How I gave up my debts: a thrifty lifestyle and side concerts

In this series, NerdWallet interviews people who have triumphed over debt by combining commitment, budgeting, and smart financial choices. Answers have been edited for length and clarity.

Obtaining a college degree during the Great Recession made Tanya Nwamkpa a challenge in finding a job and paying off her debts.

After failing to find work for a year, the Dallas resident deferred $ 31,000 in undergraduate student loans and returned to school. She received an MBA from the University of North Texas in 2012 and landed a full-time job shortly thereafter. But the additional student loan pushed her debt to $ 57,000.

“If I had been smarter in my choice of undergraduate specialization, courses and living conditions, I probably could have borrowed less,” says Nwamkpa.

Through careful budgeting, full-time work, and income supplementation with part-time jobs, Nwamkpa, now 34, eliminated his debt in five years. She logged into NerdWallet to share her story, which may inspire you to .

I had $ 4,000 in credit card debt and $ 53,000 in federal student loan debt when I graduated from graduate school in 2012. I paid it all off in 2017, and today I didn’t. no debt.

I made some stupid choices in college. I charged things I couldn’t afford on credit cards, including a two week trip to Europe. But I also spent money on important things like health care because I didn’t have insurance coverage at the time.

My undergraduate degree in advertising ultimately wasn’t worth much. I wanted to work in an ad agency as a brand manager, but it’s a competitive field and the job market was terrible in 2008.

After looking for a job for a year, I decided to go to graduate school for training that might set me apart. I took out another student loan, which added over $ 20,000 to my debt.

Reading books on personal finance, including Dave Ramsey’s “Total Money Makeover,” inspired me to get rid of credit card debt as soon as possible.

Knowing that I could pay off at least one of the cards kept me motivated [to pay them all off].

I did not pay off student loans as aggressively as I should have. After losing my full time job [as a marketing coordinator] in 2014, I decided to prioritize the repayment of the remaining loans.

I refinanced student loans in 2015 with a $ 47,000 loan from SoFi. It had a fixed rate of 4.6% and a repayment term of five years. I chose a shorter term to motivate myself to pay it back faster. The payment was around $ 870 per month. At the beginning, I only paid the minimum because it was already quite high, but I increased my monthly payments in order to repay it in two years.

I also kept my expenses extremely low. My monthly rent and bills were about $ 1,000. I lived in a small, thrifty apartment and had no car payments because my parents gave me a car in 2008.

I purchased the cheapest cell phone plan and insurance and consistently negotiated with service providers for lower rates. I lived a thrifty lifestyle, shopping exclusively at Ross, Walmart or Goodwill, and had a very good understanding of needs versus wants.

I got a part-time job earning $ 13.50 an hour evaluating how well various websites matched search engine queries. I also tested websites for $ 3-15 per test, earning $ 1,600.

I also made around $ 200 a night working at summer festivals for my friend’s family’s franchise business.

Be creative and don’t be afraid to get your hands dirty. Working these summer festivals was not ideal as it is very hot in Texas. Sitting outside, serving a funnel cake, and covering yourself with powdered sugar wasn’t exactly how I wanted to spend my summer. But it’s worth doing stuff like that to pay off the debt.

I’ve always made payments on time, so my credit score was already in the 700s. It gradually increased 100 points as I paid off the debt. It helped me get approved for a rewards credit card with a $ 27,000 credit limit.

I created a giant spreadsheet that forecast five years and tracked each debt payment, the repayment schedule, and the impact of the extra payments on my net worth, which was motivating.

I also joined the SoFi Facebook group, whose members were either trying to pay off their debt or had already paid it off. Reading their stories motivated me to get there too.

I developed an understanding of needs versus wants. You might feel like you need to upgrade your phone or car, but when you sit down and think about it, you don’t really need to.

My short term goal is to have a net worth of $ 100,000. I would also like to buy a house as an investment property. The ultimate goal is to retire early, perhaps at age 55.

If you have student loans, see if you qualify .

Nwamkpa used the debt snowball way to pay his debts, but the works best if you don’t need short-term wins and want to save the most on interest.

Flexible side shakes can increase your income and help you pay off debt faster. Consider other ways to .

Create a budget to see where your money is going and where you can save more.

Photo courtesy of Tanya Nwamkpa.

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