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Pay Off Debt: The Good, Bad, and Dumb...
Part of this podcast will focus on personal finance, because personal finance directly ties into how you handle situations in your career.
Today, I want focus on bad debt like car loans, personal loans, and those damn credit cards. Student loans are not as bad, but they are annoying, so we’ll throw those in, too.
All of these at one point added up to over $92,000 for me.
I figured, what better way to kick off the personal finance section of this podcast than with talking about my struggle with that $92K in debt for over 8 years. I definitely want to touch on what things NOT to do that I did, as well as some things that I did that I would highly recommend doing.
So, let’s get started!
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The Debt Spiral
My $92,000 in debt started with a bunch of very dumb decisions.
I wish I could say it was from trying to make my dreams come true or even some other valid reason to go into consumer debt – like helping out my parents. But, really it was me not paying attention or understanding what I was creating for myself to deal with for years after.
In college, I put almost all my spending on a credit card that had a $20K limit co-signed by my mother.
That was my first mistake.
Even though I landscaped in summer and made $13 an hour cash back then, which was way more than minimum wage in 2008 time frame… I was spending my cash on fun stuff, like partying, going out to eat, smoking weed, and building websites for fun.
I left college with $16,000 in credit card debt. I also took out student loans, both Parent Plus and Federal student loans, which totaled $36,000. I was at $52,000 in debt after college.
My Expensive Love for Cars
Over the years, I’ve had 8 cars.
My first car I purchased was when I was 15 years old. A 1990 Honda Prelude SI for $500.
Out of college in 2011, I bought my 5th car I ever owned and first car purchased with a loan. A 1998 BMW for $7K. I crashed it within 3 weeks. I never even made one payment on it. Luckily, I took out GAP insurance which covered the loss.
I then bought my 6th car, a 2011 Scion tC for $25K. I put little money down and locked myself into a $350 car payment. After another year, I crashed that one, too. Again, I had GAP insurance, so it was fully covered.
Car Buying Tip: If you take a car loan to buy a new car, always, always get GAP insurance. It saved me twice, for a total of $32,000!
I then bought my 7th car, a 2011 MazdaSpeed 3, locking myself into a $400 payment. Another year after buying this one, someone hit me causing $11k in damage and back pain I still suffer from to this date.
Because of the back pain, I needed something smoother to ride. I bought a 2011 Audi S4 and locked myself into a $650 payment. I sold that car a few months before I left Apple.
Today, I don’t own a car and haven’t for going on a year now.
Although, I do own a 2000 model year International 3800 school bus that my fiancee and I paid $4,500 in cash to convert into a tiny house. You can check that out on SkoolieLivin.com, @SkoolieLivin on Instagram, or Skoolie Livin on YouTube.
Looking back, I wish I had noticed the amount of money I was paying in interest. Every time I bought a new car, within a few months I wish I didn’t have the payment and bought something cheaper I could pay off faster, to focus more money on paying off my credit cards and student loans.
Trapped by My Income
I felt trapped by my income for many years.
I made less than $50K a year for my first 4 years of my career.
When I went to Harley-Davidson, it jumped up to around $70K.
Then, at Apple it jumped to around $150K take home with all the stocks added onto my base salary.
It wasn’t until I reached Apple that I felt financially comfortable, mostly due to living above my means up until that point. I wasn’t able to make a dent in paying off my debt until I was making $150K.
The ironic thing is that my career for the last 4 years focused on purchasing.
I managed hundreds of millions of dollars in spend at Harley-Davidson and multi-billion dollar budgets at Apple… while I struggled with my own personal finances and bad purchasing decisions at home.
Which is why I made and continue making huge lifestyle changes to reduce my financial liabilities and increase my financial flexibility.
Debt = Stress
To Me, debt = stress.
For 8 years, struggling with that debt, it wore on me hard.
I talk to many other people on a daily basis who hold anywhere from $30K to $200K in consumer debt.
