Michaela Warner

Michaela Warner

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As a 23-year-old, single, recent college graduate who is living with her grandma, I know the word “debt” all too well. The stress, the struggle, the feeling of taking one step forward, but ten steps back. If there’s anything I have learned in the past year, the process of getting out of debt is not only about creating a budget, but about a mindset shift and humility. Getting out of debt is saying “I don’t know what the heck I’m doing” but trying anyways. One has to strive for progress and learn patience, not perfection.

The first time I became aware that my family was struggling financially was when my dad left, it would be just a few years later in 2008 that the market would crash and we would lose our house, my mom and I had to move in with grandma who luckily had her home paid off.

While it was smooth sailing in high school, it was then time to pay for college. All I could think about was how I was going to be able to afford it. By the grace of God I received enough money from scholarships to be able to pay for school, but that’s where the story really begins.

I attended the University of Idaho from the fall of 2015-2018, $8,000 is what it cost a year to live in my sorority. Apparently they don’t give out free money for 60+ girls to live in a mansion together, who would’ve thought? I vividly remember sitting at the dinner table and having a conversation with my mom about how I was going to be able to pay for next semester’s fees, I began to cry out of frustration. How can a small green piece of paper impact my life so greatly? It was a few days later that I took out my first student loan, I had no other choice but to. Either I dropped out of college because I couldn’t afford it or I cave and go into a debt. Getting those loans was a process that was so simple and easy that all it took was a click of a button, I continued taking out loans every semester for the next two years of college.

Fast forward a few years later and I am officially a college graduate. I did it! I ended up transferring and graduated from Boise State University in the spring of 2019. The punch line; I also graduated with $22,000 worth of debt, mainly from my sorority at the University of Idaho. Because I couldn’t truly afford to comfortably live during college, I ended up maxing out two credit cards, financing a car to be able to commute back and forth to Boise and still had my student loans on top of it.

My total debt in January 2020 was a little over $34,000. While it terrifies me to be so transparent, I believe my story can motivate others to start their debt free journey. Since January I have been able to pay off almost $7,000 worth of debt, leaving me with just my student loans to tackle.

How did I do it though?

While having humility and tracking every single thing you spend money on are the two most important factors when it comes to your debt free journey, I also believe in getting inspired and motivated as well. Down below you will find a list of everything I did to make progress up to this point.

1. I moved in with my grandma and currently live rent free

When I first transferred to Boise State I was renting an apartment in downtown Boise. I was excited to finally have my own place, but it came with a high price to pay. It cost me $700 a month to rent a room in a 4 bedroom apartment. No wonder I was maxing out credit cards and couldn’t get ahead. On top of rent I was buying my own groceries, going out on the weekends and putting gas in my car each week to visit my family in Emmett.

I decided towards the end of my lease that I was being stubborn and wasn’t making financially smart decisions. It was then that I moved back to Emmett, commuted two hours a day to school and worked on the weekends. Don’t get me wrong, I loved having my own place, or shall I say room, but the toll it took on my finances and mental health wasn’t worth it in the end.

Instead of paying $700 a month to a landlord and groceries, I’ve been able to throw that money and then some directly at my debt. I know that not everyone has this opportunity, but if you do, I strongly recommend that you take it. Do I love living with a 75-year-old? Of course not. But this has allowed me to pay off over 7k in the past five months, something I am extremely grateful for.

2. Watched YouTube videos

I didn’t officially start paying off debt until January of this year, but in the months leading up to it I was pumping myself up. While watching old, bald, white guys like Dave Ramsey gets some people fired up, I personally find myself watching people closer to me in age or who have similar situations. When I started my journey I watched Aja Dang on YouTube (a content creator who just finished paying off 150k of student loans). I also created a visual graph of how much debt I had, having a visual aid has helped to keep me focused and on track with my goals.

3. Followed finance accounts on Instagram

The next thing I did was follow finance accounts on Instagram. I was already on the app everyday so I figured I might as well follow people who are inspiring me to get out of debt. My favorite finance accounts to follow are:

@blondebrokeandboujee

@gabbybuildswealth

@themoneywell

@mywealthdiary

@investingwithkim

@baeonabudget

@jaymillenial

4. Created a budget

After you have psyched yourself up, the next thing to do is sit down with your finances and get real. Budgets tell your money where to go, rather than you waking up and wondering where it went. I never had anyone sit down and explain to me how to start a budget, so I feel your pain if you don’t know where to start. I personally do a “zero based budget” which is my income - expenses. I give every cent of my money to a certain location, whether that be groceries, my car payment, putting money in a savings account. If you’re not sure where to start, go on YouTube and type in “Dave Ramsey Zero Based Budget,” it’s that simple.

5. Set up a $1,000 emergency fund

Now that you have your budget, the next step before paying off debt is building your emergency fund. With everything going on in the past few months due to COVID-19, there has never been a more important time to have an emergency fund. The minimum one should have is $1,000. That allows you to have some flexibility and not have to use a credit card if something unexpected comes up, using a credit card is what has got many of us in debt, so you want to avoid that at all costs.

6. Start paying off debt!

Once you have your $1,000 emergency fund set up, it’s time to start paying off debt! Get excited! You are taking control of your finances, instead of letting them control you.

I personally love the feeling and gratification of knowing I accomplished something. I am impatient and want things done quickly, maybe it’s the millennial in me. With this being said, I use the “debt snowball method”. A method that allows you to build traction by paying off your smallest debt -- despite the interest rate of other debts you may have. By doing this you feel more encouraged to keep going and keep the ball rolling.

In January I started paying on a $1,500 credit card, once that was paid off I moved onto a $2,000 credit card I had maxed out, I am now onto paying off my car which is around $5,500 and next will be paying off my $22,000 of student loans. If I had started with my student loans I would feel extremely disappointed right now with my progress because that will be a much longer and tougher hill to climb vs. my credit card.

The name of the game is about progress, patience and humility, remember that! Maybe you have to move in with your parents like I did, pick up a second job, sell your car to pay for one in cash. You have to be willing to live below your means and have self-discipline, at least until you’re out of debt. You’ve got this!

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