Kevin runs the personal finance website Just Start Investing, where he focuses on making investing easy. Just Start Investing has been featured on US News & World Report and Chime Bank, among other major publications for his easy-to-follow writing. Check out Just Start Investing to learn the simple strategies to start investing today, as well as ways to optimize your credit cards, banking and budget. You can follow Kevin on Twitter, Facebook, and Pinterest.
My name is Kevin and I run the personal website Just Start Investing. This site provides information on investing and personal finance basics – including credit cards, budgeting, banking and more.
How I Got Debt Free
My biggest debt in life so far was a $15,000 car loan that I took out right after graduation.
I know, not a HUGE number, but it was debt nonetheless.
Plus, it was debt I took on for no good reason. Did I need a brand new car right after graduation? No, of course not. But I wanted one and I paid the price, literally.
The one saving grace about this debt was that it had a very low interest rate, around 1%. So I was not in a huge rush to pay it off. However, I did make the full payments on time every month – I viewed it as an opportunity to help boost my credit score (have to look on the bright side!).
After about 2 years of paying off my car loan (and with only 1 year left on the loan), I sold my car as I moved into the city and no longer had a use for it. With the capital from selling my car, I was able to pay off the remaining debt and officially become debt free.
Kind of a quick and abrupt ending to my debt story, but I think the morale of the story was that making consistent payments on time every month set me up for success.
That, and the fact that my loan was fortunately very manageable.
Tips to Get Debt Free
My biggest piece of advice when trying to become debt free is to pay off your debt with the highest interest rates first.
I know, not novel advice, but it is the opposite of what some folks call the “debt snowball” method – where you pay off your smallest debt first (no matter of interest rates) to try to get the ball rolling and build some positive momentum.
For a rational person like myself, this makes no sense.
I’m trying to save the most money possible, not get some imaginary ball rolling. And the best way to save money is to chip away at your highest interest rate debts first.
Here are my tip 3 tips to get debt free:
- Pay off your highest interest rate debt first.
- Make consistent payments (have a plan).
- Continue to invest (3 fund portfolio for the win!) and save where it makes sense!
How I Plan to Stay Debt Free
I love being debt free – there’s no way around it.
I plan to stay debt free when it comes to short term debt. That means avoiding things like:
- Credit Card Debt
- Bank Loans
- Student Debt
- Car Loans
However, I do plan to get a mortgage and buy a house at some point. Still just weighing the pros and cons of renting vs buying, and right now renting is best for me. Although, I know at some point that will sway towards buying.
And, to be clear, I plan to avoid all of the short term debt above, but life happens. I understand that I may need to take on short term debt, but am doing everything in my power to avoid it.
Tips to Stay Debt Free
Here are a few things you can do to help stay debt free:
Set up an emergency fund
Having an emergency fund will help you avoid needing to take out loans to pay for expenses that should be manageable.
Establish a budget
Having a hard and fast budget is not right for everyone, but having a general sense of your finances is likely a necessity. Otherwise, expenses that you probably should have seen coming might catch you off guard.
Build your investment portfolio
This isn’t exactly advice to stay debt free, but it’s something you should 100% be doing while you are debt free! There is no better time to build up your investment portfolio and prepare for the future.
That’s all I got!
Getting debt free takes a lot of work, but with the right focus it is possible.
If you’ve got questions about anything above you can reach me here.