How Sarah Paid Off $33,000 in 3 Years on a Low Income

Episode 26 · March 2nd, 2020 · 26 mins

About this Episode

Sarah was able to pay off $33,000 in 3 years while only making around $25,000 a year. She was able to find some creative ways to make extra money and save money so she could pay off her debt super fast.

You can find out more about Sarah here:
Youtube: www.youtube.com/budgetgirl
Website: www.budgetgirl.com
Social media: @gobudgetgirl

Resources mentioned in this episode:
Debt Snowball Starter Pack: https://www.budgetsmadeeasy.com/debt-bundle/
Book: Educated by Tara Westover https://amzn.to/387u3gk (affiliate link)
Sarah's budget template: https://budgetgirl.com/free-budget-template/

Full transcript:

Welcome to the money mindset podcast where you will find the inspiration and motivation you need to manage your money better so you can stress less and live the life you want. I am Ashley Patrick with budgets made easy and the money mindset podcast. Today I am speaking with Sarah Wilson, who is the budget girl on YouTube and budget girl.com about her journey to pay off $33,000 in debt in just three years and on a very low income. So she shares with us her budgeting tips and her frugal living tips and ways she saved money and a couple of different ways that she got creative with making extra money so that she could pay off her debt relatively fast. But before we jump into her debt payoff story, you can get your free debt snowball starter guide, which is the exact method that she used. The debt snowball. You can get it for free at budgetsmadeeasy.com/debt-bundle comes with a spreadsheet, a worksheet, and a checklist as you can get started and know exactly what you need to do to get started. So let's jump into Sarah's interview.

Hi Sarah. Thank you so much for being with us today. Thank you so much for having me on. I am so excited to talk to you today about your debt payoff story cause it is pretty amazing. And you actually went to the Dave Ramsey headquarters and did a debt freedom screen, correct? Yes, I did. That was so much fun. Uh, he's moved headquarters since he felt like a whole new one, so I kind of wish I could go back and do it again. But at the same time I'm kinda like, I got to do it in the, you know, the OJ studio. Yeah, I would love to go there someday. That's on my bucket list. Um, so tell us how much debt did you pay off and how fast did you do it? It was a little over $33,000, and it took me three years and three months where I actually used to know like the exact number, but it's kind of faded from my brain a little bit.

Uh, yeah, that happens is you just like keep telling your story. If I, you know, I have a tendency to forget like exact months and things like that, but you know, overall you paid off $33,000 in three years. That is pretty amazing. It was a lot faster than I originally thought, which is one of my favorite things about watching people do their debt free journeys and being kind of the unique position I am to see people pay off debt, um, is that it, once you're working towards it, it goes so much faster than you think things happen in your life. You get raises, you find other ways to like cut expenses or side hustle. And originally when people were staring down the barrel of like a six, seven, eight year debt payoff, all of a sudden it only took them or four, which is simple.

Absolutely. Like once you start going, you just build momentum and then you just find ways to do it faster and faster. Budgeting and frugality I often say is like a muscle and you know, you can't just walk into the gym one day and lift, you know, the a hundred pound dumbbells. You have to start with a smaller one. So if you make one small choice to incorporate into your life, that'll save you a little money or make you a little extra money, it will then segue into finding more habits and better habits. And all of those will snowball into getting you where you want to be a lot faster and living a much more frugal life. Absolutely. So tell us, what was your like aha moment, like what motivated you? Like what started this journey for you? So I got laid off, which is a pretty good motivator.

So after I graduated college, I had a $27,000 worth of debt and I started working at a newspaper and I wasn't making very much. I was making like 24 25 a year and the government told me via letter that I was not making enough to have to pay on my loans. So I was like, okay, thanks government and, and I didn't. So for a couple of years, they just kind of sat there in the back of my brain and I guess some accounts somewhere and they ballooned up to 33,000. And when I lost my job and I had to confront that fact, I was like, Oh crap, this is, this is really horrible and terrible and I can laugh about it now. But at the time I had, I had lost my job working on a newspaper through no fault of my own, by the way, you know, not that it really matters, but my boss found someone who could do what I did cheaper than me, which makes smart business sense but sucked for me.

