Single Mom Pays off $46,000 in Debt in Just over a Year

Siobhan lives in Jacksonville, Florida, with her two kids, ages eight and 15. She came to YNAB looking for a solution to her debt—$60,000+ in student loans and $16,000+ in credit card debt. Flash forward, and she’s already crushed $46,000 of her debt, and she's on track to pay the last $30,000 off by the end of 2019.

What a difference a couple of years can make! And, not just in regards to money …

Siobhan said, “I feel like it has actually made me a better parent because I’m not stressed out about finances … that level of stress just really puts a damper over everything, and it doesn’t really leave you. I definitely feel like I can be more present in the moment with my kids.

Find out how she's beating her debt by tuning in to this episode of Money Stories:

Transcript

Jesse: Welcome, everyone, to another episode of Debt Stories: Real People Beating Debt & Winning Financially.

Today, we meet Siobhan who lives in Jacksonville, Florida, with her two kids, ages eight and 15.

Like so many other YNABers, Siobhan realized that she needed a budget when it was time to face her student debt …

Siobhan: After I finished my MBA, was just shocked at the amount of student loan debt I had got myself in to. I was totally terrified of looking to see what the final amount was. And then I saw it, and it ended being between $60,000 and $70,000, just the student loan debt.

Almost done with it; I’m not completely done with that but I am about…I’ve got about $30,000 left of that, which should be wrapped up next year.

I also had credit card debt too. And that was about $16,000, $17,000, and that’s all gone now. I’ve only been using YNAB since February 2017, so it’s been a little over a year.

Jesse: More than $46,000 of debt repaid in a little over a year?! Amazing. But how does someone so driven end up in so much debt to begin with?

Siobhan: It was mainly from after my divorce. The things that would just pop up, like car insurance that you might forget about. And then just trying to fit having the two kids with one income

I’m in my later 30s now but I have never had credit card debt. I always shied away from it. So it, kind of, piled on pretty fast. It was really scary.

Jesse: Big life changes often lead to big financial changes, and it can be tough to find your new baseline, even if you’re paying attention like Siobhan.

Siobhan: To be honest, it’s sad but I can’t even tell you exactly what it all was.

I’d always kept a budget so it was like, well how did I end up in this situation when I felt like I was doing everything right.

Jesse: That’s when Siobhan went looking for solutions and found YNAB.

Siobhan: I was researching another product and came across a blog that compared this other product and YNAB, and it ranked YNAB as being better. There was the trial and so I gave it the trial and within the 30 days, I was just absolutely hooked. Even my co-workers can tell you, I, seriously, just talk about YNAB all the time. But no, it helped so much. It has just helped me just get my finances more in line and helped me achieve the financial goals of getting out of debt.

Jesse: It was the reporting functionality that really hooked her …

Siobhan: When you first start YNAB, you don’t so much change your habits quite as much; it’s more of, how does this fit in with how I’m doing things. On the reporting, having it break down into the categories and then where my money was going, that was really what…I just realized I was spending money…you feel like, I’m making good money, I should be able to buy this or buy that and the money is in my checking account. So it was, kind of, like that. Not having the reality, not just the forecast, but the reality of what you’re spending on because the little bits, they end up being a lot.

Jesse: The proof is in the reporting—the small things really do add up!

Siobhan: One of the things that comes to mind would be dining out. You might think, well I’m going by that coffee shop; it’s going to be less than five bucks. That’s not bad, but when you multiply that by five for every day of the week, then it starts to really add up. Or even just going out to lunch every now and then, it’s 10 or 15 bucks for lunch. That turns into a pretty big bill over the month. I think that’s definitely one of the things that I saw with the reporting.

Then just also like little subscriptions too. Maybe you have a music subscription that you subscribe to. Then when you go through and you’re like, well I’m prioritizing my money and I’m looking at the reports of where my money is going and these little subscriptions, five or 10 bucks here or there.

Jesse: So, like so many new YNABers do, Siobhan rediscovered her taste for home-cooking; the obvious fix:

Siobhan: Just a lot more meal planning. Even then just looking at…what do I think is appropriate for my grocery bill? And planning ahead, so if I’m going to be out of the house all day, I need to make sure that I have a snack with me, just in case. I don’t want to spend my entire dining out budget in the first six days of the month. Then if you do, it happens, knowing just what money I have available within my budget to move to that category.

Jesse: And how much is her ‘Dining Out’ budget these days?

Siobhan: I try to keep it around just $50 for every two weeks.

Jesse: Of course, Rule Three is always there if they need to spend more—like during a sudden move last July …

Siobhan: It is a disaster. Yeah, my dining out budget was completely blown for that month. But when you go over and you look back and you see, oh my gosh, did I really need to spend $500 on dining out, especially when I’m trying to finish paying off my student loans. I would much rather put it towards the principal of my student loans.

