Between the ages of 25 and 28, I paid off just over $80,000 of consumer debt while earning only $40,000/yr at my full-time job.
On the surface, this would seem like a nearly impossible task. After all, once taxes were deducted, nearly everything I earned at work during that time went to repaying debts with no money left to pay for living expenses.
But I utilized a number of tactics to both save money and earn more, which ultimately helped me pay off debt fast. It was part smart personal finance and part hustling, but, as a result, I was able to make huge payments and clear $80,000 of debt in just three years!
Here’s what I did:
1. I refinanced some credit cards with personal loans
For anyone who finds themselves on the wrong end of credit card debt, personal loans can be a lifesaver. If your credit is at least above average (roughly, that means at least a 650 credit score), you may be able to get a personal loan of up to $35,000 at a lower APR than your credit cards.
This is great for two reasons: First, you’ll save money on interest. But even better, a personal loan comes with a fixed repayment period (usually three or five years). That means you’re making fixed payments each and every month and know exactly when the loan will be paid off.
Also, use our Loan Payoff Calculator to see how different payments and interest rates affect your loan.
2. I got a second job at Starbucks
I would work my day job from eight to five, drive 45 minutes across rush-hour traffic, and work another shift six to 10 pm; oftentimes I’d work another eight hour shift on the weekend.
I put all of my earnings (and tips) toward my debt. Yes, it was exhausting—but it added up to between $800 and $1,000 extra dollars a month.
3. I got paid to do surveys and such online
Though it may seem too good to be true, you can actually get paid to take online surveys.
Every day, big companies are looking for real people to respond to questions to help with their market research. Now let’s be honest: You’re not going to get rich answering questions about which brands of soap you prefer—the actual payout from taking online surveys usually works out to minimum wage. But, if you have time to kill, you can earn a few bucks an hour with just your laptop or your phone.
4. I used shopping portals that pay you back for every purchase
I wouldn’t have been able to pay off debt quickly—if ever— if I spent a lot of money. That said, when I did have to spend money, I looked for rewards programs that would pay a fraction of my purchase back.
eBates is perhaps the best known. Today I like Swagbucks, which pays you swag points for every $1 you spend. You can redeem the points for gift cards quickly and you earn a $5 bonus after you earn your first 2,500 SB points.
Upromise is another program I just learned about and am going to join myself. Upromise pays you cash back (sometimes 5% or more!) when you shop at over 800 major retailers. The program has a college savings component, but you can use the rewards for anything—including paying down debt.
5. Yes, I used cash back credit cards for all of my purchases
Although it may be surprising, I continued to carry one credit card while I was paying off debt. Although misusing credit cards is what got me into debt in the first place, by the time I was in payoff phase, I understood the error of my ways. I had been overspending money I didn’t have. Although many financial experts issue an ultimatum to anyone who has overspent on their credit cards — that you MUST cut them up—I do not like relying on debit cards or cash for all of my everyday spending.
Yes, there are times when both are convenient. But if you have the resolve NOT to spend more money than you have on a credit card, why wouldn’t you use one?
With the right credit card, you can earn between 1% and 5% cash back on most purchases and—even better—you get the peace of mind from knowing there is a buffer between you and a hacker who might get ahold of your card.
Yes, you typically are not liable for fraudulent purchases even with a debit card, but there’s a difference: If someone puts charges on your debit card, that money comes right out of your bank account, and it may take several days for your bank to return the cash. In the meantime, you may be stuck unable to pay bills or, worse, charged overdraft fees for pre-scheduled withdrawals. (You’d likely be able to request these be refunded due to the fraud but, still, having a debit card compromised is a much bigger hassle than if it were a credit card.)
6. I sold unused frequent flyer miles
On a related note, if you’ve collected a substantial amount of frequent flyer miles, there are websites that will buy them from you. Like anytime you sell something to a third-party broker, you get far less than the miles are worth, but if you’re in debt, cash is far more important than a few frequent flyer miles.
