I left college with almost $32,000 in debt.
I attended a small Christian university and it was definitely not cheap! Like many of you reading this, you are likely in a position of debt because of college. And I think we can agree that it is no fun way to start your 20s!
Debt is no easy feat. It weighs you down, seems impossible to overcome, and haunts your future goals. Debt requires you to be courageous, to take ownership, to be intentional, and to make sacrifices. It’s not easy, but it is extremely important to take this action in your 20s.
By the grace of God, I was able to pay off all my debt within 2 years on a $38,000 salary.
It can be done. It should be done as soon as you enter the workforce. The longer you hold onto debt, the longer you rob your future self. The decisions you make today in your 20s directly affect the future decisions you will or won’t be able to make.
There are really no excuses for not paying off your debt in a timely manner. I truly believe that everyone can pay off their debt quickly; that is if they follow the simple steps I’ll list below.
My husband and I are currently working on our next financial goal of paying off our $150,000 30-year mortgage in 5 years! A lofty goal but certainly a doable one – even on average salaries like ours!
You can pay off debt quickly and the sacrifice will be entirely worth it to experience the joy and freedom of being debt-free in the future. Being debt-free in your 20s is the best way to set up your life for success! (What my whole blog is all about!)
I’ll say it again. Remember: the decisions you make today in your 20s will directly affect the future years of your life.
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Let’s get started on how you can quickly become debt free in your 20s…
Debt Free In Your 20s #1: Mindset Shift
It all begins in your mind.
You won’t be debt free quickly if you don’t want to sacrifice. You won’t be debt free quickly if you don’t want it that badly. And you won’t be debt free quickly if your mind isn’t in it.
Becoming debt-free requires you to have a mindset of “I am all in!”
Being partially all in will lead to a longer and harder road. The more you sacrifice now, the less you will have to sacrifice later. Or as Dave Ramsey says, “Live like no one else, so later you can live like no one else!”
So you may ask, how do I go all-in? How do I shift my mindset so that I can be debt free in my 20s?
It begins with this question: What do you envision your future looking like? Do you imagine owning a home, having a family, and driving a reliable vehicle? Do you imagine traveling to your heart’s content? What do you want to do with your life?
For me, I wanted a husband and a family. I wanted a safe home to turn to each night. I desired a stable financial life where I didn’t have to worry about paychecks coming in or bills being paid. Having a small surplus of money would allow me to do what I loved, be content with what I have, and give generously where God lead me to give.
If I was to bring my school debt into my thirties or even forties, I knew that dream would not be a reality.
I would be worrying about my stressful financial situation. I would also be tied down to a job because of the debt I owed.
Instead, I wanted a biblical perspective of money. My money is not my own. Ultimately it is God’s and I am just the manager of it. Debt would make me a poor manager of God’s money.
I have learned over my debt-free journey a few key aspects to be debt free in your 20s with the right mindset:
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Be Content
The number of blessings that God has given me may be unfathomable to others, especially those in less developed countries. I am blessed beyond measure and there is no need to keep chasing the next new things.
I am content with what God has given me and that makes it easier for my mindset to shift to sacrificing for a debt-free life.
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Leave A Family Legacy
If I want to raise my children to have the right mindset about money one day, shouldn’t I set an example? I want my future children to live successful lives. I desire to see them grow and flourish while making a difference in this world.
In order to do that, it begins with me.
Once again, you can have a debt-free mindset by having a future mindset. What do you desire about the future?
A great application and action step to this section is to write down your manifesto, or your “Why.”
Why do you want to be debt-free? What do you want your future to look like? How do you want to change your family legacy?
Write it down and post it somewhere that you will see it often, like your bathroom mirror or car dashboard. That way, when the journey starts to get tough, you can remember your “Why” and stay on track!
One of my favorite books on money mindset has been Dave Ramsey’s Total Money Makeover! I would encourage you to grab a copy here on Amazon today and begin diving deeper today!
See it on Amazon here!
