How I Became Debt Free by 30

It is completely possible to become debt-free by the time you are 30. In this post, I share how I paid off nearly $100,000 of debt by the time I was 27, while still living a fun life.

This post is rather long and feels like it could be on some “debt free Reddit” page – HAHA! I hope you find that you are not alone in this journey nor do you /have/ to sacrifice everything to get out of debt. As the saying goes: “all roads lead to Rome lead to being debt free.”

The Debt

By the time I graduated college at age 21, I had $93,000 in debt.¹ The breakdown of my debt was as follows:

• $18,000 for my car loan
• $50,000 for federal student loans
• $25,000 for private student loan

Thankfully, I did not suffer from any credit card debt by the time I graduated college, which is all too common for young women in their early 20s. I have several friends who used credit cards frivolously in those younger years for shopping, vacations, and other nonnecessities, only to rack up over $10,000 in debt!

If this is you, I empathize with you and assure you there is a way to alleviate the stress of having all that debt. You no longer need to carry around the weight of debt and the shame attached to choices made in the past.

You were doing the best you could with the knowledge you had at the time, it is not your fault, and you can get through this.

I could get into the scumminess of young people being approved for such large limits, but that will be a different topic for a different day. THIS post is all about getting out of debt!

The Strategy

My strategy to get out of debt by 30 did not follow a specific plan from popular get-out-of-debt gurus like Dave Ramsey. I didn’t even start listening to Dave Ramsey regularly until after I was debt-free!

I went on plenty of vacations, contributed to my retirement fund, and pretty much bought whatever I wanted. All while getting out of nearly $100,000 of debt.

Could I have gotten out of debt sooner had I been more strict with myself? Sure. But then I would not have had those wild fun adventures in my early to mid-20s.

I am grateful I said yes to those trips and made those memories at that special time of my life while becoming debt free before I turned 30.

As you read through this post, you’ll understand some of the key ways I was able to live a life while paying off the nearly $100,000 of debt. And, more importantly, how I did not accrue any more debt.

This article is not intended to replace financial advice from a financial advisor. This is just a means for me to share with you what worked for me and a way I can show you that it IS possible to pay off debt, including student loans, in your 20s.

My get of debt strategy followed these ideas:

1. Coming up with a financial plan
2. Prioritizing paying off debt over having significant savings
3. Cutting costs where I could
4. Consolidating my student loan debt
5. Increasing my income
6. Refusing to give into lifestyle creep
7. Limiting excess debt
8. Adjusting my financial plan as needed
9. Celebrating the debt payoff wins

I became debt-free in a little over 5 Years, from Oct 2017 – Dec 2022.

1. Coming up with a financial plan

The first step in becoming debt-free by 30, while still wanting to live a fun life in your 20s, is to come up with a financial plan.

To get clear on developing your financial plan, it is important to:

• Understand all of your debts
  • This includes car loans, student loans, personal loans, credit card debt, and medical debt
    
• Know your take-home pay
  • What is your income after taxes, retirement, HSA, FSA, etc. are taken out of the paycheck?
    
• Understand your expenses:
  • Necessary expenses beyond your debts (things like mortgage/rent, utility bills, cell phone bill, car insurance, renter’s/homeowner’s insurance, pet insurance, HOA fees, groceries, gas)
  • “Fun” money expenses (trips, general shopping, restaurant/bar money, entertainment, hobbies)
    
• Set a savings goal
  • Emergency savings (generally enough to cover an unexpected large expense, like fixing an issue with a car or paying the out-of-pocket expense of a medical emergency)
  • Retirement savings (does your employer have a retirement match?)
    
• Select a debt pay-off method. The two commonly known methods are “Debt Snowball” and “Debt Avalanche.”
  
  • Debt Snowball is to pay off the smallest debt amount first by applying extra money to the principal balance due while making minimum payments on all other debts. When that debt is paid off, you then apply the money to the next smallest debt to pay off that debt faster, while making minimum payments on all other debts. And so on. I selected this method but paid more than the minimum on my student loans while I also paid more than the minimum on my car loan.
    
  • Debt Avalanche is to pay off the highest-interest debt first by applying extra money to the principal balance due while making minimum payments on all other debts. Once the highest-interest debt is paid off, you apply the money to the next highest-interest debt, while making minimum payments on the others. And so on.

2. Prioritizing paying off debt over having significant savings

During those months from October 2017 to December 2022, I consistently prioritized paying off my debt and having “fun” money over having a large sum of savings.

If we recall the “Set a Savings Goal” note from the Coming up with a financial plan section, my savings goals were as follows:

• $1,000 Emergency fund
• 5-15% of my income to Retirement

I set aside anywhere from $100-$250/month to save the $1,000 emergency savings fund. I then continued to set aside $100-$250/month to add to the savings account to create a buffer for any months that I may spend more money than usual and not need to dip into that $1,000 emergency fund.

