If you think you’re the only one who had the happily ever after of your dreams crumble away, think again. If the mountain of debt you’re surrounded by makes you feel alone and helpless, believe me, you’re not alone.
Just like every other person I know who has been in despair over debt, YOU have the power to change the story regardless of how bad it seems today.
But it requires an overhaul of your financial mindset. And action.
In this Money Moment, Carrie Smith Nicholson, founder and freelance finance expert at carefulcents.com, shares with us how she went from being a 25-year-old saddled with mountains of debt to being debt free just 14 months later by taking control of her financial future.
Tell us a little bit about yourself.
I’m Carrie Smith Nicholson, and I recently turned 33. I was born and raised in East Texas, near the Dallas area, and lived there for most of my life. I’m currently self-employed as a freelance finance expert and writer at carefulcents.com. I married my high school sweetheart when I was 22 but the relationship ended abruptly, and we got divorced when I was 25. After that season, I spent a lot of time soul searching and focusing on my career. I moved out on my own for the first time and encountered a lot of hardships.
What’s your money moment?
My money moment came as I was having a quarter-life crisis. I was completely alone, in $14,000 of debt and divorced. I was only 25, but I felt like my life and career were going nowhere. I was in my apartment one day and I heard something that sounded like two gunshots outside my window. I looked outside and a guy was laying on the ground bleeding from his leg, right in front of my apartment, while some other guys were running away. A bullet literally went through the side of my car. This was a HUGE wake-up call!
My financial situation was so bad that I couldn’t even afford a safe place to live. I started crying my eyes out and realized that something—anything—needed to change. Otherwise my life was going to continue going down this path, and I was going to miserable. So that’s when I started my finance blog, carefulcents.com, and made a plan to pay off $14,000 of debt in two years. Due to my knowledge of the financial world, I was able to get started with a budget. It wasn’t easy, and I still failed at managing my money successfully for many months. But I’m happy to say that with a lot of determination and budgeting, I was able to exceed my goal and ended up becoming debt free in just 14 months—10 months faster than I originally planned.
What was your money mindset before?
Before I made a plan to pay off my debt and change my life, I felt stuck and hopeless. I also felt mad at myself for being in the finance world and yet having no control over my own money. I managed money for other people and businesses, and yet I couldn’t handle my own successfully. I felt like a complete fraud and failure. I was ashamed that it took a drive-by shooting to force me into changing my life, but in a way I’m glad it did. Otherwise who knows if I would be where I am today.
After working to pay off my debt in 14 months, I worked for another year, saving money and building my blogging business on the side. My hope was to give my two week’s notice as soon as possible. On May 1, 2013, almost exactly one year after paying off all my debt, I walked out of my day job for the last time, and I’ve been self-employed ever since.
What’s the biggest lesson, takeaway, or aha moment you got from this experience?
While the support from my family and close friends was a vital part of being able to quit my job and launch my own business, it all came down to the choices and actions I took that ultimately changed my life and my career.
What would you most like people to know about money?
Your life and finances will never be so bad that you can’t make a change for the better. I’ve personally proven that no matter how low you feel or how bad off your money may seem, it’s the actions you take that determine your personal success or failure. Even if you don’t know what to do or where to start, connect with someone else who’s been there and ask them for help.
What’s the biggest change you made to your money habits in order to get out of debt?
I took extra work so I could earn more money. And boy, did I work a lot. Not only did I work at my accounting job during the day but I also worked at a tax office at nights and on weekends. And then when I was finally home for a few hours, I would spend time on my new blog getting my freelance writing business off the ground. I remember during tax season working for 3 months straight without any days off. It wasn’t the best idea since I was losing a lot of weight due to stress and not sleeping much, but I was so focused on changing my life that I didn’t care how sleep deprived I was.
What’s your best piece of advice for someone who is struggling with debt?
If you want get out of debt for good you have to completely overhaul your mindset about the process. Being debt free for the long term is all about creating a lifestyle where you don’t need debt to supplement your income. This means paying down your credit card balance each month, saving up more than the minimum when buying your first home, and paying for big purchases out-of-pocket. I like to think of this money mindset as a way of ‘future proofing’ your money. This is a key step to ensuring that your new financial habits actually stick.
It’s tough to live in a world of consumerism and credit, where you’re one of the few who doesn’t want to put everything on credit. It takes patience and a long-term style of thinking to fully change your financial habits. But it’s worth it!
If, like Carrie, you’re facing a difficult money moment — like a mountain of debt that you can’t see a way out of — a financial planner can help you make a plan (that’s why it’s in the name!) and change your money mindset.
Have you had a “Money Moment” that taught you something about money, yourself, or your money mindset? I’d love to help you build on that money moment! I always say that you can’t just “work on your finances” once and be done…it’s an ongoing process. So come over to my website and get access to an entire library of free resources!