A debt expert who paid off $77,000 says refusing to cut 4 expenses made it possible
- Debt expert Nika Booth started her journey in 2018, following Dave Ramsey’s advice to cut back on all discretionary spending.
- Soon, she realized depriving herself of fun spending was sabotaging her debt payoff efforts.
- She regrets making four budget cuts early on, including eating out and gifts.
Before the pandemic, 41-year-old debt expert Nika Booth paid over $1,000 a month toward her federal student loans. Having worked for the government for the last 12 years, Booth qualifies for Public Service Loan Forgiveness, a program that forgives public servants’ student loans after 10 years of eligible payments.
In addition to her student loan payments, Booth was living paycheck to paycheck, with 16 credit cards and unexpected tax debt to pay down. During the pandemic, she took advantage of the federal loan payment pause by beefing up her emergency savings fund and redirecting that money to paying off her credit card debt.
Since starting her debt repayment journey in 2018, Booth has successfully paid off all of her credit card debt. To date, she’s paid off $77,000 of debt. Thanks to a limited waiver from The Biden Administration, Booth has made 102 of the 120 eligible payments. In just 18 months, Booth will have $132,000 worth of student loans forgiven under PSLF.
Because of the lack of diversity in the personal finance space, Booth admits that she was first influenced by David Ramsey, who has often been criticized for encouraging people to deprive themselves of joy-bringing discretionary purchases from a place of white male privilege.
She quickly realized that self-deprivation was the downfall of a carefully constructed debt payoff plan. “Think about it like dieting,” she says. “If you’re so restricted, you’re eventually gonna binge and spend a lot. ” Four years later, Booth uses her social media platform, @debtfreegonnabe on Instagram, to be the example she needed to see when she first started.
Here are four budget cuts that Booth regrets making early in her debt payoff journey.
1. Eating out
Following Ramsey’s harsh advice, Booth cut back on eating out as much as possible at the start of her debt payoff journey. “I’m a true foodie at heart. I love experiencing different food,” she tells Insider, adding that cutting back on meals with friends was making her miserable. She learned that drastically cutting back on eating out made her debt payoff goals unsustainable.
Booth has vitiligo, a condition that causes loss of pigment in certain patches of skin, which is most noticeable on her hands. “As someone who uses their hands a lot while talking, having manicured nails, it gives me an extra boost of confidence,” she says.
Booth adds, “It’s really important to me to be able to present myself to the world looking my best, and that means getting my Friday shape-up, or making sure I get my fresh line in.”
In 2018, when she was just starting her debt payoff journey, she skipped buying gifts for her family members at Christmas. “We can talk about the commercialization of the holidays, tell ourselves, ‘No, we don’t need to buy gifts!’ But it was something I was used to doing every year,” she says. “It makes me feel good to give people gifts, especially things I know they could use or need, especially my mom.”
4. Season tickets to see her favorite baseball team
A longtime fan of the Washington Nationals, Booth still splurges on season tickets. Now Booth creates sinking funds, savings set aside for bigger purchases down the line, to make sure she can afford to buy season tickets.
“I’m a single person, and I pay every bill in this house,” says Booth. “Now I gotta be miserable on top of it because I’m paying off debt? Absolutely not. I’m not saying, ‘Spend all your money!’ but those for those little luxuries, you can work that into your budget. Budgeting things that bring you joy while also tackling debt increases the likelihood of being able to stick to your debt payoff plan.”
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