I will say that this is a somewhat sketchy move, as the airlines prohibit it. I didn’t actually sell my miles; rather, I exchanged them for points that could be used for gift cards at places like Amazon. This site describes how selling frequent flyer miles works (and the risks).
7. I got freelancing gigs online
If you know your way around a computer, chances are you can earn a few extra bucks providing a service online. At the most tedious level, services like Amazon’s Mechanical Turk will pay you (mostly pennies) for transcribing audio, categorizing images, and other mundane tasks. If you have a talent, such as mastery of multiple languages, you might earn more for translating. I did this for a couple of weeks—and earned probably $100 (my rate ended up being less than $1/hr, so I moved on).
Moving up the pay ladder, Fiverr is renowned among web workers for being a reliable source for people who do small tasks well. The gist is you offer to sell a service for $5. The services on Fiverr range from the useful (designing a logo, recording a podcast intro, retouching a photo) to the wacky (roasting you on Twitter, recording a funny voicemail greeting). Although initial tasks sell for $5, Fiverr gives you the opportunity to earn more by selling upgrades, such as a premium price for expedited delivery or additional services.
Upwork is the leading marketplace that connects digital freelance workers and clients around the world, from writers to coders to virtual assistants. Unless you have a very specific (and in-demand skill), landing your first few gigs is a competitive process.
I was able to land some writing gigs on Upwork back in the day but I had to accept slave wages to win projects.
If you’re already working with a few clients, ask them to run their next project through Upwork so you can begin collecting feedback, which will make you more attractive to future clients. (You may have to offer to pay the fee Upwork charges clients, but it could pay off in the long run).
8. I started a business
I started MoneyUnder30.com at about the same time I began working a second job at Starbucks. (A luxury of the young, single, and childless, I realize). But within a few years, my blogging was earning enough money that it seemed like a better use of my time than an hourly part-time job. Without a doubt, blogging helped to pay off my debt.
If you find that you have a knack for writing and an interest in a very niche topic (I don’t know, let’s say you’re really into outdoor landscape lighting, women’s scarves, or web-based accounting software), you should definitely start an online business of some kind.
You can learn more about how I took my blogging from a silly hobby to a full-time business here. If you’re serious about learning everything you’ll need to know about starting a profitable online business, I recommend Ramit Sethi’s courses—in particular Zero to Launch.
9. I got roommates
In hindsight, one of the stupidest money moves I made was renting an apartment by myself despite being in credit card debt. I lasted about a year before I realized how boneheaded that was. I moved in with a few random Craigslist roommates and cut my rent in half! My room was tiny, but I was working two jobs, so I was almost never there.
Moving is stressful, and taking on a roommate if you like extra room isn’t always enticing, but the money is real—and it adds up a lot faster than trying to cut out coffees and lunches.
10. I fired my bank
In addition to all the credit card interest I paid over the years, I would also get hit with overdraft charges to the tune of $35 a pop because I was living paycheck-to-paycheck and didn’t yet have a bank account buffer™.
I wised up and switched to a totally free checking account (I chose Capital One 360) which used an overdraft line of credit rather than overdraft fees.
At the very least, you can now opt-out of overdraft protection at all banks so your debit card will decline rather than going through and charging you a fee. It’s embarrassing, but so is wasting money on bank fees
11. I sold my crap
I left this one for last because it’s (hopefully) the most obvious. But seriously, if you have stuff sitting in your closet or basement that you haven’t looked at in six months, sell it! That could be money in your pocket you can use to pay off debt.
For months, I had multiple listings on eBay selling back many of the impulse purchases I financed with credit cards. Of course I lost a big margin on them, but getting some of that money back and putting it toward my debt was better than having my stuff collect dust (and devalue further).
Getting out of debt isn’t easy, but with some hustle and creative thinking, you can pay off your debt faster than you think.