So especially considering you weren't making that much anyway, you were making that much money. Yeah, I was actually the lifestyles editor at a little kind of tabloid newspaper, you know, those little ones that you see in gas stations that usually have, you know, a wreck on the cover, somebody's bloody, that kind of thing. It was really fun. I really enjoyed my time there. Um, but I, and what they wanted to do was be more read by the community that wasn't so interested in the crime stuff. So I actually came in and I developed the whole feature section highlighting like the amazing people in the community and it was a really, really fun job. Um, and after I had built an establish that he was essentially able to bring someone in and could maintain it and I, I mean, I get it as a business decision for me, it sucked.

But, um, it taught me something very important about this job security and that even if you're doing a good job, even if you're not doing anything wrong, that doesn't guarantee you an income. [inaudible] so suddenly I've, yeah, suddenly I was on unemployment and I was on unemployment for five months and unemployment brought me in enough to pay my rent and eat. And that was pretty much it. And on, I guess the unemployment system in Mississippi, you aren't allowed to work while you're on unemployment. Any thing that you work counts against what you get from unemployment. So I have a lot of mental time to apply for jobs and to decide how I was going to change my life cause I was really scared and I thought that I was gonna not be able to find a job. And because journalism, you know, I was and everything, but I thought I wasn't going to find a job and I was gonna have to like go back to being a waitress.

And there's nothing wrong with being a waitress, but I don't think anyone comes out of college with a degree hoping to V1. Right. So I swore to myself if I, once I found a new job, I would make sure that the only thing I would have to take care of one day would just be my regular bills because I couldn't, I would have been okay if it had just been living, you know, my, my rent, my electricity, my gas, my food. What was really killing me was that debt looming over me that I knew was growing every single day demanding to be paid. And I was, I was bringing home like a $500 employment check, unemployment check. So I decided to make a big change once I found a job and then I did. And it was not for much. I had to move to Louisiana where I didn't know anyone.

And I accepted a reporter position where I was making $26,000 a year before tax. I moved into the crappiest apartment that I could find that costs $400 a month to rent and I completely started my life over. So. Wow. Yeah. I started shopping a once a week for and based it around what was on sale that week. So I learned essentially I had to teach myself how to cook and not eat out all the time cause I realized that that was a really big budget Buster when I started budgeting and actually plan out my meals and figure out how to live on less than I was making so that I could put as much as I could at debt. So what, um, plan were you using to pay off debt? Like was it a specific plan or were you just kinda throwing money here and there to try and pay it down?

So I have my big Dave Ramsey fan and his was kind of the format that I was using. So I had two loans and I did the snowball method. So I had a $4,000 loan and I had consolidated my other student loans that were government into one big 27th house and tell her loan. And uh, so I paid the minimum on the $27,000 one as I was paying off the four K one and just kept going. And at first I was barely making the minimum payments, which were around $300 a month combined. And then I started being able to contribute $500 a month and then 700 and then over a thousand dollars a month through side hustling and figuring out other ways to cut my expenses. Oh, I got real motivated up in there.

Wow. So what were some of the ways, I mean, cause you weren't, you were making almost like poverty level income. So what are, were the, some of the ways that you increased your income and cut expenses?
Well, I was lucky enough to be eligible for overtime so I did as much of that as I could. Anytime there was like a weird night event, uh, that someone from the newspaper needed to cover or a weekend event. I was always in there with my hand up saying like, Oh, I'll do it, I'll do it. I also um, did some secret shopping, which was a really fun way to make just a little bit of extra money. I did it for a company called market force and there was another one that I've forgotten the name of now, but [inaudible] they would pay me like $12 to go to canes raising canes, which is a restaurant, a fast food restaurant and time. How long it took for them to like make and deliver my order check and see if the fries refresh, count how many chicken tenders there were, go to the bathroom and see if the bathroom was clean and I would have to do it all like very secretive.