Today, with my debt paid off, one of my goals is to inspire others to focus their efforts on changing their lifestyles and spending habits, to finally become financially free.
Becoming financially free puts all the leverage in your career back into their own hands. You are able to make career changes, change jobs, or even start your own business – without having bills and debt hold you back.
So here are 3 tips that helped me manage and pay off my debt.
My 3 Steps to Paying Off Debt
Step 1: Strictly Follow a Monthly Budget
Follow a budget and review it often. I reviewed mine daily for 8 years while I was working to pay off my debt.
Download a copy of my exact budget template below!
It’s a spreadsheet that you can open up in Microsoft Excel or Google Spreadsheets and is very easy to fill out. All of the calculations are automatic based on filling out the amount you want to save each month, your living expenses, and then your current balances, interest rates, and planned payment on your credit cards and loans.
If you want help creating a custom budget for you, contact me with this form and let’s discuss how I can help you get a budget set up for you based on what your plan.
Here's My Budget Template!
Step 2: The Rule of MVP (Minimal Viable Purchase)
There is an acronym in the product development space that almost every company knows – the MVP. MVP stands for Minimal Viable Product, meaning companies want to first create the most basic product possible to get into the market and see if it will sell, then further improve it over time.
I have another meaning for MVP – Minimal Viable Purchase, which means making purchases or lifestyle decisions to satisfy a need that costs the least amount of money.
Right now, I work from home on this podcast, my website, the courses, the supplement company, and helping others build their online businesses. So, I don’t need a car. If I were to buy a car, it would be something that costs less than $3,000 that I could pay cash for and most likely buy it from a public auction – like a well maintained city truck.
We purchased a school bus to convert into a tiny house. It’s costing us $20,000 total – including the cost of the bus – which is the cost of one years rent. We plan to live in it for at least 3 years. Living in a school bus converted tiny house and traveling North America, we plan on saving at least $100K in living and business expenses over the next 3 years.
This goes into buying branded vs generic food products, branded vs generic clothes, and even just looking at your services at home – like internet, cable, and video streaming services to see what options exist out there to reduce this cost.
Grab a copy of the 40 Ways to Reduce the Cost of Living. This is a list of several different options for places to buy products and services for cheaper than what is heavily marketed to you, as well as many other ideas for ways to reduce the cost of living.
Save Hundreds Every Month!
Step 3: Find an Accountability Club
One of the best things you can do is find people who will hold you accountable for achieving your goals.
By yourself, it is easy to get distracted, push things off, let stuff slip, and next thing you know, a few months have gone by and you have little to show for results.
An accountability club makes your goals public from day one, since you often announce what you are looking to accomplish right when you join. Making your goals public and having someone (or multiple people in a group) hold you to those goals can help you achieve them faster!
By joining an accountability club – you will learn, grow, and achieve along side others looking to accomplish similar goals.
You also have support system of people who have been through or are currently going through similar situations, who can give insight and help guide you on how to potentially navigate your situation.
If you are interested in joining an accountability club, you can sign up for the Career Coffee Club!
Step 3: Find an Accountability Club
Career Coffee Club is the official accountability mastermind group of Careers Over Coffee podcast.
Inside Career Coffee Club, you’ll access to an exclusive group of people who are making financial changes in their life, paying off debt, making career changes, and building side hustles for extra income.
Our friends in the Career Coffee Club also get access to members only content, courses, videos, resources, a private Facebook Group, and more.
If you are interested in joining the Career Coffee Club, you can head to CareerCoffeeClub.com for more information.
I am personally involved in every aspect of the Career Coffee Club, from doing live videos to creating content. This club is where I spend a good amount of my time directly helping others, answering questions, and working with people to help them achieve their goals.
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Join me for Careers Over Coffee Episode #14 next week, where I’ll be diving into How to Get a Job in a Recession.
If you didn’t know, a major recession happens roughly every 8-10 years and it’s been 11 years now since the Great Recession of 2007 – 2009. It’s coming, so let’s get ready!
I’ll see you next week!