The Stratagem’s Archive

Category: Debt

  • How I’m Paying Down Debt While Working Two Jobs on a $40K Salary

    How I’m Paying Off a 0% APR Loan Before It Jumps to 30% Interest

    If you’re trying to pay off credit cards or personal loans while earning around $40,000 a year, it can feel like every financial decision is just choosing the least painful option.

    Over the past 7 months, I’ve paid down roughly $6,000 of my personal debt while working a full-time and part-time job on a low income. I’m still in debt—but seeing that number drop has changed how much pressure I feel around money.

    It’s taken me a very long time— as long as The Stratagem’s Archives has been around—but I’ve finally managed to drop my $17,000+ personal debt down to roughly $11,000+. 

    Do you have any idea how much of a relief it is to have that number drop?! I knew that I felt my body was constantly bracing, but I didn’t realize how wound up I was until I let some tension go.

    That’s $6,000 eradicated and the money I used for this debt can be used towards my remaining balances.

    Of course, my material situation hasn’t changed too much:

    • I’m still carrying debt 
    • I’m still earning roughly $40,000/annually with a full-time and a part-time job
    • Rent, necessities, and other expenses still exist

    However, the fact that I’ve been making incremental progress on my low salary, to be able to chunk off so much money from my overall debts, is monumental for me.

    I felt my anxiety, my anger, my resentment almost melt away—enough where my chest wasn’t trying to crush my rib cage with every exhale.

    They’re not completely gone—I still feel anxious, I still hate my situation, I resent past-me for not having as many financial options as present-me does—but it’s enough where I’m not constantly holding my breath.

    I HATE debt; I hate the fact that I owe someone else money because I didn’t have the cash on hand at the time something came up. I hate how I can’t save, invest, or use my money the way I want to, but I’ve always prioritized automatically saving and investing anyways.

    This—seeing how far I’ve gotten from point A to now—gives me a faint glimmer of hope that I’ll be able to get out of debt after all.

    The Debt Lesson I Learned After Years of Using Personal Loans

    I was reliving the same money lesson over and over, spending years stuck in revolving debt.

    It wasn’t just credit cards I had to deal with either. I had to factor in for the personal loans that I took out because I needed money THEN, that present-me is paying for NOW.

    When you earn as much as I do, you don’t have a lot of options when it comes to financial kindness. 

    Not being financially generous—rather being kinder to ourselves. When you’ve weighed every financial option you had at the time, you realize that you had to pick the less painful option.

    Not the most good option; the least painful.

    Why I’m Avoiding Personal Loans Going Forward

    I decided that, before and after my debts are gone, I’ll never take out a personal loan again, if I can help it, just because I lack the money now.

    Keeping as much of my money for myself gives me more agency—both in how I use my money and how I use my time.

    Not just working to pay off debt, but giving myself a chance to imagine life past survival mode.

    If I managed to slog my way out of $6,000, then I’ll be able to slog my way into saving at least $1,000-$1,500 into my emergency funds.

    I used to have almost $20,000 in my emergency fund at one point in my life. 

    However, I made the best decision at the time a few years ago to use around $15,000 to pay towards my $35,000 car loan. 

    It was a smart decision at the time, until a real emergency came up. A Ford truck T-boned my car on my way home from work that my car was unsalvageable.

    I had more expenses piling up than I could pay off and everyday felt like a noose was wrapping tighter around my neck.

    Aren’t You Using The IWT’s Conscious Spending Plan?

    Yes, I am using Ramit Sethi’s CSP from I Will Teach You to be Rich, but in my other blog post, Where Do Frameworks and Tools End and Our Thinking Begin?, I explicitly said that I’ve taken that framework and made it my own.

    Instead of having 4 numbers to track, I keep track of 3: expenses, savings, and investing.

    Guilt-free spending doesn’t exist for me right now because, with my debts, everything falls into my expenses category. 

    I use credit cards to pay for everything. 

    I prioritize ensuring my balances are paid off within my next weekly paycheck. Or at least paid off before my credit card’s closing date to avoid interest being adding on.

    Being debt free is more important to me than spending money on things I would feel guilty spending on.

    My life feels heavier without a small reward every now and again.

    However, this was a choice I made because I would rather suffer in the short-term than prolong my debts.

    Money, or rather my lack of it, was constantly stressing me out. However, I think that I’ll finally be able to have enough money to go somewhere with a deep bathtub and soak in hot water to congratulate myself on taking care of my debts.

    That will be the day where I can experience using my money guilt-free.

    If You Made It to The End

    If this post made you feel seen, or if you recognized your own situation here, you’re welcome to quietly nod along.

    Quietly Nod

    You don’t have to explain yourself—your presence matters.

    If you feel up to it, you can like, share, or subscribe to the Archives. Someone might benefit from hearing about tackling personal debt from someone still working on it themselves, rather than from someone without debt.