They couldn't see me writing any notes or anything, but they would pay for my meal and then it would pay me like $12 and that took maybe half an hour. So I figured that was a pretty good return on my income. There was another one where they hired me to go to Walmart gas stations and purchase cigarettes and see if I was carded. And most of the time I was not carded. And despite the fact that I was in my late twenties and they would pay me, you know, maybe like $15 for that and reimbursed me for the cigarettes, which I would then sell to a coworker. Uh, so I did a lot of that. I did some dog sitting and a dog training actually because I've, uh, managed to train my dog, Rory. And it just kinda came through the grapevine that I could, I could help people with that though I'm not trained or qualified in any way. And I also did a stint where I, I delivered pizzas in the wee hours of the morning for hungry Howie's, so I'd get off of work around five or six. And then I'd take a nap and I'd go in at nine or 10:00 PM and I'd work until 3:00 AM delivering pizzas.

Wow. You are really hustling. That's awesome though because you know, I talk to a lot of people that have lower incomes and they just feel like they can't do it. Like there's no way for them to get out of the debt. They don't make enough money. Like what is your advice for somebody like that that is just struggling to even see that it's possible with that kind of income.
I get comments like that all the time actually. Where you know someone, it was, it was really recently when I did a net worth report on my channel because people were asking me how I was doing it on such a low income. I started sharing my budget each month on my channel and I show them, this is how you can see right here. This is how much I spent on food. This is how much I was able to put to debt because people kept telling me I couldn't do it. And I had a comment that really kind of broke my heart the other day because I now have a $50,000 network. Then I decided to share my budget again and show people how I was spending my now much higher income. Because throughout this whole process, you know, when you start to become a little better at money, the opportunities just come up for you to get higher paying jobs.

And I've been able to move twice for higher paying jobs. Um, and I had someone comment that, yeah, you were able to, you can pay off debt because you know, you pay $300 a month for rent now and you know, I can't do it. I, you know, I have like 12 grand in debt and I'm only making $30,000 a year. And I, I tried to respond back as kindly as I could that, you know, my, I split my rent with my boyfriend now, but for my entire debt free journey, I was paying everything out of my pocket on my own and I was able to pay off, you know, $10,000 a year on 26 great. And for the most part of it and then more when I was up to 30 and it's not necessarily a like I can do it so that you can do it too.

Cause I don't know everyone's situations individually, but it's more of a mindset of I'm going to choose to try to do something this week to lower my grocery bill. What I save on my grocery bill, I'm going to put it debt and then I'm going to try to figure out something else where I can either say or make a little bit more money. Even if it's $12 for going to canes to do secret shopping, I would use that a to lower my grocery bill. Cause that's, that was a free meal. And then B, I'd put that $12 a debt and people most that's exactly. Then that's what I try to explain to people is you're not doing this all at once. You're taking small steps in the right direction to lead you to your bigger goal. Cause just like we mentioned earlier, you will just, just momentum you. It just goes faster and faster as you go. And then once you like can see the finish line, like you do everything possible to just get through it and get it over with and that just helps propel you there.

Yeah. My last year I often called it my scorched earth year and I would, I would do practically anything. I mean I volunteered at a food banks because they fed people, they fed volunteers. Uh, and it wasn't because I was, I was so needy that I needed to go to a food bank. I never took food from anyone that was in need. But you know, those organizations that you know, need volunteers, they often feed you a meal. So I'm like, well, you know what? My hobby right now is making money and saving money. So if I can spend my time helping people and get a free meal out of it, that's just a bonus because then I'm not sitting at home considering spending money. I'm actually out doing something, buy things at garage sales and sell them for money. It's simple. Horsetrading can make people so much money. I know so many people on the internet that just go to garage sales and thrift stores and find things that are cheap that they know that they can resell for more money and they have been able to, you know, turn a dollar into 50 in a day. Uh, there are ways, if you are willing to do a little bit of birth and get a little creative.
Yeah, absolutely. Now you said you shared your budgets and stuff when you were paying off the debt. Are those videos still on your YouTube channel?

