How I Paid Off $40K in Debt in Under 2 Years
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How the Debt Began
Like many millennials, I grew up with the message that college was the essential path to a good-paying job. I was told it didn’t matter what I majored in; simply earning an undergraduate degree from a 4-year university would unlock higher income and better opportunitie During high school I participated in the Running Start program where I was able to take free college classes and earn both high school and college credit simultaneously. While participating in the program, I learned that transferring to a 4-year university with an Associate’s degree offered a way to save on tuition fees since I would have already completed 2 of the 4 years needed to earn an undergraduate degree. After earning my Associate’s Degree in Integrated Studies at Cascadia Community College, I transferred to the University of Washington in fall 2008, eager to experience “real” college life: sororities, dances, study groups, and frat parties.
Of course, the quintessential college experience came with a hefty price tag—housing fees, sorority dues, text books, and the freedom of living away from home all added up quickly. To cover tuition and housing costs I turned to student loans. Unfortunately, I didn’t qualify for enough subsidized or unsubsidized student loans, so I made the mistake of taking out a high-interest personal loan. I didn’t have guidance and genuinely believed I was making the right choice by “investing” in my future. I graduated in spring 2011 at the age of 22. Along with my degree, I carried over $40,000 in student loan debt.
The Weight of Debt
After graduation, I moved back in with my parents and continued to work at my part-time job at a private golf club while deciding what to do next. Unlike many of my peers, I couldn’t afford to take unpaid internships or travel. Instead, I faced $585 monthly student loan payments, along with car insurance, and a car loan. I struggled to find higher-paying jobs. I felt like a failure and my mental health suffered. My experience was limited to babysitting and restaurant work, and office positions rejected me. I bounced between restaurant jobs before finally landing an office job with full-time hours and benefits at age 23.
For the first time, I had a reliable income. I also made the mistake of buying fancy office clothes I didn’t need and racked up significant credit card debt. Overspending became a coping mechanism for my unhappiness, and I justified it by telling myself I “worked hard” and “deserved” nice things. At the same time, I was paying out-of-pocket for naturopathic medical care to address ongoing digestive issues, as well as spending more on the organic and gluten-free groceries that were recommended by my provider.
Each month, I felt the crushing weight of living paycheck to paycheck.c I remember one particular time when my car broke down, and I didn't have any money in my account to pay for repairs so I had to wait until payday before I could pay the mechanic and retrieve it from the shop. It was a constant, exhausting cycle of barely staying afloat. I’d save some money, only to have car repairs or unexpected bills wipe it out. My account would become overdrawn, credit card payments were late, and fees piled up. I felt stuck in a cycle of shame, debt, and financial stress, and I resented my parents for not teaching me about money. Eventually, I realized something had to change.
Turning Point: Learning About Money
On my daily commute, I started listening to audiobooks, including The Money Book for the Young, Fabulous, and Broke by Suze Orman. This book opened my eyes to just how much I didn’t understand about managing money, from basic budgeting to navigating student loans. It felt like someone was finally speaking my language, breaking down finances in a way that was both practical and approachable. I was blown away by how much I didn’t know about budgeting and finances. Shortly after, a coworker introduced me to Dave Ramsey’s Total Money Makeover, which offered a tough-love approach to paying off debt. While I don’t fully agree with their philosophies now, both books gave me a starting point.
While the books mentioned above were highly praised at the time, my top pick and the book that made the biggest impression on me is Financial Feminist by Tori Dunlap. Boy do I wish it was available in my 20’s! In the book there are fantastic exercises that are designed to examine your deep-rooted beliefs about money. I found that once I was able to identify my beliefs about money, I could re-frame my thinking which ultimately helped me break free from my toxic spending cycles. I cannot stress enough that you should take the time to examine your spending patterns and money beliefs so you can make a lasting change.
5 Steps to Becoming Debt-Free
1. Write Down All Your Debts
Start by listing every debt you owe: student loans, car loans, credit cards, personal loans, etc. Include the minimum payment, interest rate, and due date. When I first did this, I was shocked at how much of my income was going toward debt. But knowing exactly what I owed was the first step in taking control.
2. Track Your Spending and Create a Budget
Before you can create a realistic budget, you need to know where your money is going. Track your spending for a few months to identify patterns. I realized I was overspending by about $300 a month, mostly on restaurants and shopping. Once I had a clear picture, I adjusted my budget to reflect my actual spending habits, rather than setting unattainable goals. Make sure to include “fun money” or savings for things like vacations, so you don’t feel deprived.
3. Build an Emergency Fund
An emergency fund is essential for breaking the cycle of relying on credit cards. While $1,000 is a good starting point, I I quickly realized I needed a larger financial cushion to cover emergencies like car repairs and found that $1,500 to $2,000 gave me more peace of mind. Some experts recommend saving 3-6 months of expenses before tackling debt, but do what feels right for you. The key is having enough to handle unexpected expenses without derailing your progress.
4. Create a Debt Repayment Plan
Once I had a budget, I used the debt-snowball method to prioritize my repayments, listing my debts from smallest to largest and attacking them one at a time. This method gave me a sense of accomplishment and helped me stay motivated, though progress was slow. Because my income wasn’t enough to make significant progress, I picked up side jobs like babysitting and restaurant work. Every extra dollar went toward paying off debt. Find what works for you, whether it’s the snowball method or targeting the highest-interest debts first.
5. Stay the Course and Adapt
Life is unpredictable, and setbacks are inevitable. I was laid off twice, dealt with unexpected car repairs, and faced health challenges. Each time, I had to pause my debt repayment and dip into my emergency fund. I had a housing situation fall through and bought a travel trailer fully expecting to explore the US and live as cheaply as possible on National Forest and BLM land. However, my job called me back into the office and ultimately that plan was put on hold indefinitely. But it turned out to be a blessing in disguise as I adapted my plans to live in my travel trailer on my parents’ property which ultimately allowed me to save money and accelerate my debt payoff.
Reaching the Finish Line
After years of trial and error, I’m proud to say I’m debt-free! The moment I made that final payment was overwhelming—equal parts relief, pride, and disbelief. I felt a huge weight lift off my shoulders, knowing I was no longer burdened by the constant stress of owing money. It’s a freedom I had only dreamed about, and it’s allowed me to focus on building a future I’m truly excited about. Over 1 year and 8 months, I paid off $40,000 in debt. I would be remiss if I didn’t also mention there was about $15k of inheritance I received after the passing of my grandfather which greatly expedited my repayment timeline. But I chose what to do with that money and instead of going on a vacation or buying something expensive, I stayed the course and put the extra money towards my debt payoff goal. For the first time in my adult life, all the money I earn is mine. I can decide how it’s spent, saved, or invested. The journey was long and filled with challenges, but it was worth it. My next goal is to build a fully funded emergency fund and continue building financial security.
Resources
Some of the links on this page are affiliate links. This means that if you make a purchase through one of these links, I may earn a small commission at no additional cost to you. I only recommend products and services that I believe in and that I think could be helpful to you. Your support helps me continue to create content and share helpful resources!
Financial Feminist by Tori Dunlap
The Money Book for the Young, Fabulous, and Broke by Suze Orman
Total Money Makeover by Dave Ramsey
Mint App (budgeting)
EveryDollar App (budgeting)
If you’re just starting your journey to becoming debt-free, know that it’s possible. It might feel overwhelming now, but every small step adds up. Start where you are, and don’t give up. You’ve got this!
