How I Paid Off $5k in Debt in Just 4 Months

If you’re reading this you probably have some debt that you want to get rid of, and maybe you feel like you just can’t get ahead with it. Trust me, I know the feeling. When I moved here to Colorado just over five years ago, I had just graduated college with about $40k in student loan debt. My rent was pretty much my entire paycheck and I used my credit card to buy groceries, gas, new snowboards, gear, etc.

Disclosure: Some of the links below are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

I started to feel lost, drowning in debt. I made plans to pay it off and then would want to buy something, or go out with friends and I had no money left so I had to use a card. Then I would feel bad about it later and down the spiral I would I go. It felt like I would be trapped in this never ending cycle of debt forever.

I thought having debt was normal, everyone did it. I never budgeted for anything, I would just wing it. Bad idea! I over drafted my account several times, and paid fees which only made my situation worse.

I had heard about an online bank account called Simple from a friend who worked for the company. Simple was not just a bank but a tool to budget and save money in categories. I had a savings account before but I barely ever used it because any money that I put in just came right back out.

Sign up for Simple right now using this link, and get a free $20 after you make your first purchase.

I decided to give Simple a try. I thought maybe if I could put money into categories I wouldn’t overspend. At first when I signed up, I was unsure. It seemed sort of rogue to have an online bank account. Was it safe? Was it secure? By reading reviews and doing some research I learned that Simple was backed by partner banks BBVA Compass and Bancorp who are backed by Members FDIC. Ok, so it’s just like every other bank, it’s just online. I like online stuff. And as a plus they also don’t charge any fees.

So, I went ahead and put $300 in my new account and decided to just play around with it. I got my beautiful white Simple Debit card in the mail so that I could make purchases. I was able to make new categories to put money into, for example, groceries, gas, credit card payment, etc.

Simple “categories” are called goals. You can either put in one lump sum or you can choose to save over time and pick a date you need the money by and Simple will put it out of your “safe-to-spend” and into each goal.

So far this was good. Once the money was in a goal, I was less likely to spend it. Instead I only spent what was in my safe to spend or what was in each goal for that exact expense. Something started to shift in my brain, I was actually enjoying budgeting and saving money. All of the sudden it didn’t feel like such a chore.

But back to the real reason you are here. How did Simple help me pay off $5k in debt? Well, it’s simple really… 🙂

Once I played around with that $300 and I liked what I saw, I changed my direct deposit to put all of my money into simple except for the amount I needed to pay rent. (As of the time of writing this, you cannot get checks with Simple. You can use bill pay which writes a check for you but I just choose to keep my other checking account because rent is really the only thing I pay for with a check).

Now that I was able to categorize my money into goals I could change the way my brain viewed my money. The first thing I did was to put $1000 into a goal called Emergency Fund. It took about a month of paying the minimum on everything else and not going out to eat, buying gear, etc to do this.

 

Once that $1000 was in there, I cut up most of my credit cards and hid the last one from myself, it didn’t leave the house with me so that I could not use it. (I keep it for airline miles, and only use it to buy flights and then pay it off right away). Now that I had this $1000 I had a buffer in case I overspent instead of using a credit card.

Next I made a budget. I wrote down everything I typically spent money on and allocated myself a little bit of money each month towards the most necessary items. I cut out a lot of stuff, way less going out to eat, buying gear, etc. I knew I needed to hyper focus on this debt.

Once I had the budget I created a goal for each line item inside of Simple. Every two weeks when I got paid, money went into each goal and I left a little bit in my Safe to Spend for miscellaneous expenses that would pop up.

I picked one debt at a time, either the highest interest rate or the smallest balance and put as much money as I could into that debt while paying the minimum on everything else. I was amazed at how much money I could come up with. And because I could budget all of this inside my bank account itself, it made the process so smooth.

Once money was delegated into the debt goal on Simple, I wouldn’t touch it because in my mind it had already been spent. It wasn’t just sitting in one lump sum in my bank account easy to spend without paying attention. Simple was making me pay attention. This was also very motivating. I wanted to pay this debt off asap, so I picked up extra jobs, watched my boss’ dog, sold stuff, I was on a roll and couldn’t be stopped.

I learned about some of Simple‘s other cool features along the way. If you download the app on your phone (and you should) you get a notification every time you buy something. If you buy from a restaurant it tells you what the 20% tip should be. You can pull up all of your goals from your phone and see where you are at, move money around etc.

I used to feel stifled by money. I felt like there was no way out of this hole I was digging myself into. But now I feel free. I still have student loan debt and I am working to get it all paid off, but I am on my way and I no longer feel stressed about it. Simple has helped to take the stress away from saving money and paying off debt. Now, it’s just simple.

The best part? I have an awesome deal for you. If you sign up with any of the links to Simple in this article you will get a free $20 just for signing up! In order to get the $20 you do have to deposit money into the account and then make a first purchase, and then “poof!” it will appear.

So, what are you waiting for, sign up now and escape the debt cycle forever!! This offer will not last forever, its free to sign up and you can always cancel your account later if you don’t like it. 

 

 

 

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