Whenever I would have an emergency come up, like paying a dental premium or needing to fix something on my car, I would use money from the emergency fund and then continue saving the $100-$250/month to get back to that baseline $1,000 amount.

I viewed $1,000 as my new “0” and tried not to dip below that number unless an expensive emergency called for it.

3. Cutting costs where I could

This is one of the two biggest things that helped me pay off all my debts before I was 30 and still have a fun, adventurous early 20s life filled with travel.

This goes back to “Understand your expenses” from the Coming up with a financial plan section.

One of your largest recurring expenses will be rent/mortgage. If you are renting, like I was while paying off debt (shoot, I still am renting), then you have the flexibility here to really control how much this expense is.

I chose to reduce this expense so significantly so I could have extra money to pay down my debt quickly and still have funds to travel and attend festivals.

I significantly reduced this main recurring expense by choosing to live in places that were cheaper rent. During those 5 years, there was only a 6-month span where I paid more than $1,000/month for rent. All other places I rented from were $850/month, $950/month, $975/month, and $810/month. In that order.

Yes, I paid $810/month for rent in 2022 while living in a large metropolitan area.

These places were often older and did not have fancy amenities, but for what I was getting (money to pay off debt and still have a fun life), it was well worth it.

4. Consolidating my student loan debt

About a year into paying off my student loans, I noticed how the principal balance on all of my Federal student loans was increasing but the principal balance on my private student loan was decreasing. This perplexed me because the interest was higher on the private loan compared to the Federal student loans…

How could this be?

Wanting to pay off my debts as quickly as possible, I refinanced my loans and consolidated all of my debts into one private student loan.

Student loan debt consolidation and refinancing to get a lower interest rate can be beneficial and help you reach your debt-free goal faster.

Although the interest rates were lower on my Federal student loans, I was only making minimum payments that were primarily applied to the accrued interest on the loans!

When I reached out to a company to refinance the loan, I was offered an interest rate that was slightly higher than the Federal student loans but significantly lower than the private student loan. I viewed this as a net positive and proceeded with the move to consolidate.

An employee from the private loan company reached out to me about the debt consolidation. It must not be common for folks to refinance their Federal student loans to a private lender, especially when the interest rate is higher. I did not care. I was determined to see that principal balance decrease.

In total, I refinanced at least some portion of my student loan debt 3 times during the 5 Year debt pay-off period.

5. Increasing my income

Cutting costs where I could was the first of the two biggest things I did to pay off debt before I turned 30, increasing my income was the second.

I believe there are three ways you can increase your income:

• Earn more at your current job
• Take on a second job
• Leave your current job for another that pays more

During my time paying off debt, I did all three things.

The method that had the greatest impact on me paying off my debt quickly was earning more at my current employer when I lived in Phoenix.

Negotiations can play a huge role in how much you earn at a job, especially right when you are hired. I have to admit, I am not the best at negotiating or advocating for myself in this way. I do understand how beneficial it is and how necessary it is, especially for women in the corporate world. Let’s speak up for ourselves and stop selling ourselves short!

I plan to write a blog post about succeeding in the workplace, especially as a female, and will link to that blog here.

What I will say is that there are ways to stand out to your employer and be recognized for your contributions. Play into this as much as possible to increase your income and have more money to pay down your debts.

Whenever I increased my income, I would reevaluate how much money I set aside for paying down debt. I discuss this further in the Adjusting my plan as needed section.

6. Refusing to give into lifestyle creep

What tends to happen when we increase our income? We increase our expenses.

This is a major trap to avoid when prioritizing paying down debt.

I will say, however, I probably traveled a few more times when I compare my income increase from $62,000 during Year 2 of paying off debt to over $100,000 during Year 4…

But let’s go back to the Cutting costs where I could section. As I stated there, my primary recurring expense, rent, remained consistent even as my income increased.

It is invaluable to resist lifestyle creep when your net worth is in the red and you have debt to pay off.

Staying focused on what was important to me helped me resist spending more money on things to impress others. I actually felt rather cool living semi-frugally while making decent money. I was doing laundry at a laundromat during Years 4 and 5 with a 6-figure income. I was determined to use every last bit of the extra income to either pay off my debts or make memories with friends.

7. Limiting excess debt

I paid off my car loan toward the end of Year 2 of paying off debt. I vowed to never get into car debt again.

In December 2023, I held myself to that vow when I purchased my Jeep Grand Cherokee in cash.

It is best to limit taking on extra debt:

• When you are paying down debt
• All other times

Haha – in all seriousness, though, have cash savings set aside for emergencies and large purchases.

When I was paying down my debt, I mostly followed this but can recall two distinct situations where I relied on 0% APR for x months cards to bridge the gap when I did not have all that much cash: the move from Florida to Arizona and when I purchased a new laptop.

Credit cards are something I have mixed feelings about. If you are someone who pays the balance in full every month, then I understand how having benefits outweighs not having benefits.