They are. There's a, there's four years of monthly budget reports where you can see my actual budget that I was working and you can see every single time I went to taco bell, every single time I got gas, most of them are, they're dated entries. So you can see exactly what I was bringing in and exactly what I was spending all my money on and what was left over. So, and that where that money went. So also throughout the three years that I was getting on a debt, I put the, the amount of debt that I had in the title of each video that I did. So people who are watching me could watch it very slowly go down.

Awesome. And we will link to that in the show notes as well. But is your YouTube channel budget girl or is it go budget girl? It's budget girl. It's budget girl. Okay. Yeah. So good. So go to YouTube, search budget girl or slash budget girl and you'll find a ton of really motivating videos to kind of show you how she did it as well. So now do you have any just general debt payoff tips or budgeting tips? Um, even for, you know, if it's not low income, just the average family, um, to kind of help them get through paying off a large amount of debt?

Well, I always try to say that your variable expenses are often where you can save a lot of money somewhat painlessly. So yeah, obviously go in and try check and make sure that you're not paying too much for car insurance. Um, you know, get a quote every once in a while. I do it about every six months to make sure that I'm not paying more than I need to. Cause that's, that's the service you're going to get anyway. It doesn't really, it's not going to affect you whether you're paying 60 or $90 for car insurance, but I think we'd all be rather rather be paying 60. So check obviously your non-variable expenses, but on the day to day, the month to month, your variable ones are where it really makes a difference in where a lot of people's money just kind of escapes them. So restaurants, entertainment, groceries, anything in that vein. If you can track, I'm not even going to tell you to try to lower those expenses. I'm going to tell you to track those expenses so you can see where your money is going. Essentially have a budget.

Exactly. Tracking your expense. Like just where where you're spending money is crucial. Whenever you want to save money or pay off debt cause it's really eye opening. Like even for me, like I did not realize how much I was spending on food and eating out until I actually tracked it. Like I think in your mind you, you tell yourself it's a lower amount or you just don't do the math right in your head or what, you know, you're kind of guessing in your head how much you spent and when you actually write it down it's like, Oh man, I really spent way too much money. Yeah that was, that was the biggest game changer for me was when I actually sat down and I kind of did a spending audit and I was like, wait, I ate out 12 times, you know, over the past week. Even if it was like a single burrito at taco bell, that's still a couple of bucks. Yeah, exactly what I, I literally ate out for lunch three days this week. I'm poor. I can't do that. I would much rather that money be going to debt.

I could use half of the money that I've spent eating out to buy myself some really delicious high quality groceries. And if I do a little bit of like meal planning and take my lunch to work instead a that's going to save me some time throughout the week because I'll already know what I will be eating. It'll be good food and it's going to save me a ton of money. So I do have a free budget template on my website. It's the same exact one that I use to get out of debt where you just put in every single one of your expenses. So you go to taco bell, you put in taco bell and how much you spent and it'll total out and you can actually see how much are spending and where all of your money is going. Awesome. And is that a spreadsheet or is it like a printable worksheet?

It's a spreadsheet. So it's actually in Google drive, which is one of my favorite things, Google drive. So it's like the free version of Excel. And I using that, I always have access to my budget. So I have the drive app on my phone and if I ever am wondering can I afford something, all I have to do is hit it and I can go and see how much money I have left for the month on my phone. I can also look at it on my computer and it's really good for accountability. Oh awesome. And we'll link to that in the show notes as well. So you can go grab that free budget spreadsheet cause I know people, um, you know, I've got the printable one, I actually don't use a spreadsheet. And so, um, I know some of my listeners would prefer a spreadsheet, so I will link to that in the show notes as well.