Related Post: The Top 10 Most Informative Books On The FIRE Movement
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Debt Free #2: Live Below Your Means
Once you have the futuristic, all-in mindset you can add another deeper piece to it. That is the concept of living below your means.
And, if you want to be debt-free in your 20s quickly, then you will have to live very low below your income. Let’s keep it simple.
First, how much income do you bring home each month? Write it down. Next, what are the reoccurring bills each month? Write them down.
What is left? That’s the money you need to squeeze as tight as you possibly can, spending as little of it as possible so that you can throw it at your debt.
When I was working towards my goal of paying off debt, I stopped buying clothes, extra food, and anything else that wasn’t an absolute necessity. Did it suck at times? You bet.
However, looking back now I wish I had penny-pinched even more! Why? Because I now experience the freedom of walking through life debt-free (besides our mortgage) and I love having the ability to use my money in other important areas of my life.
Living below your means is taking all the money that you possibly can and using that to pay down your debt. The more you can save, the faster you will pay off your debt.
But what about gatherings with friends? Or going to the movies? Or that new pair of boots I just have to buy? I suggest saying no to them.
But, you may wonder, do I have to yes to everything? You don’t. But you should say no to pretty much everything.
I only bought what I had to when I had the goal of paying off my student loan debt. I threw any extra money at the debt and as I watched it fall faster and faster I became more and more encouraged.
Start saying no to one thing every day and before you know it you’ll be saying no to almost everything. You will be living well below your means and you will be debt-free in your 20s before you know it!
Related Post: How To Accomplish A Gorgeous Wedding For Only $2,000
Debt Free In Your 20s #3: Become Financially Literate
In order to take this journey to a debt-free life, I believe that you have to be educated.
You must learn the financial terms of this world to be successful. If you don’t even understand your credit card rates, retirement accounts, or investment terminology how will you ever be able to truly manage your money well?
It’s extremely important to understand EVERYTHING when it comes to managing your money. I cannot stress that enough.
And I get it, most of us were never taught money lingo growing up. We can barely manage to file our taxes correctly (check out this blog post!) and fail to realize what debt we may even have in which accounts.
Thankfully, we can Google everything and find the answer immediately! So, here’s a pop quiz for you. How many of these money terms do you know?
Credit Score
FICO Score
Budget
Net Worth
Amortization
ARM
Escrow
401(k)
Roth
PMI
Interest Rate
Loan Consolidation
Principal
APR
How’d you do? If you’re still lost after looking at each of those up on Google, check out this book on Amazon. It’s one of my favorites to recommend to anyone just starting out. Especially, my audience of 20-somethings!
Related Post: 7 Of The Best Investment Books For Smart Millennials
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Debt Free #4: Have A Side Hustle
To pay off debt quickly, you need to spend less AND bring in more income. This will widen your gap. You’ll have more money to pay off your debt in a very fast manner.
While some side hustles do require small investments upfront, they can pay dividends in the future for years and years to come. One example would be this blog that you are reading right now! (:
Here are some side hustle ideas for you to try:
–Start A Blog! (my side hustle of choice)
-Referee a sport you love
-Sell clothing on Poshmark
-Gain a new skill to provide a product or service with CreativeLive
-Freelance your work on Fiverr
-Deliver groceries with Shipt
-Nanny/babysit
Still not sure which side hustle to pick up? Check if you can work overtime at your current job. Google part-time work in your area. Think about what skills and talents you have. Ask people you know if they know of any easy work you could do.
You never know what opportunities may arise as well when you start looking!
A word of warning: don’t burn out. And don’t place work as a higher priority in life than eating healthy, being a responsible citizen, and getting enough sleep. You will probably feel out of balance as you go all-in conquering your debt; however, that does not mean you have to lose control of everything else in your life.
Yes, it is possible to still enjoy life and make great sacrifices! You can be productive, work hard, do more, and still find joy each day.
It’s all about your point of view. A long-term perspective is key to paying off debt quickly and becoming debt-free in your 20s! Which side hustles are you going to start doing today?
