For those just joining me, here's how the “$8,000 in 90 Day Challenge” came about:
- In early 2015 I came clean to my blog readers that I was in serious credit card debt.
- How'd I get into so much debt after famously paying off $10,000 while I lived in NYC? I'd racked it up in 2013 during my big home remodel.
- I was devastated to be back in that much debt after all my hard work getting out.
- In January 2015 I promised I'd pay off the debt in the first 90 days of that year, come hell or high water. And I did it!!
- See my progress: Day 30, Day 60, and Day 90.
Three Months. No small feat! It’s easily the most aggressive goal I’d ever set for myself (before or since), and one of the few that I’ve actually kept and completely smashed. But before I get into the nitty gritty, I want to share why wrote this post.
I've read lots of debt payoff stories in my nearly four years of blogging about money and personal finance.
Some are really great and inspiring; others are really annoying, because they don't actually share any real numbers or advice for how to get it done. In fact, these types of posts are so predictable, they often follow a formula: the more outlandish the amount and payoff timeline, the less information there is in the post.
How to Pay Off Debt Quickly – A Step-By- Step Guide
Step #1 – Get Clear on How Much Debt You Have
Because I'm a finance person, I knew how much I owed because I was tracking it in my Net Worth Spreadsheet that's in my Grow Your Money Tree tool kit. If you don't know how much you owe, this is the first step. I know it isn't easy to take a good, hard look at what you owe, but I promise it is worth it.
For those who don't want to splurge on the tool kit, I also offer a FREE debt tracker to those who sign up for my email list. Grab yours in the link below!
Step #2 – Pick Your Payoff Terms
I knew I needed to do something drastic in order to get rid of all my debt, once and for all, but making significant sacrifices for an entire year felt like a real drag (spoiler alert: paying off debt is ALWAYS a drag, which is why you should avoid getting into it in the first place.)
Twelve months also seemed so, so, so incredibly far away.
A whole YEAR before I could jump up and down about being debt free? Puh-lease. I have a very short attention span.
I'm also the type of person that likes to get the painful bits over with right away, so I started brainstorming ways to help me accomplish my goal in a way that felt good and authentic to me as a person.
I wanted a process that would work for me rather than against me.
- Could I pay all my debt off in a month? No, it just wasn’t realistic.
- What about six months? I could, but even that still felt like a lifetime.
- What if I got really serious and paid it all off in three months? Maybe.
Start at the top of the new year, and with my birthday being in March, being debt free seemed like a great thing to gift myself. Once I began running the numbers, I found it was possible.
Not probable. But possible.
Yes, I know $8k in the scheme of things isn't a ton of debt. There are many out there struggling with tens of thousands in consumer debt, or student loans. Some don't have the time to side hustle or get side work.
I get it.
Paying off all your debt in 3 months isn't possible for everyone.
Still, what if by being aggressive you could retire a significant chunk of your balance, no matter how much you owe?
That could make a huge difference plus save you tons of money on interest.
Step #3 – Figure Out What to Pay and When by Working Backwards from Your Goal
With my target date of three months in sight, and zero debt consolidation or zero balance transfer offers to take advantage of, I then began to work backwards.
$8100 divided by 3 (for # of months) = $2700 in debt payments each month.
That still seemed like a huge amount, so I bit the bullet and moved $1,000 that I could spare from my savings. I don't recommend raiding your emergency fund. In fact, if you're in debt, you should start an emergency fund if you don't have one to avoid future credit expenses when those emergencies arise. But if you have the money to do this, I recommend it, because that money would likely serve you more by reducing balances you owe money on, rather than sitting in an account accruing negligible interest.
Contributing $1,000 right off the bat brought my total each month to roughly $2400, which is still high, but do-able in my timeline.
- It was $1200 every two weeks
- …or an extra $600 a week.
So, $600 a week. That was the goal.
#4 – Trim Your Budget
I am a big fan of hacking your budget regularly to find hidden money. (To see how I do this, click here.)
There's also no better time to tighten the ol' belt than when you're getting really serious about your debt payoff.
- So during my 90 day challenge, hard look at my expenses and started slashing left and right.
- I also implemented a spending freeze and only gave myself $100 each month in “play” money.
- Here's a list of five easy things to cut from your budget.
- You can use apps like Qapital to save the extra pennies in your savings account. I know it doesn't seem like a lot, but it really adds up over time. I saved $75 my first month with Qapital. Click here to try it out.
By doing these few things I could then allocate $800 from my full-time paycheck (or $400 every two weeks, of my roughly $2,000 bi-weekly paycheck) to my debt repayment each month after my living expenses and automatic savings withdrawals.
But even after all that hacking and slashing, I still needed to come up with an additional $1600 each month in order to meet my goal.
This is where it gets exciting.
#5 – Earn More: The Only Real Way to Pay Off Debt Quickly
I’ve always been a huge proponent of the idea that penny-pinching is an absurd waste of time.
Sure, saving money is good sense, but spending hours and hours of your precious time to bargain hunt to only slightly lower your bottom line? Ri-dic-u-lous.
I make more hourly than I could ever save by bargain hunting.
After finding as much money for debt repayment as I could in my budget, I turned to my side hustle as a freelance writer and marketing gun-for-hire to ramp up extra income. Here are a few things I did to drum up work:
- I hassled a few clients I hadn’t heard from in months.
- Logged on to Upwork and found a handful of new (and surprisingly not terribly paying) clients.
