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The purpose of this blog is help people improve their Mind, Body, Soul (relationships) and their Money.

Friday, May 16, 2014

Debt Free interview #2 - Stephanie from the Empowered Dollar

This week's debt free interview comes from Stephanie at the Empowered Dollar. An  incredible journey of debt freedom over a period of just under 4 years.

1    How did you get into debt? Student Loans from College.
  2   How deeply in debt were you at the worst point? What did it feel like? $34,579.
I now had the degree. But shaking the chairman’s hand while he gave me my diploma, I felt like I’d been entered into a deceptive contract: “Here’s your diploma. That’ll be $30,000, paid off in monthly installments for the rest of your life.” I felt like BU hadn’t fulfilled it’s end of the deal. At that moment, I had no income. The only money to my name was debt. I had no significant savings. I had no job prospects. Instead of feeling financially free and independent, I felt chained down by a mountain of student loans.

What had I gotten myself into and why hadn’t someone warn me?

I continued working as an intern after graduation, making $1,000 a month. At first, it was bearable. I lived in a cozy apartment with three other girls in a similar post-grad limbo. We would sit around our fold-out kitchen table late at night, commiserating about how unprepared we felt to deal with the real world.
In the meantime, I was beginning to rack up credit card debt. Any unexpected expense became a credit card change; I just didn’t have the savings or the cash flow to deal with it. I was also uninsured and struggled to consistently pay for my prescription medication. I looked for ways to cut back on my expenses. I stopped going out on weekends. I cut back on groceries, like fresh produce – significantly more expensive than the packaged variety in the freezer aisles of the grocery store. Meanwhile, the pressure of finding a real job was getting to me. I was cracking.

3    3  When did you decide to get out of debt and why?
July 15, 2009. It’s 1 a.m., and I can’t sleep....The real reason I can’t sleep has little to do with my accommodations or my hunger pangs. I’ve been crying off and on for the past three hours. I feel hopeless, worthless, and depressed. I’m $30,000 in debt. I’m making $1,000 a month. And I know I can’t survive like this for much longer.

     4   How long did it take you to get completely debt free? under 4 years

     5  What advice would you give to someone trying to become debt free? Stephanie has  5 strategies to crush your debt in no time...

a) Hustle "I honestly thought that I would be able to pay off all of my student loans in a year while earning $48,000. HA. HA. HA. (It’s okay, you can laugh, too). ....I began reaching out to companies doing interesting work and offered to work for them for free – which I later turned into paid consulting."
b) Negotiate - "How much did I earn just by asking over the last 4 years?
I earned $13,000 in bonuses and salary adjustments through negotiation."
     c) Allocate - "The biggest mistake I made out of college? I used my checking account balance as my budget. If I had $1,000 in my account, I felt like I had $1,000 left to spend. So before you start getting used to your fat paycheck, allocate what you need for fixed expenses and student loans in a quick, back-of-the-envelope budget."

     d) Prioritize - "If you want to tackle tens of thousands in debt in a few short years, paying off your student loans has to become one of your top 3 financial priorities – and that means ruthlessly cutting down on the things that don’t matter."

     e) Motivate - "Declare your intentions. Announce it to the world. Tell your family, friends and dog that you’re going to tackle your debt once and for all and you need their help staying accountable. The biggest motivation for me came from publicly declaring my debt goal online."

To Hear more about these strategies or Stephanie's journey from this point forward - please check out her blog

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