I Was $40K in Debt, Now I’m on Track To Be Financially Free Before 60: 6 Money Moves I Made
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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Kathleen Marcell is a financial coach and founder of The Financial Reframe, but she wasn’t always savvy about her money. Marcell graduated college in 2008 with $40,000 worth of debt and was making $30,000 a year.
“My loans felt suffocating and I was completely overwhelmed by money,” she said. “At the time, I thought I should throw as much money at my loans as possible to try to pay them off quickly. Three years later, I was forced to quit a very high-stress job and I still had a substantial amount of debt, no income and less than $2,000 in savings.”
It was only when Marcell hit this financial rock bottom that she knew she needed to change.
“Once I landed in a new job, I committed to learning everything I could about personal finance so I would never be in that position again,” she said.
Thanks to a few key strategies, Marcell was able to get out of debt by age 26 and is now on track to achieve financial freedom by her early 50s. Here are the money moves she made that had the biggest impact.
Create a Plan for Getting Out of Debt
When you have thousands of dollars worth of debt, it’s hard to see the light at the end of the tunnel.
“You need a strategy for getting out of debt,” Marcell said. “It is important to prioritize high-interest debt, but depending on the interest rate, not all debt is bad and can actually be part of your overall strategy.”
Build Multiple Savings Funds
Marcell realized the importance of a robust emergency fund when her own personal savings dwindled below $2,000.
“You need to prioritize funding an emergency fund of three to six months of essential expenses to provide financial security in the event of losing employment or a medical emergency,” she said.
Marcell also advises creating savings buckets to prepare for one-off expenses.
“For example, instead of having to come up with $2,000 for a vacation, I started setting aside $166 a month into a vacation fund,” she said. “This ensured that all one-off expenses were a part of my overall plan and strategy, and made one-off expenses much less stressful.”
Have a Plan for Every Dollar
Marcell recommends creating a budget that gives every dollar a job. Once you have a plan in place, automate it.
“I was able to automate my finances so that my essential payments, debt payments, savings and investments were all coming out automatically on payday,” she said. “This strategy allowed me to know exactly how much money I could use every two weeks to fund everything nonessential.”
She also used a debit card so there was a hard limit on her spending.
“Own your numbers,” Marcell said. “Take the time to fully understand where you are starting from and what you are working with so you can create a realistic plan that will give you flexibility for today while saving for the future.”
Advocate for Yourself at Work
It’s easier to reach your financial goals if you increase your income. This means advocating for yourself at work to advance your career.
“I was able to 10x my compensation over the past 15 years because I was always asking for feedback and initiating conversations around how I could take on more responsibility and get promoted,” she said.
Keep Your Budget Up to Date
Marcell revisits her budget — or what she calls her “money system” — regularly to ensure she is on track toward her short- and long-term goals.
“My husband and I review our net worth and financial goals every six months or anytime something changes with our income,” she said. “This ensures that we are correctly allocating any additional income to best support our goals and that our goals are up to date as life changes.”
Stay the Course
Remaining disciplined can be tough, but always keep your end goal in mind.
“You will be more likely to stick to your plan if you are fully bought in on why you are doing it,” Marcell said. “Perhaps you want to be able to say yes to more opportunities in your life or live life on your own terms sooner. This is different for everyone of us, but the key is that you know why you want to be in a different financial situation and the difference it will make in your life.”
Marcell’s current “why” is achieving financial freedom.
“It has now been 13 years since creating this money system and I continue to use the same strategies today,” Marcell said. “It isn’t easy but it is simple. My husband and I have a seven-figure net worth and are on track to be financially free in our early 50s.”
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