If you have debt, please pay it off.

My first credit card was both a blessing and a curse. Like most people in America, I was a major consumer, and once I turned 18, got my first credit card. It was a Capital One secured card with a limit of $200. Being my first, I would max it out, then try to pay the minimum balance of $25 (or a little extra) every month, only to max it out again. I didn't know when I would pay the full balance off, but between the monthly spending, lack of substantial income, and compounding interest, it felt like it would never happen.

Fast forward four years, I had three maxed-out credit cards, two personal loans (ridiculously had taken them out for vacations), and student loan payments beginning in the fall, all with no job in sight.

Months went by with missed loan and card payments, trying to scrape together any money I had for fun nights out (the priority at the time) and then paying off whatever I could with whatever money was left. Though by November, I had begun my job as a Financial Analyst, with one thing in mind: paying off my debts. Luckily, Biden had put my loans in forgiveness, so that was one less payment to worry about, but the credit card and personal loans were haunting me every month (usually how it feels). I had about $1,200 in credit card debt and $6,000 in personal loans. So I decided to create a game plan, listened to a few podcasts/articles about credit cards/loans, and paid off the monthly minimum for all accounts with my first paycheck. That was only the first step. As the month went on, I dived further into anything and everything Personal Finance. One of my favorite podcasts, simply because his enthusiasm makes you want to learn more and he makes it fairly simple to understand, is The Personal Finance Podcast by Andre Giancola. After listening to a few episodes, along with reading some online articles, I decided the next few months would require sacrifice but would ultimately be worth it to rid myself of these monthly payments.

The personal loans were the largest, and when I broke down my Upstart personal loans, I realized the monthly payments were mostly made up of interest and fees. Getting out of it (without letting them win, i.e collect hundreds in interest) would require not just the minimum, but basically paying it all. So I started by looking at my monthly income and expenses. Again, I was fortunate enough to really only have these debts as my expenses to worry about, as I was living with my parents. When I wrote down the actual necessities, I realized I would be able to pay these loans off in a matter of a few months. Simply taking the remaining loan amount and dividing by the number of months I wanted to pay it off. For example, the $2,500 and $3,500 Upstart loans divided by 6 months would be $417 and $583 monthly payments, instead of the $53 and $102 minimums (could've been slightly different as this was a few years ago).

The credit card payments totaled $1,200, and the monthly minimum situation was similar to the personal loans, each one roughly $25-$35 a month, but it would take years to pay them off at that rate. So I took the same approach but was a bit more aggressive with the credit cards, as they were smaller, breaking up the $1,200 between 3 months. This would make the monthly payments to these cards roughly $400 (in total), instead of the $25-$35 minimum mentioned before.

In total, I would be paying about $1,400 per month, leaving $1,800 with my after-tax income of around $3,200. This, from what I've learned, is called "paying yourself last," as you pay your expenses first (debt and necessities) and then use the money remaining for anything else. I could have had an even more aggressive approach, but decided that I also wanted to build up a small savings account, and this would leave me with enough leftover each month to do so. If you don't have the luxury to live at home, and the money set aside can't be saved but has to be put towards necessities, that's 100% okay because paying off debt/expenses should be the first priority.