Woman reveals how she paid of $40K worth of loans
Credit card-loving big spender shares how she went from drowning in a $40,000 debt to taking charge of her finances – and the simple method she used to do it
- Whitney Steel, 37, spiralled into debt after ‘randomly’ getting a credit card at 18
- The marketing lead never opened mail as she was afraid of how much she owed
- In her 20s she amassed $40K of debt but had no idea
- A book recommendation from a colleague helped change everything
- She managed to pay off $25K of personal debt in 14 months
Whitney Steel (pictured), from New Zealand, refused to check her mailbox and deleted emails because she was ‘too afraid’ to know how much debt she had
In her 20s, Whitney Steel was a big spender who used credit cards to fund a lifestyle beyond her means and ended up saddled with huge debts.
Now in her 30s, she’s wiped her debts, bought a house and is considering starting a business.
Whitney thanks some sound financial advice from a best-selling book – and some tough love from her concerned boyfriend – for turning her financial life around.
Whitney moved to Melbourne from Auckland at age 25 and indulged in an an outgoing, carefree lifestyle.
By refusing to check the mailbox she could ignore the debts she was amassing which eventually topped out at $40,000 in credit card bills and personal loans.
‘I didn’t have the discipline; if I wanted something I would just swipe the credit card,’ Whitney told FEMAIL, adding: ‘Every weekend in Melbourne I could easily go out and drop $200-$300.’
Now 37, the marketing lead said her debt started snowballing after she ‘randomly’ received a credit card at 18.
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Now 37, the marketing lead said her debt started snowballing when she ‘randomly’ received a credit card at 18. The marketing lead managed to pay off $25,000 in just 14 months and says she would’ve paid pack $40K in total throughout her 20s (pictured: Whitney, right, with friend)
‘As soon as I turned 18 I was put into debt. I had no restraint and never kept track of how much I was spending, which became the norm for me,’ Whitney said.
‘In university I had a $500 credit card with a $2,000 overdraft, I had personal loans, I had a MacBook on high purchase. Thinking back, it was ridiculous.
‘I saved money but would always dip back into my savings account.’
Whitney described her 20s as her ‘gluttony era’ – she collected expensive perfume, travelled to Las Vegas with friends, attended Coachella and bought a second-hand Mazda 3 for $16,000 – which she put straight onto her credit card.
‘I lived like I was earning $200K when I was really on around $70K,’ she said.
Her lack of financial literacy meant she was spending far more than she was earning, and had ‘no idea’ what interest rates even were.
‘I really had no idea how much I was spending, how much was coming in, what was going out, I never stopped to analyse my bank statements or anything,’ she said.
The ‘turning point’ sparked when her boyfriend at the time threatened to break up with her unless she sorted out her money habits.
‘I was really pissed off during that conversation but then I thought about if the roles were reversed, I would’ve acted the exact same way,’ she said, adding: ‘So it really kicked my thinking into gear that I need to change my ways.’
But moving from thought to action left Whitney feeling ‘so overwhelmed’.
‘I knew I wanted to make a change but didn’t know how to or where to start,’ she said.
‘The first thing I did was open the mail in my letterbox – I hadn’t checked it for months because I was too scared to know how much I owed.’
To begin with, Whitney wrote down all her debts, calculated her expenses and searched for ‘how to budget’.
‘I really had no idea how much I was spending, how much was coming in, what was going out, I never stopped to analyse my bank statements or anything,’ she said
The ‘turning point’ sparked when her boyfriend at the time threatened to break up with her if she didn’t sort out her money habits. A friend from work then recommended The Barefoot Investor by Scott Pape, which ultimately helped Whitney pay off her remaining debt of around $25,000 (pictured right: The Barefoot Investor monthly budget breakdown)
A friend from work then recommended The Barefoot Investor by Scott Pape, and after applying some of the principals, Whitney managed to pay off around $25,000.
The best-selling book is known for teaching readers how to budget by dividing income into different ‘buckets’.
The ‘blow’ bucket is for essential costs, such as bills, debt, food, and rent or mortgage repayments, the ‘mojo’ bucket is for emergencies and the ‘grow’ bucket is for long-term investing.
How do The Barefoot Investor buckets work?
The Barefoot Investor Buckets strategy starts by splitting your regular household income into three main savings accounts or ‘buckets’
What are the three buckets?
The Blow bucket – cost of living and lifestyle expenses such as rent/mortgage repayments, bills, debt, food, etc
The Mojo bucket – emergency fund or ‘money for a rainy day’
The Grow bucket – long-term wealth building to increase your net worth
The Barefoot Investor Accounts from The Blow bucket
Within The Blow bucket are four bank accounts that break down your income as follows:
Daily expenses – 60% of income
Fire extinguisher/debt reducer – 20% of income
Splurge (fun money) – 10% of income
‘Smile’ (adventures/experiences) account – 10% of income
‘The hardest part for me was reducing my expenses down to 60 per cent of my income and getting rid of my credit card,’ Whitney said.
‘My credit card had been a safety net for so long that it was difficult to get rid of.’
She started off by paying off the smallest debt of $1100.
‘After paying that off, for the first time in my life, I felt confident,’ she said.
From there she changed phone provider and energy provider to cheaper alternatives, reduced her splurge allowance to $100 per week, and changed her personal loan to one with 0 per cent interest.
She also cut her Netflix and coffee subscription, and stopped buying expensive perfume.
‘Every tiny little thing gave me a one per cent boost of confidence that I am in control of this,’ she said.
Following this process she managed to pay off a huge lump sum of $25,000 worth of personal debt in just 14 months.
How did Whitney pay off her debt?
After reading The Barefoot Investor, Whitney started by calculating her expenses
She changed phone providers, energy providers, reduced her splurge allowance to $100 per week, and changed her personal loan to one with 0 per cent interest
She worked hard to get her expenses down to 60 per cent of her income
Whitney also said ‘no’ to going out with friends a few times, because she knew she’d spend more money
From there she worked off paying off the smallest debt amount of $1100 and worked her way up
All the small changes helped her gain confidence to take control of her finances
She also cut her Netflix and coffee subscription, and stopped buying expensive perfume
From there she managed to save a further $25,000 for a down-payment on a house and land package, and the home in Melbourne was completed last year.
‘For me saving for a house turned out to be so much easier than getting rid of my credit card!’ Whitney said.
Today she lives back in New Zealand renting with her boyfriend, and they split the expenses by percentage of income.
Whitney now refinances her home every 12 months and is considering either buying another property or starting a business.
In regards to advice to others, Whitney said to ‘rip the bandaid off’ and calculate your expenses.
‘You can’t start budgeting or saving without knowing how much you’re spending,’ she said.
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