Jesse: So, they’re eating at home a lot more, and Siobhan trimmed all of the unnecessary subscriptions from the budget … a great start. But she’s also throwing every extra dollar she gets at those debts:

Siobhan: Well I do get a bonus every year, so that went to it. Even beyond that, it’s really easy to see that money come in your account and just splurge, to go on a vacation and stuff. But logging it and then hurrying up and paying where you want to put it to. Hurrying up, it’s … no, it doesn’t spend more than a day in my checking account. But no, you’re right. There wasn’t really anything major that really happened. It was just adjusting priorities is what it came down to.

Jesse: Adjusting priorities. Simple, but sometimes so hard. And not always an easy sell when you’ve got kids …

Siobhan: they know that mom is really focused on, especially now, paying off student loan debt. They’re right behind me, rooting me on and wanting me to get it down. They’re actually really understanding. The nice thing is we can always put something towards the budget for entertainment or doing something, and I will give them an allowance. So once they spend that allowance, they know that that’s it; they can’t come back to me for more.

Yeah, no, I can’t say that they’ve really gone without or anything. It’s been a learning experience for them. I’ve been trying to use it as a learning experience on how to manage money. The end, not spending before it even hits your account.

Jesse: So the kids are on board and learning to manage their allowances—excellent. But no family budget is perfect … or is it? When it comes to life’s little luxuries—the non-negotiables—Siobhan said:

Siobhan: I guess I would say fitness-type stuff. I like to Pilates and yoga, so I will, every now and then, put some money aside in the budget, but with that said, it’s not something that I’m really treating myself to all the time. I would say I’ve even cut back on that. And I started running because running is free. Even for some of the luxuries, like if I really want coffee, I make it at home now instead of going out. I can’t really say that there’s any luxury that I’ve found that I can’t go without or adjust in some way.

Jesse: You might think that giving up yoga, pilates and switching to coffee at home would leave a bitter aftertaste, but quite the opposite:

Siobhan: It really helps put things into perspective on what you think you need and what you actually need. At least for me, it makes me feel really grateful for what I have. That’s been one great thing about going through this process is I’m just really grateful for what I have in my life, even the little things.

Jesse: Not only is she feeling grateful, now that she’s budgeting a weight has lifted …

Sibohan: I feel like it has actually made me a better parent because I’m not stressed out about finances. It’s not something that I have to worry about, so I can just focus on my kids. There’s not other things running through my head when I get home. Not that every day is a perfect day but I’m not stressed. For somebody who’s in debt and who might be struggling to make ends meet, that level of stress just really puts a damper over everything and it doesn’t really leave you. I definitely feel like I can be more present in the moment with my kids.

Jesse: The peace of mind that comes with freeing yourself of that much debt is huge. It’s hard to even fathom when you’re living on the financial edge, and that’s just where Siobhan started. She remembers thinking …

Siobhan: I make good money so why am I struggling, feeling like I’m living paycheck to paycheck. When I looked back, looking at my finances and with the reporting, I was making over $1,000 a month in debt payments at one point when I first started. And that was just…it literally took my breath away. I was like, I’m paying other people this money before I’ve even, pretty much, fed my kids, or paid for housing or put gas in my car. That money has already gone.

Jesse: It’s so true. Debt is an agreement to a future pay-cut. But she’s recovering and, next, Siobhan looks forward to buying a home.

Siobhan: After this debt is paid off, I would like to buy a house. In my previous home, when the market turned I owed way more than the house was worth, and just feeling stuck was just really awful. So I really want to make sure I can get into a house in a more financially sound way this next time. When the debt is done, it’ll be saving up for a down payment and then buying a house.

This whole process has taught me a lot about patience. We live in a society where you want it and you want it now and that’s why so many people have so much debt. By just teaching myself to be patient and just do this the right way. Pay off the debt so you’re not paying other people before you pay yourself, and then just save up and do it the right way. I feel like I’m creating a much better foundation for my future, and I feel super hopeful…I mean I can’t even explain just…even like my five to ten-year, future retirement, I feel so confident that I’m going to be in a really good place.

Jesse: What a transformation. Not just the debt, but her whole perspective. In addition to patience, Siobhan says …

Siobhan: It’s hard to say when you’re in the moment but you have to try to just be patient and stay calm and just keep looking forward. Don’t get so caught up in the here and now. Just keep looking forward and maybe write your goals out. Have an idea of what goals you want and don’t tell yourself that you can’t. You have to tell yourself that you can do it because you can do it. You’re going to do it, if that’s what your goal is. You just have to put those positive thoughts out there and just remain positive.

It’s really hard. You can really feel sometimes like the weight of the world is on your shoulders. Especially being a single parent, but even if you have to take something…maybe your kids can’t do dance or maybe they can’t go on that field trip or something, it’s not going to be the end of the world.

You’re a family unit and just keep your head up and just know that in the end, it’s going to be worth it and everybody is going to be better off.

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