How can you get out of debt when you’re barely able to cover the minimum monthly payments on your current salary?
One solution is to start making more money — which is how Adrienne Dorison was able to pay off $48,000 of student loan debt in just six months.
Overcoming the fear of facing your debt
After graduate school, Dorison landed a job as a supply chain analyst for a large paper manufacturing corporation. But while she was earning a six-figure salary, she was still living paycheck to paycheck, since her graduate degree came with a price tag of more than $50,000.
In a blog post for the Daily Worth, Dorison explained that even with the salary she was making, paying off that student loan debt would still take about 25 years. After covering rent, the minimum student loan debt payments (around $500 per month) and the rest of the bills, there just wasn’t enough money left for extra payments. She had accepted the fact that she’d be living with debt for the next few decades and would someday have to carry that burden with her into a marriage.
But after a while, Dorison realized that living like this just wasn’t going to work and she needed to do something about it. So she started looking at her options.
Reevaluate your spending to give every dollar a purpose
To speed up her loan repayment timeline, Dorison cut her expenses and found a way to increase her income.
When she finally took a good hard look at where all of her money was actually going, she began to realize that her spending habits were a big part of the problem.
“Your expenses reflect what you value — this realization makes your spending intentional,’ Dorison says.
This is something many people never figure out, and very often it ends up keeping them from reaching their financial goals.
The thought of going through your expenses line by line can be kind of scary, but it can also be one of the easiest ways to either start saving or to save more. When Dorison looked at where all of her money was going, she was ‘shocked’ at how much she was spending on ‘everything from eating at restaurants to buying clothes and even dog toys.’
So that had to stop. “I didn’t eat out, and I didn’t buy unnecessary things (clothes, knick knacks, and coffee) like I had previously. I switched my phone provider. I didn’t have cable. I didn’t travel.”
Dorison also points out that while she stopped contributing to her 401(k) during this time, she did have an emergency savings fund of $1,000 in order to cover any unexpected expenses.
Increasing your income
Once Dorison straightened out her priorities and how she was spending her current income, she decided she needed a way to make more money.
So she started a side business.
By using her experience and skills in business, leadership, technology/social media, networking, and communication, she started a blog — and then a business — around helping entrepreneurs run their businesses more efficiently.
Once her side gig began to grow, more clients led to more income — immediate income, which isn’t always available in a corporate setting (since getting a raise or bonus can take more time). So she continued working her day job and her side job at the same time — putting as much of her income as possible toward the debt each month.
And all that hard work really paid off. Dorison reduced her repayment timeline from 25 years to just six months. And after seven months, she quit her day job to focus solely on her new business, which was eventually making her triple the amount of money.
How you can get out of debt, too!
The thought of facing your debt can be overwhelming, but the sooner you do it, the sooner you’ll get it paid off and be on your way to financial freedom.
If you haven’t taken the time to go through your expenses, start there. You may be surprised by where all of your money is actually going.
Then if you want to make extra money, either to fund your emergency savings or pay off your debt quicker, look into side jobs where you can use your skills and experience.
Getting out of debt may not be easy, and it typically requires sacrifices, but part of the process is figuring out what your values and priorities are, in order to be sure you’re setting yourself up for the life you want to live.
Here are some resources to help you get started:
- Setting goals: How to create a plan that motivates you to save more
- Guide to paying off credit card debt
- 7 things debt-free people never do