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How I paid off $20,000 in credit card debt without giving up my avocado toast

Since most people aren’t taught about money management in school, and probably not by their families either, it seems like a lot of young adults find themselves trapped in debt at some point. given.

Lexa VanDamme found herself in such a situation, but says she managed to pay off more than $20,000 in credit card debt. She is still managing her student loan debt. Using online resources, this millennial has started learning about budgeting and financing during the pandemic. This contribution helped her get out of credit card debt.

VanDamme now draws on its own experience to lead the Budget avocado toast, a resource that allows others to manage their debt, without reducing simple pleasures like, yes, avocado toast. “I wanted to create a community where people could come and talk about debt without shame or guilt,” she says.

VanDamme spoke to Bankrate about how she manages her credit card debt.

Courtesy of Lexa VanDamme

How did you get into credit card debt?

Looking back on it, I think a lot of it was because I thought I was afraid of managing money. I thought I was just lazy or couldn’t figure it out. But much of it was just trying to meet day-to-day expenses. I was getting my master’s degree (in psychology) and working full time. So I ate out a lot. And I would end up spending money – without thinking about it – on impulse purchases. All of these things really add up. And they add up pretty quickly.

I had moved to another apartment several times and the job I had at the time was very unstable. My schedules were not very regular, so I thought it was impossible for me to make a budget. And with the move and all the expenses that go with it, I thought that was a lot of it. But I wasn’t entirely sure because, honestly, I just tried to avoid my finances if possible.

How did you repay the debt?

Learning how to budget and adopting a budgeting system that worked for me was one of the things that helped me the most. In March 2020, I was dealing with three different personal loans that were all originally credit card debt.

I racked up $6,000 in credit card debt, took out a personal loan. I ended up racking up more debt and took out the second loan, then ended up maxing out my credit card a third time. And that’s when I pulled out the third one. But the first two times I tried to refinance and repay, it didn’t work because I didn’t know how to budget in a way that worked for me.

I am so grateful to have discovered a zero-based budget and to have a system where I tracked all my expenses and understood what I wanted my money to do for me. I feel like it gave me the most control over my money. I was able to pay off my debt faster this way because I finally felt like I knew where my money was going, when before I had no idea.

Explain how zero-based budgeting works.

You give every dollar you have a purpose. I went through and listed all of my bills, but also all of my variable expenses, like groceries, gas, and dining out. And savings. I knew I would probably move again and wanted to be financially prepared for it – or buy a new car or go on vacation. Every time I got paid, I reviewed and assigned all the money I had to one of these categories. So I knew exactly what my money was doing for me.

And then, as I went through and tracked all my expenses, I was able to keep pace and say, “OK, maybe I spent too much eating out, but where is that money coming from?” So I could make sure I could always pay the rent and cover my phone bill and whatever else had to be paid. Zero-based budgeting is one of the more practical budgeting methods, but if you’re heavily in debt or have low income or high expenses, it’s one of my favorites. I think this gives you the most control over your money.

How do you compensate for the money spent on indulgences?

There are only a few things you can cut back on, especially right now with the cost of gas and groceries. Try to find creative ways to increase your income in small ways, by trading or taking a side hustle. I drove for DoorDash on weekends whenever I wasn’t working or whenever I didn’t have paper to turn in. Just those little things, so you can invest a little more in debt or whatever little extra things you want.

There may also be creative ways to reduce expenses. I think a phone call is really powerful. I cut my internet bill and phone bill in half just by calling the company and asking if they had any other options. Being able to navigate those negotiations and find those little creative ways to cut back can really come in handy when you’re on a tight budget, when you can’t make ends meet, because it happens.

You say there is no financial freedom without reproductive freedom. Please explain.

Children and being pregnant are very expensive and can completely change your life, whether you decide to keep the child or whichever direction you take. Not being able to make that choice not only means you don’t have your reproductive freedom, but you also don’t have the financial freedom to be able to make choices.

I think we need to have conversations about how financially destructive things like Roe v. Wade are overturned – and some of these larger government decisions – can impact our individual lives, the freedom of people to feel confident with money and able to navigate the world we live in.

Do you think debt is always a bad thing?

I don’t think debt is inherently bad, especially when it comes to things like student loans or home ownership which have low interest rates and can add a lot of value to people’s lives . Sometimes the focus is so much on being debt free that we forget that, above all [wealthier] people or their business owners, they go into debt all the time. But to them it’s called ‘leverage’, whereas to many of us, middle class or lower class, it’s called ‘debt’, and that’s considered a bad thing.

What is your advice to people paying off credit card debt?

You are not alone in this, even if no one else talks about it, other people are struggling with the same things as you. Or at least struggling with debt, trying to figure out their finances.

I have a saying on my channel: Debt is morally neutral. And that basically means you’re not a bad person to be in debt. Your debt does not reflect how good you are with money or the kind of person you are. I think being able to let go of some of that shame and guilt is often the first step to being able to start managing your finances and feeling more confident with money. It’s something that a lot of us really struggle with.