    No pressure—just thanks for spending a few minutes with these words. If you’d like to say thanks without words, tap this little button below:

    A Tiny Wave

    Money Related Posts

  • Eradicating A Burden: Eliminating Personal Debt to Ascend:

    The Stratagem’s Impediment:

    Welcome fellow Villainous Co-conspirators, for stumbling into The Stratagem; now, today, I’m going to share a predicament that I, The Stratagem’s creator, am facing right now… this burden hinders all people from all walks of life — heroes, villains, anti-heroes, anti-villains, and civilians alike. It is one of the main foundations for any pursuit. This crippling burden I’m speaking of is called, Personal Debt—a significant amount, and if you think heroes are the only ones to throw a wrench in your plans, you are sadly incorrect.

    Do you have any idea why Personal Debt is a far more devastating force to deal with than any other living and conceptual adversary? Imagine this: you have constructed the perfect plan, a plan so diabolical that it could turn the tides to your favor, and all you need to ensure its construction is possible is money. Every fictional villain tends to steal from banks and incredibly wealthy individuals. If operations, tools, gadgets, and personnel could function on hopes and dreams, or fear and anxiety, what then? No, no, no, money isn’t just a symbol of one’s avarice and greed; it is a tool for fair exchange since gadgets, keeping the Stratagem running, and paying for good help takes money. This is how any business functions.

    We need to make sure that every dollar we owe to Personal Debt returns to us for our own personal use. I personally hate debt, especially debt that hinders the individual’s progress, growth, pursuits, and opportunities. Imagine what it would be like to be free from debt, no longer owing money to financial institutions because of an emergency or surprise expense that you didn’t have cash on hand. You could return to your plans of crafting the life you want to be proud of. In the following paragraphs, I’ll share with you what I’ve been doing to eradicate my personal debt, the resources I’ve been learning and from using, and the progress made since taking on this challenge.

    Have You Acknowledged That Something Is Wrong With This Picture?

    During my journey into financial literacy books, videos, and other resources, the one thing that we need to start with in destroying Personal Debt is to acknowledge it— Acknowledge that there’s a limitation preventing you from achieving your goals and halting your plans. My favorite resource to watch that shows what happens when people ignore their debts, who keep racking up new debt onto existing debt, and thinking it’ll magically sort itself out is from a Netflix show called, “How to Get Rich.” If you’ve ever read the book, “I Will Teach You to be Rich” by Ramit Sethi, or watched his YouTube channel by the same name, he has had guests on this show do just that: ignore their debts.

    I think that ignoring your debts is a horrible tactic and it widens the gap between becoming free from it and remaining its hostage. The best financial resources I’ve come across that’s helped me improve my financial literacy and competency(in no way am I affiliated with these resources) are:

    • I Will Teach You to be Rich: The books, journal, and YouTube channel by Ramit Sethi.
    • The Psychology of Money by Morgan Housel.
    • The Richest Man in Babylon by George S. Clason (audiobook Narrated by Grover Gardner).
    • Alux.com YouTube channel and app.

    I had improved with how I use the money that I earn, saved, and invested from jobs that let me hide among the masses. These had been the best resources I could find that helps people who don’t have a business or are not self-employed make the most of what they have. I am not affiliated with these people, just a fan of their work, which has helped me see with more clarity than before. Now, let’s move on to how I’ve been tackling my Personal Debt of $17,000.

    The Stratagem’s Aggressive Payoff Strategy:

    How I started to tackle my Personal Debt was to write down how much I owed and what each of my debts APR(Annual Percentage Rate) for each debts (which includes interest rates and fees) and displaying them prominently. For myself, I have a white board on my desk, so I wrote the numbers down.

    • Short-term debt: $5,000
    • Medium-term Debt: $12,000

    The first thing that I decided to do was to put a stop to using my short term debt. I had paid off all other balances using a loan. I didn’t want to spread my money too thin again. Putting your physical and other means of accruing debt away to not use will take willpower to not swipe and increase your debt. Instead, I changed to using a cash envelope system.

    If you’re unfamiliar with what the Cash Envelope System is, it’s where you take out cash each month to pay for your necessities, groceries, gas, and fun activities or things you want to buy on a budget. Using this system will give you pause where you would have to ask yourself: 1)what can I get with X amount of dollars in my hand? 2)am I buying X because I need it or because I want it? These are the few questions I ask myself when I go shopping and I withdraw between $200-$300/week to spend. How I separate the money each week, especially more than $200, let’s use $300 as easy math:

    • $200 for groceries.
    • $40 for gas
    • $20 put away for, as Ramit Sethi coined it, “Guilt Free Spending”.
    • $20 put aside for funding this blog.
    • $20 for whatever cause I will financially support once I reach $100-$200 milestone.

