How I gave up my debts: making a “tornado” pay

In this series, NerdWallet interviews people who have triumphed over debt. Answers have been edited for length and clarity.

Steven Donovan and his dog, Angel.

Steven Donovan did not study personal finance growing up. The subject was not covered in his high school or college, as it is with many Americans. So Donovan had to figure out how to manage his money, overcoming one stumbling block at a time.

Donovan was in debt of about $ 118,000 when he realized he needed personal finance skills. He had student loans, credit card debt, and a car loan. His salary of $ 40,000 at the time was just enough to get by. Then his private student loan issuer suddenly tripled his monthly payment and he had no choice but to face his debt head-on.

He started reading books by some of the great authors of personal finance, including JD Roth and Dave Ramsey. During his five-year paid journey, he followed a number of personal finance bloggers who offered the information and motivation he needed.

The bloggers who helped him along the way inspired him to create his own online resource to help others. With Even Steven Money, Donovan serves as a financial coach for those who need help managing their money. He recently spoke to NerdWallet to share his story, which may inspire yours. trip to get rid of debts.

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What was your debt when you started, what is it now?

I had about $ 118,000 when I decided to focus on repayment. Today I have no debt.

How did you get into debt?

When I left college, my credit card debt was around $ 5,000. For my student loans, I had a private loan of $ 20,000 and a federal loan of about $ 35,000.

Then I got a loan from my parents of $ 38,000, which was for education and living expenses. So, right out of college, I had about $ 98,000 in school debt. Then, a few years after college, I decided to buy a Mercedes-Benz, which cost around $ 18,000.

Before I seriously started paying off my debt, my credit card owed amount fluctuated a bit, so I had about $ 118,000 by the time I decided to pay it off.

When did you decide to get out of debt?

There were two moments that prompted me to get out of debt. One of them was when I started getting a little more involved in personal finance. I read blogs and created an account with Mint for follow my finances. I went there and put my bank account information – checks, credit cards, all that. When I went to put it all in, I couldn’t bring myself to enter my student loan information because I didn’t want to see negative equity. … It was a great realization for me: that I was so in debt that I was afraid to put the info.

Another big moment, a little faster, was when I moved to Miami from Chicago. In Miami, I worked first as a volunteer basketball coach, then I did side activities like mowing lawns through Craigslist and selling Ross, Marshalls, Nike items on eBay. It wasn’t until later that I found part-time work at a kiosk in the mall. I was just trying to make minimum payments on my debts and cover my groceries.

About a year after living there, I ended up receiving a letter in the mail from my private student loan company. Since the end of my university studies, I had abstained and had paid the minimum … [but now] my payment was going to triple. It shook my budget and something had to change. I put my cock between my legs, went back to Chicago to save money, and worked where I did when I was in college. It was a very humbling experience.

How did you get out of debt?

Moving to Chicago was a big part of it.

Initially I was able to live with my family for a few months, then once I found my job I shared an apartment, so the housing costs were relatively low. Plus, selling my Mercedes, taking public transport, and walking or cycling to work made a big difference. Selling my car was really important to me, and I saved almost $ 500 a month and got rid of a lot of my debt. Low housing and transport costs therefore played a role.

My cost of living was lower, but most of the reasons I came back to Chicago were to get a full-time job. At first I was working on a golf course which was mostly full time, and very soon after I got a full time job at US Bank as an assistant branch manager. I was also looking for a little extra and ended up selling lightly used and new men’s clothing on eBay.

Then I realized that now that I have the money, what can I do to pay off my debt? I started using the debt snowball. For me, it made sense to choose the debt snowball because I hadn’t had a lot of money earned until now. And whatever I could afford, I felt really good.

On a parallel track, I did what I call the “debt tornado”. My philosophy is that no one hates your debt more than you. If you really don’t like your debt, you end up getting angry and wanting to do something about it. So I channeled this anger to pay off the debt I hated the most. I picked the student loan company that tripled my payment and decided to tackle it first.

How did you stay motivated?

The biggest motivation for me came from reading personal finance blogs and websites. These blogs also inspired me to start my own blog to write what I thought. And it has become my partner of responsibility.

I also commented on a lot of blogs, and if someone was having a hard time, I was like, “This is like me. What can I learn from them? How can I encourage them? It has been really beneficial for me.

Then, after a few years in Chicago, my wife and I got married. The biggest financial changes back then were that I received an internal transfer, which was a raise. Being married, I also had a partner who really encouraged me and supported me when I paid off my debt.

We decided as a couple that whatever debt you incurred in marriage you were responsible (a Florida mortgage for my wife and my personal debt for me). We shared the costs everywhere else, including housing, utilities, groceries, etc. … Our combined household income was six digits low.

What personal finance training did you have prior to this process?

In high school, I had no training in personal finance. I may have taken an economics course, but no personal finance training was offered. My parents, of course, instilled hard work in me, but personal finances were not one of them.

When I went to college, I knew I wanted to be in business and got a finance degree, but there wasn’t a personal financial aspect to it either. Where I really learned everything – beyond trial and error and going to an ATM and finding out you don’t have any money – was the Internet. I relate more to personal stories that I read online and that I can apply to my life.

What are your financial goals now that you are debt free?

The next step for my wife and I is figuring out what makes us happy and having that. We want to move from financial freedom, which we now have, to financial independence… My wife is now working 9 to 5 years old, and I quit my day job and switched to focusing on my website and work like money. coach, helping people like me who were in trouble and who were paying off their debts. So we want to understand how we can get by with our income without having to work 9 to 5 jobs.

How to get rid of your own debt

Are you looking to get rid of your own debt? Here’s how:

  • Know what you need and work to stop the bleeding: The first step to paying off your debt is to see how much you owe – and prevent yourself from increasing that amount if possible.

  • Really understand your expenses: See where you are allocating your dollars and where you can make changes. Creating a budget or using an expense tracker gives you a detailed understanding of your cash flow, so you can see where you might be making cuts or rearranging things.

  • Find your strategy: There is no “right” way to pay off debt. Find a debt repayment route that suits your lifestyle, your budget and your debt load.

Photo courtesy of Steven Donovan.

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About Johanna Gooding

Johanna Gooding

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