Almost five years ago, I had a net worth of negative $23K, $200 in savings, and ample amounts of credit card debt. Fast-forward to now and you’ll find a far different financial picture: A net worth of over $130K, $87K in savings, and $0 in credit card debt. Plus, I own my first home, and I’m planning to purchase an investment property next year.
How did I go from the self-proclaimed Princess of Interest to a home-owning, reformed spendaholic? I made my debt payoff efforts a game!
You can, too, by following the steps below.
Setting some basic rules for your game:
Post & follow goals. I was religious about posting my goals, and I still am. I started with annual goals, then broke those down into tangible monthly goals. When I felt extra motivated, I’d post a weekly post-it note as a reminder of everything I hoped to accomplish. I challenged myself to have as many “blow out” months as possible; where I literally would blow my goals out of the water.
Track every penny. At first, this was a huge chore. Eventually, it became second nature to track where every single penny of my money went. My current system is to keep a weekly post-it on my desk where I record my daily spending. At the end of the week, I transfer all of those numbers to my detailed Excel budget sheet and total up how much I have left in each category.
Pay yourself first. In an effort to curb my spending and build savings while also paying down debt, I automated my savings and retirement contributions. I started with only $50/month into an online bank account and $100 to a Roth IRA. Once I paid off a credit card, I immediately rolled the amount I used to pay towards it to the debt of another card. When I’d finally paid off every cent of credit card debt, I began to pay myself–by upping all of my automated savings amounts.
Rolling the dice:
Be creative. I found ways to cut back on everything including groceries (coupons! less processed foods!), rent (got a roommate), utilities (cut out cable, haggled with companies), insurance, etc. I also learned the fine art of bartering–I traded baked goods for haircuts, homemade dinners for gift cards which I’d use for new shoes, cleaning supplies, and meals out. Basically, I tried to be as creative as possible when it came to saving and spending money.
Boost your income. During my debt-payoff game, I challenged myself to become a side gig guru. I scoured Craigslist for side jobs, and I threw myself into bringing in some extra cash 100%. Because I hadn’t had the extra income in the first place, I made sure to send every single cent to my debt.
Frugal vs. cheap. Realize that living a frugal lifestyle does not mean one is cheap. You can find great ways to socialize, exercise, and even travel on a shoestring budget. The key here is not being afraid to pass when something doesn’t fit into your budget and being able to confidently suggest free/cheaper alternatives.
Keep your eyes on the prize. There were times when I felt like giving up, when I felt as if I’d never see the glory of living a consumer debt-free life. But when my focus waned, I reminded myself of why I was working so hard. I reviewed my goals, and I looked over my progress in an effort to reignite my motivation. I never stopped moving forward because I believed in my ability to reach my goals…no matter how long it took.
Bringing home a win:
Never stop improving. Above all, I’ve maintained my solid financial foundation because I’ve applied what I learned during my debt payoff game to my permanent money management strategies. While I may not have boatloads of credit card debt to pay off anymore, I still have aggressive goals for saving and investing. To me, a bit of game playing in an effort to reach these goals is more than worth a bit of sacrifice.
Do you play any games with your money?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.