How to pay off $ 20,000 in debt in one year

Paying with paper instead of plastic has helped Kristy Epperson eliminate $ 20,000 in student loan and car loan debt in just one year.

After graduating from Wright State University with a Bachelor of Science in Nursing in 2017, Epperson owed approximately $ 16,000 in student loans from multiple borrowers with interest rates between 3.6% and 6.8%. He also had about $ 4,000 left on his car loan, at an interest rate of 4.2%.

Even as Epperson slowly began to reduce that debt, she was successful in achieving another financial goal: home ownership. She was able to buy a seat in Dayton, Ohio, with only 5% down. Becoming a homeowner forced her to take a close look at her spending and reassess her spending habits, which made her more determined to write off her student loan and auto debt.

“If something happened, if I lost my job, I wouldn’t have any way to pay my bills,” Epperson told Grow. “I needed a better long term plan.”

In addition to getting a second job as a substitute teacher, which was making an additional $ 100 to $ 300 per month, Epperson created an expense spreadsheet and started follow your purchases to help him repay his debts faster. She used her Instagram page, @DebtFreeAtTwentyThree, to share their failures, strategies and achievements.

The Anti-Debt Strategy: Cold and Cash

Tracking Epperson’s expenses showed him one key issue: credit card use.

“I was looking at my credit card bill and couldn’t even remember some of the charges,” she says. “I ate a lot in restaurants, I bought new clothes at Target, I shopped on Amazon.”

So she abandoned credit cards. “I felt that using cash would hold me accountable,” she explains.

Epperson’s cash budgeting method.

Kristy epperson

Each month, Epperson began withdrawing money from his checking account to cover expense categories such as restaurant meals, groceries, and gasoline. Once she ran out of the money she had allocated for a specific expense, she stopped spending on that category.

If Epperson spent too much in one category, she would borrow from another. It involved making sacrifices: “One month my friends were all going to a Kenny Chesney concert and I didn’t have the money that month, so I couldn’t go,” she says.

When paying cash wasn’t an option, such as when she had to shop online, Epperson says she used a credit card and immediately paid off the balance with money from her checking account to avoid having to pay off the balance. get into more debt.

Once Epperson’s friends realized she was turning down their plans, they tried to be accommodating to help her save money: Epperson and her friends began to enjoy Dayton’s great hiking trails, organizing trips. game nights and participating in grocery shopping and cooking dinner together.

Celebrating Without Debt: Beautifying Your Home

While in debt elimination mode, Epperson vowed to herself that she would spruce up her lawn once she finally zeroed her student loan debt. “Looking out the window and imagining the garden I wanted motivated me to stay on budget,” she says. Hiring a landscaper was one of the first decisions she made after paying off her student loans earlier this summer.

Epperson’s Lawn, before and after hiring a landscaper as part of his celebration of paying off student loan debt.

Kristy epperson

The Opportunity: An Emergency Fund

Now that Epperson is free from student debt and auto loans, his medium-term goal is to save enough to buy a new car. use cash, and to replace his pocket TV. But first, she says, her priority is to build a six-month emergency fund. So far, she has saved almost a third of what she needs.

Epperson says she plans to follow her cash budgeting strategy. In fact, she hasn’t used her credit cards for months.

Do you have an inspiring story about how you paid off your debts? Write to us at [email protected].

The article How cash-only helped this 23-year-old pay off $ 20,000 in debt in one year originally appeared on Grow by Acorns + CNBC.

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