Tahnya Kristina had a 6-figure income and lost it when the market crashed. Today she’s sharing how she’s made getting out of debt her number one priority and how she changed the way she approaches money.
Getting Out of Debt Is Not Fun, But It Can Be Easy…
I was in my late twenties, a university economics graduate and I had a great job at a bank as a financial planner. I was living the good life and I thought that I had it all…then the market crashed. Suddenly, I found myself with a new car, over $20,000 in debt, an expensive downtown apartment and no job. I had no backup plan so, needless to say, I had to make a major lifestyle adjustment.
I was under 30 years old and making a six figure salary, unfortunately I wasn’t financially responsible enough to know how lucky I was; I definitely took my cash flow for granted and unfortunately my early success would soon become my demise. I spent money carelessly on multiple vacations, a new car, expensive electronics and other materialistic (aka unnecessary) personal items. Money wasn’t a concern for me because there was always money coming in.
My bills were being paid on time each month but my debt was accumulating because I kept spending money. I wasn’t worried about my increasing debt balances because I knew that I could afford to make the minimum monthly payment and keep my credit in good standing. At the time, I didn’t realize that making only the minimum monthly payments on my (multiple) credit cards was not enough to maintain a good credit score. Credit card balances that are close to the limit negatively affect our credit score. I guess I learned my financial lesson the hard way.
After years of watching my credit card balances increase I finally hit rock bottom and decided that I didn’t want to live in debt anymore. I wanted my debt to be paid off as soon as possible; the only way to do that was to cut my expenses and allocate more of my new (lower) income towards paying off my debt.
I Got Out of Debt and You Can Too
I found a second job, sold my car, moved to a cheaper apartment, and I set a target debt free date. My new personal goal in life was to become debt free and I didn’t focus on anything else. I always had money on mind; I became obsessed with paying off my debt. I would save money any way that I could because money that was not spent was money that I could allocate towards paying off my debt.
I now live on a strict personal budget that includes setting up pre-authorized payments to transfer money from my checking account to my credit cards every two weeks, and I check-in regularly on my debt free plan to make sure that I am still on track towards becoming debt free by my target date (which is December 31, 2013).
My financial habits have changed since I started to turn my life around but surprisingly I don’t feel like I am missing anything in my life. Actually, How I am happier than I was four years ago because now I can afford to save money and I am well on my way to becoming debt free. I have learned to live without all of the things that I want and appreciate the non-monetary things that I do have. I no longer feel as if going on vacation is a right; I now feel that going on vacation is a privilege that requires savings. For the first time in my life I have more savings than I do debt and I couldn’t be happier!
Tahnya Kristina is a blogger and personal finance expert at My Diary Entry. Every day she helps people find their dream job, get their finances in order and achieve personal happiness. You can follow her on Twitter @TKBlogs.