After graduating from UCLA in 2007, Guen Garrido had $40,000 in student debt. "At that time, it was one of those things where you take out as many student loans as possible to get through school," says Garrido, who was a first-generation college student. "I did consider community college, but the fact that I got into UCLA was a big deal since I was the first person in my family to go to college. I just thought, 'Do whatever it takes and afterwards you'll get a job and you'll pay it off fast.'"
The job she took as a preschool teacher paid only about $13 an hour, though, which was barely enough to make ends meet. So Garrido put her debt on the back burner. "For a while, I was living as if my debt wasn't there," the 32-year-old tells CNBC Make It. "It just became normal to have it."
It wasn't until 2013 when a few life events prompted Garrido to tackle her debt. After ending a five-year relationship, she moved out of the apartment she shared with her boyfriend and "I found myself having to figure things out more on my own," she says. Later that year, her dad was diagnosed with cancer: "That's when it really hit me, when I realized I couldn't really help my dad because I was in such a deep hole."
By the end of 2014, that hole had grown to $68,600, thanks to a car loan, a few personal loans and credit card debt. But three years and three months later, the San Diego-based millennial had paid off every cent.
Here's how she did it.
The first thing Garrido did was dive into the personal finance resources out there: books, podcasts, articles and even videos on YouTube. "I started researching and picking people's brains," she tells CNBC Make It. "I looked up Dave Ramsey, Tony Robbins and different financial people and personal development people."
She started by reading Dave Ramsey's "The Total Money Makeover," which helped her come up with her plan for getting out of the red. But her favorite resource, she says, was YouTube: "Every day, I would have YouTube up and listen to motivational speeches about money or anything about investments, loans and credit."
In her research, she learned about student loan refinancing, a strategy that can save borrowers thousands, and ended up refinancing $20,000 of her student loans with finance company SoFi. It cut her interest rate on that debt nearly in half, from 10 percent to 6 percent.
After reading Ramsey's book, Garrido was sold on using his "snowball method" to pay off everything. With this strategy, you prioritize your smallest debts, regardless of interest rate. For Garrido, that meant starting with $50 she owed Target.
The idea is that you'll appreciate watching debts disappear as you would watching a snowball grow bigger and bigger, and that will help you stay excited about the process. As Garrido puts it: "Psychologically, when you hit the smallest one, you're winning."
After paying off her credit cards, she moved onto personal loans and finally, she tackled her biggest debt: student loans.
A key part of Garrido's plan was establishing a target date. "I think a lot of people think they're never going to be debt-free, so they don't even try to get out," she says. "But once you set a date, you start to think, 'OK I can do this,'" she says.
To track her progress, she set up an Excel spreadsheet that not only allowed her to record her income and expenses but would also predict how her target date would change if she upped her debt payments by a certain amount each month.
"It motivated me to find ways to beat that date," adds Garrido, who ended up paying off her debt nine months ahead of schedule.
By 2015, Garrido was working as a data analyst for an online university and earning more. But she wanted to boost her income even further, so she started driving for ride-sharing apps Uber and Sidecar.
"I did it pretty much five nights a week," says Garrido. "After I got off of work, I would give myself 30 minutes to an hour to relax at home and then I would jump right into it. I did weekends, too."
She drove part-time for the full year of 2015 and earned an extra $10,000, most of which went straight to her debt. "Don't be ashamed if you have to take a side job," says Garrido. "I did have that feeling at one point, but it was worth it."
Any other extra income also went straight to her debt: "Anytime I got a raise, I didn't up my lifestyle. If I got money for Christmas or something, I put it to straight to the debt. And taxes, too — my tax refund would always go straight to the debt."
Besides generating more income, Garrido pulled back on spending. She started by negotiating lower prices on certain fixed costs: "I called my car insurance company. I looked at my phone bill and I found that I was actually on an older plan that was costing more than the current one, but of course, they're not going to tell you that. I realized that you have to update yourself on these things and see if there's anything new that could save you money."
Next, she focused on slashing her day-to-day expenses. "I only gave myself $300 per paycheck for everything besides fixed costs, so groceries, gas, food, going out to eat and entertainment," Garrido tells CNBC Make It.
To make sure she stuck to her budget, she opened a separate checking account with a separate debit card and moved $300 from each paycheck into that account. Once she went through the $300, she couldn't spend any more until her next paycheck hit. It was similar to going on a "cash diet."
While Garrido was spending significantly less than she was used to, she didn't feel deprived: She viewed her situation as having the freedom to spend $300 per paycheck. As she puts it, "It was like a diet where you could do whatever you want within a certain amount of calories."
Her discipline paid off. Over the three years and three months, she put an average of $1,800 a month towards her debt. Her smallest monthly payment was $859 and her biggest was $3,418. "That was one of the months where I got three paychecks," Garrido notes. "That month, I put my third paycheck pretty much all towards my debt."
Garrido made her final payment in March 2018. And she made sure to celebrate. She took the day off from work, got a massage and then went to Party City, she says: "I got a giant black balloon — the ones you would see for a gender reveal — and filled it up with green confetti. At home, I painted the word debt on it in silver, popped the balloon and the confetti came down on me."
While the 32-year-old is officially debt free, her spending habits haven't changed much. "Now, I give myself $350 per paycheck to spend," she says.
The money that was going towards her debt is now going towards different savings goals. Her priorities right now are building her emergency fund up to $10,000 and saving for her upcoming wedding. And she's already thinking about long-term goals like buying a home and saving for retirement.
"Even though I'm debt free, there's still a lot to work towards," says Garrido.
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