- Brainstormed new streams of revenue for my business, and so I started offering blog coaching for beginner bloggers and businesses.
- Started offering “sponsored content” to brands.
But leveraging/starting a side hustle isn’t the only way to make extra money to pay off debt.
There are a million low-time investment ways to make extra cash to pay off debt. Here's a few more that I did:
- I sold some of my old stuff on Ebay.
- Did little voice over work for a video my friend was making for her business.
- Opened up two new checking accounts just so I could get $300 in bonuses, which went to credit repayment and helped out a lot.
- You can earn $3 per survey with Swagbucks. (Here's the other top survey sites we recommend.)
- Or look for jobs on Fiverr or TaskRabbit.
- 83 ways to save more money this year
- How to hustle $100-$5,000 dollars
Basically, anything I could do to bring in extra dollars, I did.
#6 – Stay Motivated
Here's a few other tips for what I did to stay motivated while paying off debt.
- I employed the use of vision boards to help visualize being debt free.
- I also built in “rewards” for myself each time I was able to contribute my bi-weekly debt payments. (spaces for you to write down your debt pay off rewards are also in the free debt repayment worksheet that you get when you subscribe via email! It's so important!)
- I also recommend getting competitive with yourself. I’m a money nerd, but it was almost fun to look at my checking account balance on February 15, see I needed 2-300 more dollars to hit my weekly $600 goal and start hustling my pants off to make it happen.
These steps may seem insignificant, but I’ve tried to accomplish goals without them before, and this time it was much easier with these helpful reminders along the way.
Are There Other Options to Pay Off Debt Quickly?
One of the biggest criticisms of my story back when it came out was that people assumed it was easy for me to pay off a large amount of debt because I was a single, childless woman making over $60,000 dollars a year. And yes, this does mean I have more time and more discretionary income, but it doesn't mean it was easy. Or that paying off debt doesn't take a lot of hard work no matter who you are.
I gave up my social life to freelance write on Friday and Saturday nights to make this happen. I didn't buy anything other than the bare necessities for 90 days.
People want to hear debt payoff stories, but they often don't want to accept that paying off debt isn't super fun. It's not glamorous, or sexy, and it's often boring and frustrating. It's why a lot of people fail and give up and live their lives in debt.
But for those of you that have decent credit, ~$10k in balances, and little time to hustle – there are a few other options, which I've listed below.
Balance Transfer Offers
At the time I was doing this challenge, I wasn't eligible for any balance transfer offers and since I wanted to be done with debt fairly quickly, I didn't feel taking time to lower my interest rates (plus any balance transfer fees) was worth the money. Still, a big component to paying off debt quickly is figuring out how to get your interest rates as low as possible. This is because interest compounds, so the higher the interest rates – the more you pay and it'll take you longer. No bueno.
If your credit is decent, (I repeat don't try this unless you have good–ish credit!) I'd try 0% balance offers with credit cards before trying to consolidate to a lower interest rate. Why? Because paying zero interest for a certain number of months is a great way to leverage credit strategically to pay off debt. Debt consolidation is nice, but they're still making you pay a (lower) interest rate.
A refinance loan works for those with over $5,000 in debt, but with less than they would consider to be staggering. You apply for a loan (at a lower interest rate than offered on a credit card.) You apply, get approved, you get the funds and you pay off your credit cards with this money. Then, each month you pay the loan provider. It's typically a lower monthly payment at a much better rate – meaning you'd save on interest, and have more money in your budget for additional payments. These are a really strategic tool to use in any debt payoff journey. P.S. Here are 67 other ways to pay off debt!
Debt Consolidation with Debt Management Company
For those who have average credit and few other options, there is debt consolidation or working with a debt management company. (Read the post on the difference between the two here.) By consolidating your debt, you can lower your monthly payments, pay just one creditor, and pay less in interest because you're consolidating at a lower rate. A debt management company, such as Accredited Debt Relief, will help you. Click here to hear one woman's story about using a debt consolidation company.
So, Here's What Happened After I Paid Off Debt Quickly (My life changed!)
The benefits of paying off debt are numerous:
- My credit score went up (check yours for free here.)
- I have more money and freedom in my monthly budget ($600 worth in minimums was what I was paying. It is awesome to have this money back in my budget!)
- And it is four (yes, FOUR!) less monthly payments to worry about.
Also, my debt journey has opened up a lot of new adventures. I ramped up so many new clients that I was able to leave my full time job and start working for myself in April 2015. I would never have been able to leave my full time job if I were still making such high monthly payments on my credit cards. It's also a lot less pressure when you're building a business.
I was also holding onto a lot of financial and emotional baggage from the time when I racked up the debt.
My mother always used to say, “you can do anything for 30 days,” which is true.
I also think you can do anything for 90.
Even though I only had to sacrifice my high-falutin’ lifestyle for 90 days, it still taught me new things about what I can (and can't) live without.)
And perhaps best of all–I’ve become incredibly financially empowered in the last 90 days.
Some may think that since I write a personal finance blog that preaches financial empowerment I was already very money aware, but being able to pay off debt so quickly reminds me I can focus and get motivated and accomplish GREAT things when I'm not distracted, when I prepare, and when I push myself.
But seriously, go do something you think can’t be done, whether it has to do with money, fitness, relationships….whatever.
Sure it may seem tough at the beginning, but do it anyway. Your future self will thank you.