Jessica Garbarino has been enjoying the sweet taste of debt freedom since March 5, 2015. That was the day she finally put her $56,000 debt to rest and walked away from a life of owing money to others.
Although her journey to debt freedom was not an easy one, it went much more quickly than she could have imagined. Here’s everything you need to know about Jessica’s path to debt freedom, and how you can follow it yourself.
The lightbulb moment
It was when she was watching her grandmother balance her checkbook during a visit in January 2010 that Jessica realized how much she hated being in debt.
“My grandmother is so meticulous about keeping accurate financial records, and it made me remember all the sacrifices she and my grandfather made when coming to the US from Cuba in 1962,” Jessica recalls. “They worked long hours at jobs below their skill level, learned a new language, and started over from zero in their late 30s.”
“I realized I was throwing away the huge opportunities that were given to me by their sacrifice and that I needed to become more responsible with my money,” she adds.
Finding a debt-payoff system
Luckily for Jessica, her lightbulb moment coincided with a friend’s enrollment in the Dave Ramsey Financial Peace University program. After hearing her friend’s testimonial, Jessica purchased Dave Ramsey’s book and started following his advice.
She started by totaling up her debt and by her calculations she owed $56,000 (not including her mortgage). She then broke it down into $29,000 in student loans for her MBA, $14,000 in credit card debt, and a $13,000 car loan.
Even though it was a somewhat discouraging amount to face, Jessica was on fire to become debt free. She used the debt snowball method to pay off her loans, which meant paying off debts with the smallest balances first:
“I am a firm believer that the small wins help keep you motivated and help you to believe that paying off your large debt balance is possible–you just need to do so one bite at a time,” Jessica says. “I had been great at creating budgets in the past (I’m an accountant by trade) but I had never followed through.”
“Having these smaller debt payoff goals kept me motivated to stay on budget and watch the debt balance shrink,” explains Jessica. “In that first year, I paid off $26,000.”
When life gets messy
Unfortunately, very few debt payoff journeys are completely smooth sailing.
In February 2011, a year after her lightbulb moment, the same grandparents who so inspired Jessica needed some help, so she moved from her home in Minnesota to Florida to take care of them.
Even though Jessica was able to keep her previous job on a contract basis after her move, the hours dried up. She found herself without an income and scrambling to find work.
Not only did she have to put the brakes on her debt payoff, she also had to stop making the mortgage payments on her house in Minnesota. By the time she found a new job in Florida, she was so behind on her mortgage that her house went into foreclosure.
It was a tough time for Jessica.
“Needless to say, I lost motivation and over the next two years, I just lived normal life, paying minimums on my outstanding debts, only sometimes paying extra,” she says
Remembering her goals
During a friend’s Facebook challenge to share their goals publicly in August 2014, Jessica remembered her passion for becoming debt-free.
From that moment on, Jessica worked hard to get her debt to zero. She was able to eliminate it all a mere seven months later on March 5, 2015.
“I wish I had started earlier,” Jessica says. “I know hindsight is twenty-twenty but all those years that I avoided addressing my debt, I kick myself for not doing it sooner.”
“I am grateful that I did start when I did and I wish I had known the time would go by quicker than I imagined,” she adds. “It’s amazing how overwhelming the goal can seem until you get into a new normal. Suddenly a few years go by and you are making your last payment.”
Debt burdens of a “normal American life”
It was easy for Jessica to fall into debt without thinking about it because she lived what she describes as “a normal American life.” She was careless with credit card spending, took on a car loan, and decided to take out nearly $30,000 in student loans for an MBA that may or may not have been worth it.
“I don’t feel like I got any intrinsic value from the education I received, although I may never know what doors that degree opened for me,” Jessica explains.
“I think students need to think carefully about the investment they make into their education and personal development and determine if it really matches their long-term goals,” she says.
But it’s not just the debt of “normal American life” that can be a problem, according to Jessica. She is also worried about the fact that single people do not necessarily have a lot of role models to teach them how to handle money.
Much of the financial advice available is geared toward couples and families with children, but there is no one speaking up for the single person.
She has seen single women in particular who believe they don’t need to really start thinking about finances until they get married. Jessica has decided to fill that information gap.
“I started my site Every Single Dollar to be that resource of information, role modeling, and encouragement to single women everywhere,” she says.
Advice for student loan borrowers
For anyone facing student loans, Jessica’s advice is to look forward, rather than back.
“You finished school. It is a past achievement. Don’t let it follow you for years and encroach on your future goals,” she explains. “Start a plan now to pay off the loans – even if it means taking a part-time job to accelerate the payoff. Your future self will thank you.”
And who knows, perhaps one day you will inspire your grandchildren to reach for big financial goals, just like Jessica’s grandparents inspired her.
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1 Important Disclosures for SoFi.
2 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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% 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 April 17, 2019, 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 04/17/2019. 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 firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
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3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
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.
4 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.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.53% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|