    The second thing that I decided to do was to get a part-time job; this was a personal choice because my full-time job had our hours cut and my paycheck shrank as well. I went job hunting for 1 month looking on Indeed and applying on the company’s job board before getting hired at a rage room part-time. The extra money, even though I had to adapt to extra workload, had helped with making sure my bills were paid. I’m not beneath working 2 jobs, though I am fortunate that both jobs were flexible and worked with me, no one should not feel ashamed for making such a decision.

    Having 2 jobs, though draining, had given me the freedom to use an aggressive pay off method called, The Avalanche Debt Payoff Method. What this means is that you are paying more than the minimum payment towards the debt that has the highest APR. When looking at this from a mathematical perspective, tackling the debt with the highest APR also reduces the amount of interest that could be added on to the existing debt.

    Even though my highest debt is $12,000.00, it would not make mathematical sense if I paid this off first. When using the Avalanche Debt Payoff Method, getting rid of the debt that will accumulate interest fastest will free up more money in the long run. By ensuring that I pay the minimum payment towards my other loan, I’ll be shrinking that loan with less penalties. I’ve been saving as much as $1,000.00 to put towards my credit card debt to pay it down faster. The more money you can put towards it, the faster this burden will be gone.

    A Less Aggressive Option is Available

    I chose the Avalanche Debt Payoff Method because I could pay off my debt aggressively. Thanks to working a full-time job and a part-time job, this option is mathematically sound for my situation. However, for those who aren’t able to use the Avalanche Debt Payoff Method, a less aggressive method is available: The Snowball Debt Payoff Method is used to pay off the smallest debt balance off first and work up towards the highest balance.

    For example, if my $17,000.00 debt were spread across 4 different accounts, using this hypothetical debt to explain this payoff method, you would start by paying off the lowest balance. Then you’d move up to the next balance, until you pay off the next balance, and you focus on the last debt.

    From personal experience, using the Avalanche Debt Payoff Method can feel mentally taxing—you’re seeing a lot of money move from your bank account to pay towards your debt and it can feel as though you’re not making a dent. I’ve thought of many scenarios of what I could be doing, instead of paying off my debts. I could be using that money to:

    • Donate to either a food bank, the blood bank, a school that needs school supplies, to a local library, or a farmer’s market.
    • Buy a nice lunch for my family once a month.
    • Repay my parents money I had borrowed from them for an event I chose to attend last minute.

    These are the things I would do once my debts are paid off. Remember that everyone is facing different challenges and has their own goals. These are mine and I will see them fulfilled.

    This payoff method offers a plethora of benefits that its aggressive counterpart would not. The less aggressive method grants:

    • Bursts of dopamine from eliminating small debts and seeing each debt gone.
    • A sense of accomplishment.
    • Provides an increase of strength to keep pushing through their (financial) challenges.

    This method could also help individuals who are:

    • Working one job.
    • Earn under $50,000/annual salary.
    • Taking care of children, elderly or sick family members.

    For anyone who is already overwhelmed by their debt and other responsibilities, this could offer a sense of accomplishment and as though their situation has hope, instead of seeing it as hopeless.

    Plans Need An End Date

    Regardless of the method you choose to use to pay off your debts, you will need to have an end date for when you will become debt free. Why? Because it gives you something tangible to strive for than leaving it up to chance.

    When I didn’t set a deadline to when I wanted to be debt-free, battling debt felt impossible in the beginning. Not having a deadline drops you into the someday category, the same as how New Year’s Resolutions are: I’ll someday get to travel, or I’ll someday get healthier, or I’ll someday get myself out of debt. NO! Someday, without a goal and a when to strive for, is a wish, not a strategy.

    Go ahead and try it; keep paying your debts without a deadline and see how it feels, then set one. Share how much of a mental shift it is once you’ve tried this out yourself.

    Treat your empire the same as eliminating debt—have a concrete date for when you want to start building your empire, instead of letting it become a someday wish. Otherwise, you will likely be at the mercy of life and nothing will change for you because you followed the same strategies you’ve always followed. We’re not simply Dreamers, Fellow Co-conspirators. We are Dreamers who plans, takes responsibility, and executes on our plans. Now, let’s move on.

    What Happens If You Choose Neither Method?

    If you choose neither method to tackle your debt—then the only thing that will happen would be a longer financial sentence. You need to choose which plan works for your situation and act on it, then you have enough sense to not remain debt’s prisoner.

    You are the only one who gets to decide how to live your life, no one else, especially not some institution who cares about taking as much money from you as possible. That is what we’re here for—fighting for our financial freedom and get back to building our empire!

    Charting Your Course to Financial Domination!

    Understanding your enemy and the damages they can inflict on your rising empire is the first step towards victory. We’ve explored how devastating inaction can be and the immense power the strategies like the Avalanche and Snowball methods. Now, the choice is yours fellow co-conspirators.

    No matter the battlefield you are fighting on, the time to act is now. What course of action are you taking and how you feel about the progress you’ve been making? Share in the comments a glimpse of your journey for other co-conspirators to learn and take inspiration from. Thank you for visiting The Stratagem’s Archives, now build your empire!

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