Eight years ago, Emily Shutt found herself in the same scenario as over 44 million Americans: in debt and overwhelmed with how to pay it back.
“When I graduated from college I had about $15,000 in credit card debt and another $15,000 in student loan debt,” says Shutt, 30. “I couldn’t even make my minimum payments on my credit cards, and I didn’t even know I had taken out loans my freshman year of college.”
She hit rock bottom after she had to make a pizza and a grocery care package from her mom last for two weeks while waiting for a paycheck. “I was anxious and ashamed about having no money and all of this debt, especially because I was working in the financial industry,” Shutt says of her January 2010 breakdown. “I spent the rest of that day mapping out my plan and timeline for getting out of debt, and then I took action.”
A year and a half later, Shutt had completely paid off her credit card debt. She made the last payment on her student loans in October 2017.
Figuring out a debt-free life inspired the determined college grad to help others. Shutt became a financial expert and life coach and has helped clients get out of a total of $150,000 in debt. She helped one couple go from living paycheck to paycheck to saving $50,000.
So, what’s Shutt’s secret? Here are some of her top tips for becoming debt-free fast.
4 pro tips for getting out of debt
Shutt used these methods for ditching her own debt and successfully getting others to do the same.
1. Figure out your take-home salary and nonnegotiable expenses
Shutt says many people in debt forget the basics of creating a budget. They get overwhelmed with the large looming number and forget how to break it down into a manageable payment system.
“The first step to getting out of debt is to figure out how much you’re actually bringing home each paycheck after taxes, retirement, and other costs such as insurance,” she says. “Then make a list of recurring nonnegotiable expenses: rent, utilities, groceries, internet, cellphone, student loan repayments, etc. This will help you get a grasp on your finances and determine what you can afford.”
If you’re feeling overwhelmed with this process, don’t worry. You can try out some financial apps to set up and track a budget.
2. Research your mystery expenses
After Shutt took the first step of creating a budget with her take-home pay and recurring expenses, she was baffled when she realized she was left with zero leftover money.
“I thought surely I would have some cash after looking at my monthly budget, but I didn’t have any,” she says. “I needed to figure out what I was spending the rest of it on because I truly had no idea.”
That’s when Shutt looked at her credit card statements and faced the truth about how she spent her “extra” money. Like many millennials, she was inadvertently overspending. “I was going out to eat, buying new clothes and home decor, taking trips with friends, getting manicures, going to happy hour, paying for cable and a gym membership I didn’t use,” she says.
In fact, 73% of millennials surveyed said their generation overspends on unnecessary indulgences, according to a 2018 Bank of America study. If you’re wondering where your money is disappearing, examine your credit card and debit card purchases. Then figure out which extraneous expenses you can live without, so you can build a savings account or have more money to pay off your debt.
3. Commit to conscious spending
Each time you spend on something that’s not a nonnegotiable expense, you’re choosing to stay in debt, Shutt says. She went through all her expenses, determined what was important to her, and then focused on spending her money consciously.
“I cut cable immediately, canceled my gym membership, switched my phone plan to one that reflected my data usage, negotiated with my internet provider to give me a discount, etc.,” she says. “I ended up insourcing almost all personal upkeep, and everything I saved went toward debt repayment.”
Each person’s necessities will vary, so it’s important to think carefully about every purchase. Being mindful of your money will prevent you from overspending and open you up to creative alternatives. For example, instead of buying lunch every day, commit to meal planning and price out your groceries.
By taking that extra second to think before you spend and knowing that the trade-off for any expense can be a longer debt repayment timeline, you could save hundreds of dollars each month. That can go a long way, considering the average student loan payment is $351 per month.
4. Keep reassessing as life changes
Just because you make a budget that works for you at age 22 doesn’t mean it’ll make sense when you’re 30.
“My life has changed radically since that morning sitting on the floor of my apartment realizing I wasn’t going to be able to pay my credit card bills that month,” says Shutt. “I relocated another seven times, got married, bought a house, adopted two dogs, started my own company, and am planning to start a family soon. What I needed and wanted to spend money on in my early 20s looks nothing like it does today.”
Your needs and priorities will continue to change as life does. The key is to learn to make conscious decisions that reflect who you are and where you’re headed. As you continue to grow and change, you’ll be able to use money effectively with no regrets.
It’s less about setting a strict “money diet” for yourself and more about evaluating your financial goals. Every four to six months, look at your income, spending, and future plans. Then ask yourself:
- How are the numbers lining up?
- Where can I cut back?
- Where should I spend more?
- What will make me happy?
Taking the time to come up with answers should keep you in control of your finances and lead to successful money management in the long term.
Manage your money successfully
It’s possible to get a grasp on your finances and get out of debt faster. Shutt’s tips aren’t complicated, but they do require some dedication and effort. If you’re serious about making a difference in your bottom line and aiming for a healthy financial future, set aside the time to be conscious of your expenses.
Saving a few extra hundred dollars here and there can make a huge difference.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.66%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.99% – 5.34%4||Undergrad & Graduate|
|1.97% – 8.54%5||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|Check out the testimonials and our in-depth reviews! |
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 11/13/2020 student loan refinancing rates range from 1.97% to 8.54% Variable APR with AutoPay and 2.95% to 8.77% Fixed APR with AutoPay.