How I Paid Off $50,000 in Debt in 2 Years: My Journey to Debt-Free Living
Debt can feel like a heavy burden,
constantly looming over you, and for years, that’s exactly how I felt. I was
$50,000 in debt, a mix of student loans, credit card balances, and a car loan.
It seemed impossible to tackle, but two years later, I was debt-free. It wasn't
easy, but it was doable, and if I can do it, so can you. This is my story,
filled with lessons learned, strategies that worked, and how you, too, can
climb out of debt.
The Wake-Up Call
My journey to becoming debt-free started
with a harsh realization: my minimum payments were barely touching my balances.
I had racked up over $25,000 in student loans, $15,000 on credit cards, and an
additional $10,000 in a car loan. One day, after looking at my bank statement
and realizing how much of my income was going toward interest alone, I knew
something had to change.
The moment of clarity came during a casual
lunch with a friend. She mentioned how she had just finished paying off her car
loan early, and I was shocked. Here I was, making minimum payments on
everything, while others were getting ahead. That conversation sparked
something in me. I didn’t want to spend the next decade drowning in debt. I
wanted financial freedom.
Step 1: Taking a Hard Look at My Finances
The first step in my journey was figuring
out exactly where I stood financially. I knew I had debt, but I had never fully
added it all up or considered how much interest I was paying. I sat down with
my laptop, logged into all my accounts, and made a spreadsheet listing every
debt, the interest rate, and the minimum payment.
Seeing the total—$50,000—was overwhelming,
but it was also the push I needed. I knew the exact numbers I was dealing with,
and it was time to make a plan.
Step 2: Creating a Budget
Budgeting was something I had avoided for
years. It always seemed too restrictive, but once I faced my debt, I realized
that budgeting wasn't a punishment—it was the roadmap to freedom. I started by
tracking all my expenses for one month to see where my money was going. What I
found was shocking.
I spent an obscene amount on dining
out, subscription services, and little impulse buys that added up quickly. Once
I saw the pattern, I knew I could cut back significantly. I created a
bare-bones budget, cutting out everything that wasn’t a necessity. Here’s how I
slashed my expenses:
- Dining out: I started meal prepping and cooking at home, which saved me around $300 a month.
- Subscriptions: I canceled multiple streaming services and unused subscriptions, saving another $50.
- Impulse buying: I instituted a 24-hour rule for purchases. If I still wanted it the next day, I’d buy it. This helped me avoid unnecessary splurges.
With these cuts, I freed up an extra $500 a
month that I could put toward my debt.
Step 3: The Debt Snowball Method
Now that I had more money to allocate
toward my debt, I needed a strategy. After some research, I decided to use the
debt snowball method. This method involves paying off your smallest debts first
while making minimum payments on the larger ones. Once a small debt is paid
off, you take the amount you were paying on that and roll it into the next
debt.
For me, this method made the most sense
because it provided quick wins, which kept me motivated. My smallest debt was a
credit card balance of $2,000. By putting all my extra money toward that card,
I paid it off in two months. The satisfaction of eliminating one debt entirely
gave me the momentum I needed to keep going.
Step 4: Side Hustles and Extra Income
While budgeting and cutting back were
essential, I realized that increasing my income would help me pay off my debt
faster. I started looking for ways to earn extra money on the side. Here’s what
I did:
- Freelancing: I picked up freelance writing and graphic design projects on platforms like Upwork and Fiverr. This added about $400 a month to my income.
- Selling unused items: I went through my apartment and sold clothes, electronics, and furniture I no longer needed. Over six months, I made about $1,500 just by decluttering and selling items on eBay and Facebook Marketplace.
- Part-time gig: I took on a weekend job at a local café, earning an extra $200 a month. It was hard work, but every dollar counted toward my goal.
In total, my side hustles added about $600
to $700 a month to my income, and I threw every extra cent at my debt.
Step 5: Staying Motivated
Staying motivated throughout the two-year
journey was one of the hardest parts. The excitement of paying off a small debt
can quickly wear off when faced with larger balances. To stay on track, I used
a few tactics:
- Debt tracking: I kept a visual chart of my debt and colored in each section as I paid it off. Watching the chart fill up was incredibly satisfying and kept me motivated.Â
- Financial podcasts: I started listening to personal finance podcasts to stay inspired and learn new tips. Hearing success stories from others reminded me that becoming debt-free was possible.
- Accountability: I told a few close friends about my goal. They checked in on my progress and celebrated each milestone with me. Having accountability partners made a huge difference.
Step 6: Adjusting When Life Happened
Life isn’t always predictable, and I faced
setbacks during my debt-free journey. There were months when unexpected
expenses—like car repairs or medical bills—derailed my progress. Instead of
getting discouraged, I adjusted my plan. I built a small emergency fund to
handle these surprises, which allowed me to stay on track without going deeper
into debt.
Step 7: Debt-Free!
After two years of hard work, side hustles,
and smart budgeting, I made my final debt payment. The feeling was
indescribable. I had been carrying that $50,000 weight for years, and suddenly,
it was gone. My income was no longer tied up in interest payments, and I could
finally start saving and investing for my future.
What I Learned
Looking back, here are the biggest lessons
I learned from paying off $50,000 in debt:
- Budgeting is essential: A well-planned budget was the foundation of my success. Without it, I would have continued to overspend and make minimum payments forever.
- Small wins matter: Paying off smaller debts first gave me the momentum I needed to tackle larger balances. Don’t underestimate the power of a quick win.Â
- Earning extra money accelerates progress: Cutting expenses alone wasn’t enough. Side hustles and selling unused items helped me get out of debt much faster.
- Motivation is key: Staying motivated, even when progress seemed slow, was crucial. I celebrated small victories and kept my eye on the big goal.
Moving Forward: Financial Freedom
Today, I’m debt-free, and my financial
goals have shifted. Instead of paying off debt, I’m focused on building an
emergency fund, investing for retirement, and saving for a house. The journey
was challenging, but the freedom I feel now makes every sacrifice worth it.
If you’re struggling with debt, know that
it’s possible to turn things around. It won’t happen overnight, but with a
solid plan, discipline, and the right mindset, you can break free from the
chains of debt and build a better financial future.
Remember, it’s not about how much you
owe—it’s about taking control and working toward financial freedom, one step at
a time.