If you are in a bind for immediate sums of cash and do not have a friend or family member to loan the funds, I understand the choice to use the 0% APR for x months cards. I truly get it.

I caution against using them if you struggle with credit card debt. I also understand their usefulness in specific situations.

They helped me during those district situations, but if I had to do it again, perhaps the smarter move would have been to say “no” to myself a few times and use the money I originally allocated for trips or festivals to supplement the large purchase needs I had.

We are all learning & growing here.

8. Adjusting my financial plan as needed

There were two distinct scenarios where I would adjust my financial payoff plan:

• Increased Income
• Overspending

Increased Income

Whenever I would get a salary bump, extra pay (I’ll explain this below), or bonus check, I would increase my debt payment amount to pay off my car loan and student loans more quickly.

Salary Bump: An increase in my salary, or bi-weekly/bi-monthly paychecks, meant I had more money to use to increase my recurring payments. I started off paying $600/month on student loans and $300/month on my car loan.

My car loan payment remained $300/month until the final payoff in Year 2 of paying off debt. I increased my student loan payment to $700/month in Year 2. By Year 4, I increased this to $1,035/month and the payment fluctuated between $935 and $1,235 through Year 4 and Year 5 to the final payoff. The fluctuation is discussed in the Overspending section.

Extra Pay: When I lived in Florida, I was on a bi-weekly pay schedule, meaning I would get 26 paychecks a year. A lot of folks, including me, create their financial plan on a two paychecks/month income, or 24 paychecks a year. This means twice a year, generally around May and November, there is an “extra” paycheck. Or an unallocated funds paycheck.

I would use these paychecks and split the check into two or three ways. One portion would go toward general savings. One portion would cover the fun trips I had scheduled. One portion would go toward making an extra payment on my car loan, the first loan I wanted to pay off.

Extra payments on debt go a long way since they typically can attack more of the principal than monthly recurring payments can.

Bonus Check: Similar to the extra payments discussed above, I would split my bonus checks between fun spending money and paying a large chunk of debt.

I would earn sizable bonus checks at my job in Arizona (Years 3-5 of paying off debt). Even after paying an exorbitant amount of taxes on the bonuses, I was able to put down $10,000 in Year 4 and nearly $13,000 in Year 5 to pay off my student loans before I turned 30.

Overspending

The less fun side of adjusting the financial plan is having to adjust due to overspending.

I have difficulties saying “no” to myself and it would show in some choices I made regarding trips and other entertainment purchases. I have a habit of wanting to do it all and share experiences with others.

Whenever I would overspend due to these choices, I would reduce my monthly debt payments and decrease my retirement contributions to cover the large costs. This is why my monthly student loan payments fluctuated during Years 4-5.

I am proud of myself for not taking on more debt or interest from debt, when we consider the 0% APR for x months cards as debt, it was just debt that I paid off prior to interest kicking in.

It was important to me to be flexible with the financial plan at these points and do anything I could to avoid taking on more debt while on this journey to becoming debt-free.

9. Celebrating the debt payoff wins

Paying off debt can feel like a long, never-ending process.

Celebrating payoff wins or large pay-down wins with a little something for yourself can keep you motivated. I know that helped keep me motivated.

As mentioned in the Adjusting financial plan as needed section above, I would split Extra Pays and Bonus Checks in multiple ways to remember to “pay” me as well as the debt.

When I made the $10,000 payment on my student loans at the end of Year 4, I also used $1,500 to buy snowboarding gear. A “small” token of look how well I am doing!

Conclusion

So there it is, the 9 things I did to pay off all of my debts before I turned 30. I actually became debt-free one month after I turned 27, but who is counting?

1. Coming up with a financial plan
2. Prioritizing paying off debt over having significant savings
3. Cutting costs where I could
4. Consolidating my student loan debt
5. Increasing my income
6. Refusing to give into lifestyle creep
7. Limiting excess debt
8. Adjusting my financial plan as needed
9. Celebrating the debt payoff wins

Did I handle the process perfectly? Maybe not to some financial guru or someone who is naturally frugal. But to me, a regular person who wants to experience life while also becoming debt-free, it seemed to work out just fine.

The debt-free life is amazing. Well-worth whatever craziness it took to get here.

I am now 1.5 years out from being debt-free and have a positive net worth. I am growing my savings and was able to purchase my vehicle in cash. I took a couple of months off between my job in Arizona and my job in Alaska and was able to live off of savings.

I refuse to go into debt again and look forward to when you reach this point, too.

I recognize a ton of things I did that I wouldn’t recommend to others, but that is the point of a human story. The human experience. To share how even with all of these non-ideal choices, you, too, can be on the other side and feel the weight being lifted off your shoulders when you make that last debt payment.

I share some money tips I have for young professionals linked here.

Thanks for reading!

1. These amounts are estimates. I am having trouble finding the exact amounts owed right after graduation and how much I owed when I started to pay off the student loans in the fall of 2017. I will revise the article when I can confirm the numbers. ↩︎