How I Paid Off $123k of Debt in One Year

How I Paid Off $123k of Debt in One Year

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It has been a hot minute since I've given an update on my journey to being debt free. It is something that I think about every. single. day. It is definitely my current obsession. On my mission to grow my Instagram, I have gained some new friends who've asked how I plan to pay off $260k of business debt in one year. So I decided it was time to give an update on my current situation. 

Getting into debt was so easy, and fun at the time, but trying to climb my way out has been exhausting! For anybody that is new here, let me give you a little back story so that we can get into the nitty gritty details. 

I need one thing in my life and that is passion. I do not feel fulfilled in life if I do not have one thing that I am passionate about. Normally, it is my career that I need to feel the passion in. Back in 2014 I was working a job that I hated, I had just been dumped and I was living in rural Nebraska. This was not a place that I thought I would ever be back in after joining the Marine Corps, getting out of my hometown and living in San Diego for four years. Needless to say, I had no passion and felt stuck! 

I had thought about moving, why should I stay in Nebraska? But the comfort of having my support system here is what eventually made me stay. That is when the opportunity to buy a retail store became available. I jumped on that like a hot potato and didn't think twice. And that is how I got myself into $300,000 of debt. 

Before I bought The Boot Rack, I had one student loan for less than $6,000. (By the way, I had used that student loan to buy a Harley, not for school.) No car loan, no credit card debt, no mortgage, nothing! I was in a really good place financially. Well that didn't last long. I purchased a retail business right at the time that retail businesses were dying. Over the next 2.5 years, I dug myself even further in debt. The final total was $392,462.28 to be exact. 

How did that happen?? Well, trying to keep a business alive when the market was plummeting was one reason. Also, my boyfriend at the time (now husband) hit a herd of sheep and totaled my car. Yes, you read that right, a herd of sheep! lol! So now I needed a new car. At this same time, I was working on updating my vacant house in Spalding so that I could rent that out for extra income. 

So in the beginning of 2017 I had massive business debt, a car loan, a loan for the rental house, multiple credit card debts and my student loan.

It was also at this time that I couldn't have been more miserable. This was supposed to be a very exciting time for me as Michael and I were about to be married. But all I could think about was how much I hated my business, and how much debt I had dug myself into. I felt very much alone and I honestly didn't see why Michael wanted to marry me because I was such a drag to be around.

That is when I flipped the switch. Enough was enough. I am not a person who feels sorry for herself for long. I don't take any shit from other people so why was I taking this shit from myself? It was time to get out of this mess and be happy. After numerous, tumultuous months of trying to sell The Boot Rack, I finally said that I'll just move it online and be done with it. I was so tired of being yanked around by potential buyers. It was such a rollercoaster of emotions. I had the power to make myself happy so I did. 

So that's the back story of how I dug myself into debt but how am I getting myself out of debt? There a few important things that I need to point out that may make my debt situation different than yours.

Here are the things that I don't pay for that most people do: 

  • I don't pay rent. I didn't when I lived on my own in Spalding because my mom owned the house and we don't now as a married couple as we live on the family farm.
  • I don't pay health insurance. I am a veteran and I get free health care through the VA.
  • I don't pay utilities. Michael pays the utilities for the house. Because we live on the farm, Michael handles all of the utility expenses.
  • I don't pay for my vehicle registration. Michael owns at least 576 vehicles... Ok not really but he has numerous vehicles that he has to license and register every year. I have one. So he just lumps mine in with his.
  • I don't share accounts with my husband. Michael and I keep our expenses separate. What I mean by that is, my business debt is not his responsibility just like his farm expenses are not mine. Michael spends his money how he sees fit and I spend mine the same way. This works for us because we don't have any kids and we are both extremely responsible with our money. (But let's be honest... I wish he would help me pay off this debt! ha!)
  • With that being said, we sit down on the 1st and 15th of EVERY MONTH to go over money. We are a team and if there is a month where one of us needs something or feels tight, we discuss it and see where we can help. This is also the time that we go over the expenses like utilities, tv, cell phone, travel funds, etc. 

All of those are reasons that I am able to save a little bit more each month than most people. Now what do I pay for every month? 

  • I pay the cell phone bill for Michael & I. 
  • I pay for the internet since I am the one that uses it most. It's also a work expense for me since I work from home. 
  • I pay for the Dish bill and Netflix.
  • I pay for our Audible account.
  • I pay for our gym membership.
  • I pay for my life insurance.
  • I pay for my car loan.
  • I pay all of my business expenses. Which include insurance, debt payments, merchant account fees, website hosting, etc.
  • I pay for the groceries and the gas in my car.

I think that covers all of the normal monthly expenses that most people pay for. But that should give you a little idea of what my money does and does not go towards each month.

Ok, but how did I go from $392,462.28 in January 2017 to $269,363.14 in February 2018? I made the conscience decision to get the fuck out of debt! First, I decided to stop throwing money at a business that wasn't fulfilling my passion anymore. A few years ago, when I was working for another entrepreneur and his business was failing, I read a quote that said:

A good captain knows when to jump ship.
— Unknown

It changed the entire way that I thought about business. The signs were all there. Every single person that I knew who owned a store like mine, had moved online only. Why was I holding on to this store? You want to know why? Because I felt that I owed it to "people." I don't know who those people are, but I felt that they were owed my time, energy and business. That is why I held on for so long. 

Honestly, after the decision was made to move online only, the debt started falling off like fat! Or at least how I wish fat would fall off!!

So let's get into the details...

First, I stopped spending money. Because I knew I was moving online only, I didn't need to buy any more inventory or put any more money into my building. This alone started saving me thousands of dollars. 

I sold the building that my business was in. This was around $40k which helped to really jumpstart my debt free journey. 

Next, I was able to cut my expenses almost 90%. When it was time to close the doors I had two employees working for me. One of them was who I sold the building to so she was working towards her business goals. The other stayed on with me for a few more months until she moved away. Now I work alone and was able to cut expenses like payroll, utilities, business insurance, and other miscellaneous business expenses. This alone saved me almost $90,000/year!

The first two months that we were online only, we did almost $60,000 in sales. Needless to say, we were certain that we had made the right decision. And that also helped me to pay off more debt. Sales fluctuate every month but I am still doing enough to keep chipping away at my business debt. I sell on my own website, eBay and Poshmark. That is what I do to pay off this massive debt hanging over my shoulder. 

To summarize, my monthly expenses are around $7,000. That is with each debt payment that is scheduled to come out monthly, my business expenses and personal expenses. My business income is anywhere from $10-30K/month, depending on the month. So whatever the difference is that month, it goes towards my debt.

My goal for 2018 is to be 100% business debt free. I started 2018 at $260k of business debt. As of writing this post in February 2018, I am at $247,864.04. (Just so we're on the same page, the remaining portion of my debt is my car loan and student loan, and I'll have the student loan paid off next month.)

I hope that answers any questions that you may have about paying off a large amount of debt. To be honest, every day I am looking for ways to make more money. I feel like I have cut my expenses drastically so my next step is to increase my income. If you still have any questions, please let me know! I am an open book and hope that I can help everyone on their journey to being debt free. 

What are your debt free goals? What do you do to make extra money? Comment below!

Dani, xx

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