Um, now do you have any, just last words of wisdom? Any last pieces of advice? I would say it gets easier. Yeah. And that actually trying to manage your money is so worth it. I went from, you know, an negative net worth of, you know, minus $33,000 to positive 50,000 in five years. I am currently saving for a multifamily property. I own a small business now that nets me income, managing my money changed my entire life and I can't imagine myself ever not using a budget. A business would never operate without recording the expenses and profits that it makes. If you can treat just that one aspect of your life, like a business, you will vastly improve, I guess your margins for each quarter and your projections. If you're not managing your money, then it's not going to manage itself. That's right. Now I always ask people what their favorite nonfiction book is.

As you know, Dave Ramsey is a huge fan of reading and um, you know, encouraging people to read nonfiction books and just to train better yourself. So do you have a favorite nonfiction book? So I am a huge, huge reader. I actually did a challenge this year to read a hundred books and I have surpassed that by about 30, just so far. All right. Now I'm writing the princess bride, which is a really, really fun read. Um, my favorite one, God that's so hard, educated by Tara Westover was probably my favorite thing I've read this year. Oh, I haven't heard of that one. It's, it's really good. It's a, it's a national bestseller is about a young woman who was kind of raised off the grid by a fundamentalist extremist Christians. And so she was, she was never sent to school, uh, and she worked her way out of that kind of educational poverty to having a PhD from Harvard.

Wow. It's, it's really, really enlightening. It's, it's an inspiring story. And if you like debt, pay off stories, this, this type of aspirational inspirational Jordy would probably, you'd probably really love it. Oh, awesome. I'll have to check that out now. Where can people find you? So I am@budgetgirl.com. I'm also on YouTube budget girl. So youtube.com/budget girl and I'm on all social media platforms at go budget girl. So Instagram is my favorite. I post there every single day. I even still occasionally do a, uh, spinning accountability thing. So in my stories for the entire month of October, I budgeted in real time essentially. So every single time I made a purchase, I took a picture and I posted it saying like, I spent $13 on gas, I spent blah, blah, blah on groceries. And that was kind of fun. Yeah, I remember seeing that. That was like, Oh, that's like so much work. I don't want to do that.

But it also really reinvigorated me cause I, I generally, you know, back when I was in debt, I would reconcile my budget every single day. Cause that's the only way I wouldn't go over daily basis, how much money I had left in each category. But now I'm more of a weekly budget or so I check in every Friday, you know, sometimes every other Friday. And having to, uh, be accountable for my decisions in real time to an audience changed my decisions a little somehow I can, I'm going to imagine I was a lot more responsible with money in October than I normally am. I have a little more wiggle room now. You know, I live off of 60% of my income and I invest in save 40%. But, uh, yeah, just having to justify being at target, it was, I can definitely see that. Yeah. I was watching, I was like, Oh, that's a good idea.

But that's just, yeah, I don't want to do that. I don't want to be that accountable. No, I considered doing it again for November and I really thought I was going to, and then my Instagram account got hacked and I had to, I had to get that back. So I was like, after that I was like, nah, nah, nah, we're gonna. Maybe I'll come back and do it in January. Cause it really was a lot of fun and people seem to enjoy seeing, uh, just like an average person, like exactly what I'm choosing to spend on. And what I'm choosing not to. And I would say why and what things I would doing kind of frugally on a daily basis. Like, Hey, I bought bulk in this, or Hey, I chose this over this because look at the cost savings.

Yeah, absolutely. I mean that's really, people love to see, you know, somebody doing it, especially in real time like that. So I'm sure people love that. Uh, well thank you so much for being on today and I will link to everything in the show notes so you can go follow Sarah at um, budget girl and on YouTube and Instagram. And I appreciate you so much for being with us today. Thank you for having me. It was a blast. Thanks. Thank you so much to Sarah for being with us today and sharing her journey and her, uh, money making tips and budgeting tips and how she, you know, paid off $33,000 on a low income. So don't forget to go get your debt snowball starter packs. As you can get started with the debt snowball, just like Sarah, it is free at budgetsmadeeasy.com/debt-bundle and I will talk to you guys soon.