I'm Nataasha: a 29-year-old reformed serial spender who now saves around 40% of her income.
As with many people, the debt-free life used to be a distant dream for me. But I finally got serious about my finances - and you can, too!
The debt spiral
My relationship with debt started at the tender age of 18. All of a sudden, I was deemed to be responsible enough to be trusted with the bank's money.
I got a credit card that originally had a limit of $500, and which increased to $6,000 within a few years.
Next was the car loan for $13,500, bringing my total debt to around $16,000.
The final nail in the coffin was moving out of the share-house I was in living in at age 26. I had no savings for a bond to get my own place, so I asked the bank for more money. They told me they could change my car loan into a personal loan and I could borrow extra on top of that. Seemed like a good idea at the time - but what they didn't tell me was that the interest rate on the loan would basically double overnight.
The moment that changed everything
I was tired of being broke. I had no savings. I often spent the last week before my monthly payday living on credit. I was in a lot of debt and I was struggling.
I had told myself just about every excuse as to why I couldn’t save money or that having debt was just normal and part of being an adult.
In June 2017, something happened that would change the course of my life.
While browsing through a bookstore, I came across ‘The Barefoot Investor’ by Scott Pape. I had never read a finance book, so I don’t know why I purchased it, but I’ll forever be glad that I did. I read the book that night and in one sitting. The next day I started the process of changing my finances.
When I started my debt-free journey, I had a total of $11,489 of debt, made up of $2,433 credit card debt and a $9,046 personal loan. I set myself a goal to become debt-free in one year and started my Instagram account @tashagetsfrugal to document my journey.
Now the hard part
For the next year, I did everything I could to pay off my debt. This included:
I decided to pay off the debt with the highest interest rate first (known as the avalanche method). This debt was my credit card and with a yearly bonus from my job, I eliminated it and then promptly cut it up and cancelled it. It was the first time in my adult life that I didn't have a credit card. I was scared!
I spent the next 10 weeks saving money to build my starter emergency fund of $2,000. This was recommended to prevent getting into further debt if an emergency were to happen.
After that, I began to throw every cent I could at my debt. I set aside as much as I could from each monthly pay and slowly my balance came down. It wasn't until I transferred my personal loan to a 0% interest credit card that I really noticed the balance drop, because my payments were no longer being eaten up by interest charges.
The final countdown
Six months in, at the start of 2018, my debt balance was $6,331. I created a chart that I coloured in, which gave me the motivation to keep going. The process was slow; every payday, I would transfer as much as I could to my debt, and then wait until the next payday to do it again.
In June 2018, I used my yearly bonus from my job to pay off the last $1,200 of debt. I was officially debt-free on June 15, 2018, exactly one year after I started my journey. I was elated! Never in my adult life had I been debt-free. To not have any credit card payments or car payments was the most amazing feeling.
My top five tips for paying off debt
1. Get serious when evaluating your budget. What can you live without?
2. Work out your spending habits and try to overcome them. There's no point having a budget if you can't break a spending addiction.
3. Find a source of motivation. Paying off debt alone can get isolating. Set up an Instagram account to motivate yourself and others. Use colouring charts to track progress.
4. Find ways to increase your income. The more money coming in, the more you can put towards debt.
5. Give yourself time! It can be a long progress. Look how far you've come, not how much further you've got to go.
Author: Nataasha is a money-saving millennial from Queensland. After years of struggling with her finances, she turned her life around and become debt-free in just 12 months. She documents her debt-free journey on her Instagram and blog, www.tashagetsfrugal.com
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