How This Couple Paid off $50,000+ in Debt in Less Than 5 Years
Some stories can make it sound like millennials are wasting all their money on avocado toast and $4 coffees, but those of us living in the largest population group in the world can tell you that’s not the case.
The average salary of a millennial is an estimated 20% lower than the average salary of a Baby Boomer at the same age, according to a SmartAsset analysis of Census Bureau data. They also have more debt than their parents did at their age, with an average of $33,000 in federal student loan debt alone.
With digital marketing, millennials are more inundated with ads, personalized for our interests and spending habits, than any previous generation was at this point in life — enticing us to open our wallets at alarming rates. According to an Experian study, millennials have an average credit card debt balance of $4,712, a 7% increase for the age group from 2018 to 2019.
It’s no wonder millennials like Chris and Vina Browning turn to credit cards to fund their lives and find themselves in $50,000 of debt with spending habits no one would have thought twice about.
Making ends meet
In the summer of 2012, Chris Browning took out a credit card to pay for his wedding, scheduled for the coming December.
“We didn’t have the cash to pay for it, but we felt that we should have a certain type of wedding,” he said. “I wasn’t comfortable as we racked up roughly $14,000 of debt over about nine months, but it felt like this is what everyone does, so it was justified for us to do the same.”
With ValuePenguin reporting the average cost of a wedding in Los Angeles at over $36,000, they did seem justified to friends and family who wanted to see them get married close to home.
For two years after the wedding, the Brownings continued to accumulate credit card debt through a combination of out-of-pocket school costs, medical bills and other spending.
Chris always felt uneasy paying with a credit card. He knew his debt was growing, but it was spread out over several cards so he never saw the numbers together. This story isn’t uncommon. According to Northwestern Mutual’s 2019 Planning & Progress Study, 20% of U.S. adults aren’t sure how much debt they have, and 22% of millennials don’t know their credit card interest rate.
When Chris finally tallied his debt, he realized they had amassed $27,000 in credit card debt.
“The shock and horror of finally seeing this total number made me realize that a change had to be made,” he said. “The fact that our debt was greater than half of our income was the wake-up call I needed.”
And that was just credit card debt. When they added the car they’d purchased in 2014, their total consumer debt was more than $50,000. It kept them from living the life they’d wanted when they got married. They couldn’t save, travel or invest with the debt looming over their heads.
How to pay off $50K of debt
Chris knew they had to pay off their debt as soon as possible but at the time, their household income was just $64,000, which doesn’t go very far in Long Beach, California. Still, he and Vina did everything they could.
Make a Budget
They made a budget and lowered their expenses to fit it. Vina changed how she shopped for clothes and became a master thrift shopper.
They use Mint to make their budget and track their expenses, and cash back apps like Rakuten and Dosh to save on necessities.
Start a Side Hustle
Chris said the biggest factor that helped them pay off the debt faster was increasing their income.
He took on several side hustles, including selling things on eBay and delivering food. Toward the end of their journey, Chris started delivering food with multiple delivery apps and was able to make $1,700 in two months.
Increase Your Salary
The extra income from side hustles was nice, but Chris saw they weren’t moving the needle as fast as he wanted. He found there was a better return on investment by taking steps to increase his salary.
As a senior-level bookkeeper, Chris made $44,000 per year. He knew there were steps he could do to make more. He built his resume by joining professional organizations, serving on committees and taking on additional assignments.
He used the experience to obtain a higher paying position as a management analyst at another organization that increased his income to $77,000. Being open to a new role at a more competitive company allowed for a significant jump in income.
“When you stay within your current organization, the rate at which your pay can grow is typically very limited,” Chris said. “Most employers are not willing to increase your pay by more than a few percentage points each year unless you receive a promotion. And even then, often the salary offer you receive can be based on your current pay.”
Combined with the time he’d put into his resume and later getting a promotion at his new company, he was able to increase his salary to $87,000 by the end of his debt-free journey.
These moves allowed the Brownings to pay off their credit card debt in just under two and a half years. They then finished paying off the car loan 21 months later and became debt-free in October 2018.
Enjoying life debt free
It’s easy to get into credit card debt. Especially if you’re splitting your income between daily necessities and other big expenses like a wedding or student loan payments. With the rise of the gig economy, it can be tempting to focus on side hustles to supplement your income — but don’t take for granted your ability to increase your salary for a greater impact.
By going beyond what’s asked, tracking your accomplishments and taking on projects that improve the company’s bottom line, you’ll be in a good position to negotiate a raise or get a better job at another company.
Now that Chris and Vina are debt free, they’ve been able to save and travel without the guilt of looming debt payments. They can also afford to save for the future.
“Now I am able to truly prepare for a financial emergency and work towards retirement on my own terms,” said Chris.