I Paid Off $1 Million in Debt in 2 Years Using These Dave Ramsey Methods

wtiu / Naseema McElroy

Naseema McElroy, founder of Financially Intentional, was working as a labor and delivery nurse in the San Francisco area when she realized her debt had gotten out of control.

“My eldest daughter was turning 1 and I realized that if something were to happen to me, I didn’t have anything in place for her,” McElroy said.

She had accumulated nearly $1 million in debt over the years due to a combination of lifestyle choices and a lack of financial literacy. “The biggest portion of [my debt] was my house in the San Francisco Bay Area,” she said. “Other than that, [I had] almost $200,000 in student loans, a 403(b) loan I took out for my house, a car [loan] and then your normal, everyday consumer debt.”

Here’s a look at how McElroy was able to turn her financial life around, thanks in part to two methods she learned from Dave Ramsey.

Improving Her Financial Literacy

Once McElroy realized how dire her debt situation had become, she knew she had to educate herself about how to get out of it.

“I really committed to learning about my finances,” she said. “The only thing that I considered debt at that time was my consumer debt. I never really considered my student loan debt because everybody was like, ‘That’s good debt’ and my student loans were [eligible for] public service loan forgiveness.”

However, when she really took a look at how her student loans were affecting her finances, she realized that she couldn’t just dismiss them as “good debt.”

Make Your Money Work for You

“I was still paying $1,900 a month just on my student loans alone,” McElroy said. “I was like, ‘Oh my god, this is like some people’s mortgage.’ And I was like, no wonder I can’t seem to save.”

McElroy was making $230,000 a year between a part-time job and a per diem job, yet she still couldn’t seem to break free of the paycheck-to-paycheck cycle. “I did not have any money in the bank. I didn’t have anything saved,” she said. “I was just like, ‘I’m making too much money to be this broke.’ So I had to figure it out.”

Changing Her Money Mindset

McElroy said that in addition to improving her financial literacy, her beliefs about money also needed to shift in order for her to regain control of her finances.

“I grew up really low income but surrounded by wealth, but the people who were wealthy never looked like me, so I never thought that wealth was attainable for me,” she said. “It wasn’t until I started to see people that were wealthy that look like me that came from similar backgrounds that I was like, ‘Oh, I can do this too.'”

Another money belief McElroy had to break was the idea that consumption is a sign of success and wealth.

Make Your Money Work for You

“We’re such a consumerist society,” she said. “You’re rewarded for having that nice house, having that nice car. [I had to] shift [my beliefs] to be like, that’s not really what wealth is.”

While she was on her journey of learning and unlearning, McElroy said that “the biggest thing that I had to learn was that I couldn’t out-earn my financial ignorance. I had to focus on being intentional with my finances. It’s not about making more or getting to a certain level in your career. It’s really about where you’re at right now, and really diving in and being intentional.”

How Dave Ramsey Played a Role in Her Debt Repayment Journey

McElroy credits two of Dave Ramsey’s cornerstone methods for helping her pay off her million-dollar debt.

“I started with zero-based budgeting, which was the biggest shift for me — telling my money where to go in advance,” she said.

With a zero-based budget, your income minus your expenses equals zero, with every dollar allocated to a specific budget category. When you are in debt repayment mode, one of those budgeting categories is your debts.

“Then I did the Debt Snowball,” McElroy said. “That really gave me a lot of momentum.”

The Debt Snowball method involves listing out all of your debts and paying them off one by one, starting with the smallest debt. The idea is that by starting with your smallest debt, you can feel a sense of accomplishment quickly that will keep you motivated to continue paying off your bigger and bigger debts.

Make Your Money Work for You

“Those were the two things that took me a couple of months to get down, but once I did it, I was going so hard,” McElroy said. “I was super motivated.”

Her Advice for Anyone Struggling With Debt

If you’re currently in debt, it can seem overwhelming. Having experienced being in significant debt firsthand, McElroy offered the following advice: “Focus on one thing at a time,” she said. “Focus on that one debt, set up a plan and start building momentum.”

The worst thing you can do when you are in debt is to do nothing.

“What [often] ends up happening is that you’re like, ‘I have to figure out all my finances all at once.’ Then you get analysis paralysis and you don’t do anything, or you give up because you don’t see the momentum,” McElroy said. “Just go hard on one thing for at least three months and you’ll see big improvements, and then you can start incorporating those lessons learned from that into improving the rest of your finances.”

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