Related Post: 7 Side-Hustles Any 20-Something Can Do
Debt Free In Your 20’s #5: Cut Spending and Budget
Now that you are making more money, make sure you are not spending it! How do you do that?
You start with a budget.
A budget is where you list all your sources of income. Then you list all your expenses by category. When you add everything up, your expenses should never exceed your income.
If you’ve never budgeted before, then you must start now! It is foolish to live a life where you are not in control of your money. You need to be the one that tells your money where you are going to spend it. Otherwise, your money will slip through your fingers and you’ll overspend before you even know it!
A zero-based budget is where you zero out every category. So, for example, if January is about to end I am going to start making my February budget. I will list all my income sources for the next money and then I examine my expense categories.
I see that some of the expenses are fixed expenses, meaning I pay the same for them every month. This may include the phone bill, wifi, cable, heat, and electricity. Fill those categories in. Now subtract your total fixed expenses from your income total. How much is left?
The rest is to be divided up among your variable expenses, or ones that will change from month to month. This could be clothing, food, entertainment, and gas. This could also include charitable giving. Now, fill in the budget by assigning each category the amount of money you would like to spend in it for the month.
The zero-based budget, which I highly recommend, means you zero out the money. Every dollar is assigned to a category. Your total income ends up equaling your total expense.
Congrats! You are now in control of your money. That wasn’t so bad, was it?
The real work actually begins when you have to stick to those budgets and never exceed a category. A budget requires diligence, perseverance, patience, and motivation (see point 1!).
There are so many fantastic tools out there today to help you get started on budgeting quickly and easily. I personally like Dave Ramsey’s resources here and his Every Dollar app to help with zero-based budgeting.
However, recently, I have found that pen and paper is still my most productive method. It’s simple.
Now that you have a budget, it’s time to examine each category. Which ones can you cut spending on?
Start with groceries. Can you skip the deserts and extras and maybe save $50? How about gas? Could you carpool with someone to work and save money? Or, how about getting rid of a few subscriptions you didn’t even know you had?
To cut spending, examine each category very closely. You’ll realize there are more places to save than you even realized! You’ll be saving more money than you know and be on the way to being debt-free!
Related Post: Will Chris Hogan’s Everyday Millionaires Help You In Your 20’s?
Well, there you have it! Everything you need to know to pay off debt quickly and become debt free in your 20s! Which tips and tricks have you tried so far? Which will you be trying next? Let me know in the comments below!
Kelsey at GoodPointGrandma
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This is such a useful guide! I definitely needed to read this and will be saving for later to refer back to the tips you shared!
I’m so glad!
I love these tips! We are $2k away from being completely debt free (until we buy a house, then we’ll have a mortgage) but we’ll be debt free this month and it’s so exciting! We’ve been working to budget more, and this year I’m doing a spend free year to practice being content and to curb some of those bad spending habits!
Congrats Taylor that’s amazing!!!
Thanks so much for sharing this post! I still have a bit of my student debt to pay off and am hoping to get it done before I turn 30, fingers crossed!
You can do it, Rachel! Get it done before 30 and it will be completely worth it (:
That’s an incredible accomplishment to pay off that much debt on your salary in 2 years! I turned down my university of choice and then left my second university to avoid debt. I’m starting nursing school in the fall, but I wish I could have realized that sometimes you need to go into debt (it would have saved me 2 years of my life!). Like in the case of school, you can’t get to where you want to go without taking out some debt. You just need to be responsible about the debt that you have. I’ve been wanting to… Read more »
You bring up a good point Maddie. I found ways to save a lot of money for college tuition, even graduating a year early, but was still left with a lot of debt. While there would have been ways to avoid it altogether I do not regret the decision I made at all. Some debt can be necessary in today’s culture, like tuition or a home mortgage, but it is so important to pay it off right away and only take on the amount of debt you can reasonably handle. Check out the book and let me know what you… Read more »
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