Post Grad Life
This Millennial Financial Guru Paid Off $45K In Debt In 10 Months. Here's His 5 Crucial Tips On How To Save.
Living a life as a millennial can come with many pros and cons. Although we share similar joys, we also deal with setbacks that can keep us from living our best life, one of which being financial debt. Whether it’s student loans or credit card payments, a vast majority of millennials can’t get past the hurdle of dealing with their financial frustrations.
According to a poll conducted by NBC News, as of April 2018, “A quarter of millennials — those 18 to 34 years old — [were] over $30,000 in debt, including 11 percent who [were] over $100,000 in debt. Only 22 percent of millennials [were reported as] debt free.” Frankly, it seems like none of us can find a way to get out of it.
Fortunately, Devon Horace, a 26-year-old financial consultant from Rochester, NY, has found a way to become part of the 22 percent of millennials who are debt free.
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Back in 2015, when Horace graduated from college, he owed a total of $47,238.38 — $37,238.38 in student loans and $10,000 in credit card debt. It wasn’t until May 2016 that he decided to take his loans seriously, and started his journey toward eradicating his debt — which he accomplished in only 10 months!
Want to know how he did it? Check out these five budgeting strategies Horace suggests to help millennials not only save money, but pay off existing debt in less than a year.
1. Take Inventory of Your Expenses
First thing’s first, write down all of the debt that you owe. Horace told Blavity that when he began figuring out his personal budget, he wrote out all of his student loans in a notebook, arranging the list in descending order starting with the largest dollar-amount loan dollar amount and the highest interest rate and working down. To constantly remind himself of this challenge and keep track of his progress, he made sure his list was easily visible and accessible.
Horace also said it’s important to record your spending habits, as well. For example, Apple Music, Netflix and Hulu all add up, so having a list can help you determine what you’re paying in just entertainment alone.
“You have to have a budget,” Horace said. “A budget is going to save your life, because you’re going to see where your money is being allocated.”
2. Focus on Small Victories
Looking at your debt as a whole can definitely make you feel defeated and overwhelmed. According to Horace, when saw his total balance the first time, he even doubted his own ability to pay his debt back. However, he did not allow the initial shock to prevent him from taking on his debt, one small step at a time. Horace advises everyone to take a similar approach, addressing their debt in small bites by dealing with one loan at a time, ultimately setting small benchmarks that lead to achievable goals.
“I always advise my clients to focus on the smaller victories, because if you look at your debt on a huge scale, of course, it’s going to feel impossible,” he said.
He then broke down his loans into numbers, labeling each like loan one, loan two, loan three and so on. After one loan is paid off, the ability to cross it off your list will leave you more motivated and determined to pay off the rest.
“Focus on one debt total at a time,” Horace said. “This is a marathon, not a sprint.”
3. Pay More Than the Minimum Payments
Horace strongly advises millennials to set up auto pay while paying off their loans. When he set up his auto-pay account with Navient, a student loan provider, he was able to reduce a percentage of his interest rates on his loan.
“When I set up auto pay, I asked my lender to pay the lowest amount I can,” Horace said. “The extra money went toward the principle of the loan.”
Additionally, he wasn’t afraid or ashamed to make this request to his lender, and you shouldn’t be either. It’s important to capitalize off of that opportunity.
“They are not going to deny you — they want their money now or later,” Horace said. “Once I applied this method, along with paying more than [my] minimum payments [and] targeting one loan at a time, I was able to pay off my loans faster. “
Paying the bare minimum per loan payment across each of his loans enabled Horace to eventually them off, in manageable increments, and taking one step at a time allowed him to enjoy the succession small victories mentioned in No. 2.
4. Pick Up an Extra Job or Another Source of Income
Having a side job is definitely a great way to save money and pay off debt. There are many options to choose from, like freelancing, selling unwanted items, babysitting, shoveling snow, driving for a ride-share service tutoring — the list goes on.
“Let’s be real: When you’re in debt, it’s already hard enough to find a job. But a lot of people always make it seem like you have to eat, sleep, breathe, hustle — and you got to just be down to your socks and [unable to] buy anything,” Horace explained. “Yes, it’s true, but one thing a lot of people miscommunicate or don’t mention at all is that sometimes you just need to make more money.”
Because Horace was so determined to pay off his debt, he took on any gig he could find.
“When people say, ‘I can’t make extra money,’ it’s like they’re not trying at all. [However,] there are so many ways to make money today, and you have to increase your source of income in order to pay off your debt faster. Now, some people don’t have to, but if you really want to eliminate your debt faster, within 90 days, pick up a few more sources of income.”
He also strongly warns those who are juggling multiple jobs to save money to avoid tiring themselves out. Just as it’s important to have a budgetary strategy, it’s important to come up with a strategy that provides a healthy work-life balance.
5. Redefine Your Personal Standards for Basic Living
Due to the level of discipline and focus required for this step, Horace considers this to be the hardest of them all. However, this is essential in order to reach your goal of becoming debt free.
“Every day, we are marketed the latest fashion, the latest tech [or] the latest product for us to spend our hard-earned money [on],” Horace said. “To avoid this, I limited my connection to it. You have to get rid of all of this excess stuff.”
While Horace was paying off his debt, he didn’t have a TV in his apartment and limited his time on Instagram. He cut his expenses down so much that he could pay all of his bills using only half of one paycheck. Also during this time, he only had two pairs of pants, and would wear black or white Hanes T-shirts from Target. When his friends would also ask him to come out, if the plan involved spending money, he would decline their invite. In addition, he even ate pasta with tomato sauce for a year straight, to only spend approximately $20 per month on groceries alone.
“That’s the level of discipline and sacrifices I made to during my debt-free journey,” Horace said. “Now, everyone is different, but think about what risks you are willing to take. Don’t worry too much about missing out. [Instead], think about all the things you will be able to buy and be a part of when you are debt free again, this is only temporary, because once you are out of debt, you can buy whatever you want. Right now, I still keep that minimalist mindset, because — again — it was training for me,” he explained.
After limiting his access to life’s luxuries over an extended period of continuous focus and self-discipline, Horace’s sacrifices paid off. Today he owns and invests in six-figure businesses, has his own financial consulting firm, Horace Consulting, owns a few properties, and has two years of living expenses saved up.
“Yes, things will get tough and it was an emotional roller coaster,” Horace said. “There were many times I wanted to give up and ‘live my life', but I stayed committed and disciplined. [Radio host] Dave Ramsey once said, ‘Live like no one else, so later you may live and give like no one else.”
Horace is planning to start a Facebook group to provide financial tips and advice on how to handle debt. He advises millennials to pick up The Richest Man in Babylon by George S. Clason, to help start you off on a good foot as you begin saving. He says this book taught him how to save 10 percent of all coins he earned.
The financial guru believes nothing that is worthwhile comes easy, especially when it comes to financial freedom and wealth building for your family. However, if you are truly committed, you can make it happen.
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