OUT OF DEBT

1. Make it your focus to get out of debt. Period. No other extenuating circumstances should prevail.
2. Make as much income as you can, which includes asking for more money and switching jobs.
3. Spend as little as you can, in any way you can, while still allowing for mistakes.
4. Budget and track your expenses so that you know where your weaknesses are.
5. Take calculated risks and think through your plan of action all the way to the bitter end.
6. Don’t give up; debt fatigue will set in but you have to find a way to power through it and stay motivated.
7. Don’t stop learning about your money and plateau — you do not know everything — this includes INVESTING!
8. Don’t listen to what naysayers will tell you — “That’s impossible!”…”You will always be in debt!”; they do not know you, and they do not know what you are capable of.
9. Don’t buy what you can’t afford in the first place — this includes houses, cars and student loans that lead to dead end jobs.
10. Take a break and avoid comparing yourselves to others if you can — you can only compare yourself to who you were yesterday.

..and that is how I got out of $60,000 of debt in 18 months by the age of 25.

You can find me over at Save. Spend. Splurge. where I talk about money on occasion.

Come over and say “Hi”.