Americans have a serious spending problem. With many living beyond their means, they have taken out thousands upon thousands of dollars in credit card debt and loans to finance their lifestyles and excessive consumerism.
Debt On The Rise
With a 6% increase from 2016 to 2017, credit card debt is on the rise. Nerdwallet’s 2017 American Household Credit Card Debt Study determined that spending has outpaced income growth over the last ten years. After analyzing data from several sources, including the U.S. Census Bureau and the Federal Reserve Bank of New York, Nerdwallet concluded that the average American household carries over $100,000 worth of debt, of which $15,000 is credit card debt. The total debt owed by American consumers is in the trillions.
We, as Americans, are overrun by debt. Furthermore, the Federal Reserve’s 2017 Report on the Economic Well-Being of U.S. Households found that nearly 40% of adults do not have cash on hand to cover a $400 unexpected expense.
Frankly, I find these statistics incredibly disappointing. There are ways to dig yourself out of debt and start building your savings. Little by little, you can make a difference in what you owe versus what you own. Sometimes, you are your biggest obstacle and you just need to get over yourself. It takes some hard work, sacrifice, and plenty of discipline to create and stick to a debt pay-off plan.
Check out these debt-free success stories:
In one year, Kara Perez paid off $25,000. She lived with 3 roommates, drastically cut down her budget, and worked several odd jobs. Kara catered, free-lanced, drove a van, and nannied. She was even paid $100 for standing in line for someone. Through these gigs among others, Kara was able to make some extra money to put towards her debt. No job was too big or too small – she did what she could, when she could, to hustle hard towards a debt-free life.
Live in the Hood
The McClanahan family moved from the cushy suburbs of Chicago into the hood so they could focus on paying down their $120,000 debt. Aja McClanahan and her husband were offered a property on the south side of Chicago at no cost. At first, they declined the offer. However, after examining their finances, they ultimately decided to make the move.
In a neighborhood of gang activity, gunshots, and homes selling for about $2,000, the McClanahan family owned a home free and clear. They were able to aggressively pay down debt because they had no mortgage or rent payments. The McClanahans became debt-free three years after moving into their home.
Strategize to Win
Sunethra Muralidhara was unfazed by the $200,000 debt she accumulated through student loans. She believed that student loans were considered “good debt” and that it was perfectly normal to take upwards of 30 years to pay them off. It wasn’t until Sunethra’s then-boyfriend, Michael, shared his concern about how her debt would affect their future together that they decided to tackle the debt right away.
They created a debt pay-off strategy that included relocation, a strict budget, and saving 75% of their paychecks. Sunethra and Michael moved halfway across the country to Nevada, where there is no state income tax and the cost of living is lower. Eliminating luxuries, living off of 25% of their paychecks, and working long hours eventually allowed them to become debt-free after 26 months! Not only did they successfully pay off $200,000, they also paid for their wedding and Michael’s MBA program without financing.
Double the Workload
With $77,000 worth of consumer debt, Kelley Olinger was one unexpected payment away from foreclosure. Faced with an empty bank account, virtually maxed out credit cards, and a mortgage payment due, she had hit rock bottom and was ready for a change.
Kelley cut out unnecessary expenses and learned how to create an effective budget. The biggest game changer in Kelley’s debt-free journey was the decision to pick up a second full-time job. She sold real estate during the day and waitressed full-time outside of traditional work hours. Kelley sacrificed her social life and committed herself to two full-time jobs in order to pay off $77,000. Her debt was paid in full in one year and 10 months.
What would you do to reduce your debt?
How far would you go? The stories above are not only inspiring, but they also demonstrate that it is absolutely possible to get out of debt. To completely eliminate debt is a serious goal that can be overwhelming. In order to remain constant and focused on your debt pay-off plan, it’s important to start small.
Jump-start your financial freedom journey with some of our favorite tips.
- 10 Tips For Reducing The Drain On Your Wallet
- Top 7 Rules For Credit Cards
- How To Stay Motivated When Paying Down Debt
Statistically, it’s completely normal to be in debt. Normal is boring; try being a rebel.