{"id":10294,"date":"2023-09-11T21:14:05","date_gmt":"2023-09-11T21:14:05","guid":{"rendered":"https:\/\/prosfunds.com\/finance\/paying-off-debt-is-about-more-than-money\/"},"modified":"2023-09-11T21:14:06","modified_gmt":"2023-09-11T21:14:06","slug":"paying-off-debt-is-about-more-than-money","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=10294","title":{"rendered":"Paying Off Debt Is About More Than Money"},"content":{"rendered":"
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With federal student loan payments resuming in October, I\u2019ve been thinking a lot about my own student loan payoff story. Honestly, it\u2019s the foundation for my business and what helped my blog take off. As we\u2019re growing into a thriving media company, it\u2019s really to look back at that period and realize how my debt story still matters. But when I was going through it, very few people took what I was doing seriously, and I took a lot of heat for prioritizing my debt over investing.<\/p>\n

I heard it all.<\/p>\n

\u201cYou\u2019d be a fool to pay off your student loans instead of investing!\u201d<\/p>\n

\u201cWhy in the world would you pay off your debt instead of buying stock?\u201d<\/p>\n

\u201cThe market has average returns of 10% you know.\u201d<\/p>\n

To be clear, the people who challenged my desire to pay off debt over invest aren\u2019t wrong. From a pure numbers standpoint, there is definitely a point to be made for investing versus paying off debt. Depending on the circumstances, it actually can be a really good idea.<\/p>\n

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But the reason I chose to pay my debt off before investing is that it wasn\u2019t just about the money.<\/strong><\/p>\n

Anyone who has paid off a significant amount of debt can probably relate to this, whether it\u2019s credit cards, a car loan, your mortgage, student loans, or any other type of debt. There is so much more to paying off debt than just pure math.<\/p>\n

The reality, though, is that less debt equals more freedom, and the start of my business is a great example of this.<\/p>\n

Back in 2013, I was working as a high school band director. The kids were great, but I didn\u2019t love what I was doing. I had always dreamt of starting my own business one day (at that point I considered starting a pool cleaning business, which is laughable to me now), but my $40,000 student loan debt was weighing me down. At that point, I didn\u2019t feel like I could move forward in any significant way until my debt was gone.<\/p>\n

Eighteen months later, after making a plan involving extreme frugality and side hustling, I submitted my final student loan payment. Shortly after that, I started Millennial Money Man to share motivation and advice to other financially curious millennials.<\/p>\n

Being debt free gave me a real sense of relief, but I still didn\u2019t like my job. Having multiple people tell me what to do was like nails on a chalkboard, and to be honest, I probably wasn\u2019t the best employee. I knew entrepreneurship was the right path, so I tested the limits of my new found freedom and quit my job. And no, my site hadn\u2019t taken off at that point \u2014 I had literally only made $3 from my blog, but it was enough to realize the potential.<\/p>\n

And the only, and I legitimately mean only, reason it was possible is because I paid off my student loans before I was \u201csupposed to.\u201d<\/p>\n

It gave me the confidence to change careers and take on so much more risk than I would have if I still had the debt.<\/p>\n

If you\u2019ve leveraged your debt freedom to make a big change in your life or even to provide some relief in your day-to-day life, you understand what I\u2019m talking about. There is something about it that absolutely supersedes any dollar amount gained. Paying off debt is a guaranteed return, and I know that numbers people will disagree with me, but it\u2019s not always about numbers.<\/p>\n

While the market has historically gone up, none of it is guaranteed. It\u2019s just not. People always seem to forget that you can lose money investing just as quickly as you can make it. When you go after your debt, you\u2019re keeping future interest in your pocket. It\u2019s actually guaranteed.<\/p>\n

If you\u2019re ready for the kind of freedom I found through paying off my debt, here\u2019s how to get started:<\/p>\n

Step 1: Assess Your Debt<\/strong><\/p>\n

You can\u2019t destroy your debt if you don\u2019t know exactly how much you have. For a lot of people, this is one of the scariest things because it makes it seem too real. But remember, your debt is just a number, and we\u2019re going to work on shrinking that number. When you\u2019re adding up your total debts, make note of your interest rates, balances, and minimum payments, which will help you in the next step.<\/p>\n

Step 2: Make a Budget<\/strong><\/p>\n

If you don’t have a budget yet, please consider making one. It\u2019s a huge help when you\u2019re paying off your debt because you\u2019ll see how much you have to work with every month. A budget helps you decide how your minimum payments fit in with making extra payments and how much extra you need to expedite your payoff.<\/p>\n

Step 3: Decide on a Debt Payoff Method<\/strong><\/p>\n

There are two really effective ways to pay off your debt: the debt snowball and debt avalanche methods. Both of these strategies have you pay more than the minimum payment each month, but you choose which debt to put that money toward based on interest rates or amount of debt.<\/p>\n

Here\u2019s how they work:<\/p>\n