This Woman Paid Off $57K of Debt In Less Than 3 Years — While Planning Her Wedding!

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Playing How Social Media Finance Guru Carmen Perez Paid Off $57K in Under 3 Years
How Social Media Finance Guru Carmen Perez Paid Off $57K in Under 3 Years Aired February 28, 2020

Carmen Perez was like many 30-something ladies, post-college and living her best life — but she was in debt.

$57,000 worth of debt, in fact. (Gasp! We know.)

But, not even three years later, that debt is gone — and she managed to get rid of it WHILE planning a wedding!

So how did she do it? Carmen was generous enough to break it all down for us, step by step. Take notes, ladies!

Carmen's Story

As Carmen explains, "I made every money mistake possible," including borrowing against her 401K and racking up credit card bills with interest as high as 18.5%. As a result, she had — in her own words — a "terrible" credit score, which was so damaging, she says, it led to one company actually rescinding a job offer to her.

Can you imagine?!

So how did she turn that around? By doing the one thing she knows people hate hearing: budgeting.

How Did Carmen Budget to Get Rid of Her Debt?

As much as she knows people hate to budget, she promises, "It was single-handedly the most effective tool to tackle my debt."

And her favorite form of budgeting? The "cash envelope system."

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I’ve been using cash envelopes since 2016 and well, as much as I’ve tried to get away from them, they are the one thing that I know... sticks the best (for me). Budgeting in the beginning did not come naturally. I failed a bunch of times then finally landed on something that worked and provided me structure. I personally look at a budget like a spending list. Sitting down ahead of time to put together a list of all the times I am going to spend my money on over the next two weeks is something I haven’t stopped since I started (2016). Cash envelopes help the process because at some point it just becomes second nature and doesn’t require you to think too much or have to tie back a lot of purchases made on a debit card. Does it have its cons? Absolutely but every process isn’t perfect. This is just a process that has been proven to work for me

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As Carmen explains, the cash envelope system calls for setting up envelopes based on categories, such as food, rent, toiletries, date night, etc., which you should organize from most to least important.

For instance, your rent or mortgage is #1, as you need a roof over your head! Miscellaneous "wants"? We know they're important too, but they go to the bottom.

Once you have all of that worked out, you take your paycheck, divvy it up into the various envelopes depending on how much you need for each category, then spend what's in each envelope as needed.

And ONLY what's in each envelope. That means when one envelope is empty, that's it — you have to wait until your next paycheck.


Wait! What Happens When the Envelope Money Runs Out?

"When one envelope is empty, that doesn't mean you whip out your debit card and make the next purchase," says Carmen. "It means you have to get very creative about what you're going to do next." (That "wants" envelope might help out here!)

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I thought I’d take a moment to introduce myself to all of my new folks now that I’ve hit 32k followers. ✨ Hi everyone and welcome to my page! My name is Carmen and despite having my degree in finance and having worked in the finance industry for years, prior to 2016 my finances were in complete shambles. ✨ All of my bad choices finally caught up with me when I was sued for a private student loan for the grand total of $30k and that was just the tip of the iceberg. By the time I got sued, I had already had a job off rescinded because of bad credit (yes, that’s a thing in the finance industry), I had a lot of accounts in collections, I was paying 18% interest on my car, and I had terrible credit. ✨ In September of 2018 I became debt free and had paid off $57k of debt. Fast forward to saving a bunch of money, I quit my job to learn how to code ( I went to a coding bootcamp) and changed careers (got into Tech) after working in the finance industry for 10 years. I recently started my new job as a software engineer 👩🏽‍💻. ✨ My story is just one of hundreds of stories in the personal finance space that prove you can always change your current situation if you’re willing to get focused and disciplined. ✨ I started this page with the purpose of helping people that find their money situation to be hopeless and for those that have no idea where to get started. I wanted to serve as an example by documenting my journey. ✨ Thanks for the follow! I hope you enjoy my page and as I always say - remember you are always one decision away from a totally different life. ===== #personalfinance #money #savings #debtfreecommunity #blackinfinance #womenofpersonalfinance #investing #stocks #retirement #debtfree #debtfreeliving #moneygoals #emergencyfund #creditscore

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It's hard — she knows, she's been there! — but in the end, she says, "You start building the habit of getting a tighter grip on your spending."

I.e. not spending more than what you have! So that your credit card bills don't go up — and your debt can come down.

Does Carmen Have More Budgeting Tips?

We're glad you asked! Carmen's got plenty more tricks up her extremely mindful sleeve, and this one specifically relates to interest rates.

First, figure out the interest rates for all of your debt. Once you've organized it all from highest to lowest interest rate — regardless of the balance of each card or loan — Carmen says to go against the advice of most financial gurus: tackle that HIGH one first.

"Try to put as much money as possible from your budget and anything extra towards the debt with the highest interest rate," she says.

Once it's done, you roll the money you were paying on it towards the next highest interest rate balance and so on, until it's all gone.

In the End, You Will Be SO Happy to Be Debt-Free!

"The most gratifying part of this entire process," says Carmen, "[were] all the options that I had available to me once that debt was paid off."

Just a few? She was able to buy a home with her wife AND was able to quit her job and get into another career: finance-minded content creation. (You can follow her at @MakeRealCents on Instagram — alongside the 33.1K people who already do so!)

"Once that debt was paid off, I had a limitless world in front of me," she says. "And that was the coolest part of the entire journey."

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