In 2011, LaTisha Styles decided it was time to pay off her $US22,000 of credit card debt and $US10,000 auto loan.
The process took her three years and one month.
“In November of , I moved to my own place in the city, single and without children,” she remembers. “I took a job with an investment adviser and slowly began the process of paying off my debt.”
At the time, her debt was delinquent (meaning she hadn’t been making payments) since she had graduated college without a job and went to live with her parents outside of Atlanta, Georgia.
On the day she was offered her new job, she sat down and created a budget, using a basic spreadsheet and working with Clearpoint Credit Counseling Solutions to manage her consumer debt.
Here, she shares an average monthly budget from 2013, when she was furiously paying down her debt, as well as one from 2014, the year she paid it off. Note that these are averages taken from a year’s worth of spending, so a single month isn’t represented, and the budget was created for her after-tax income.
First, 2013. Her average monthly income, after taxes, was $US3,949. This includes earnings from her job, where she was employed until June of this year, her blog, Young Finances, and miscellaneous income from smaller gigs such as babysitting.
When setting up her budget, she first subtracts the money that goes into savings (in 2013, an average of $US161 a month), and then distributes the rest of the money into her various expenses. While she breaks her spending into even more granular categories, we’ve consolidated some here for simplicity. All categories have been rounded to the nearest dollar.
Note that the “savings” category includes contributions to a Roth IRA, money invested with robo-adviser Betterment, savings for travel (one of Styles’ financial priorities), and personal savings. Concentrating on paying the last of her debt in 2013, she accumulated minimal after-tax savings in favour of pre-tax retirement contributions, which wouldn’t appear in this budget.
Expenses falling into the “debt” category are her consumer debt, plus a student loan payment. Her next big financial goals are eliminating her $US65,000 of student loans in less than three years and travelling the world.
She plans to do this by saving half her after-tax income, which you can see below. In 2014, her average monthly after-tax income was $US5,178, which she explains is primarily from her blog.
“During my debt payoff journey, I learned to separate needs from wants, and I realised that much of my overspending was from impulse shopping,” Styles explains. “I love shopping for new clothes and shoes. Now I simply use one rule to keep myself in check. If I planned to purchase the item, then I can purchase it. If I am at a store and I want to buy an item that was not on the list or planned, then I have to plan a day to come back and get it. It really helps me to prevent those splurge shopping trips!”
Styles also manages to keep an impressively low monthly food budget — an average of $US51 in 2013, and $US81 in 2014. “I am a master grocery shopper,” Styles explains. “I buy when items are on sale (I freeze them if needed), and I am OK eating beans and vegetables — canned vegetables are pretty cheap. I was vegetarian for a short while, which is even cheaper.”
You’ll notice that while the bulk of her budget used to go towards her debt, it’s now allocated to savings, and the car payment has been eliminated.
Two categories in 2014, post-debt, that don’t appear in the 2013 budget are entertainment and miscellaneous (which includes nights out and the occasional shopping trip), as Styles had cut them out to divert more money toward her debt.
“My entertainment category came back in 2014 as I spent a bit more on gifts and outings,” she says, “but after a restricted budget it was really difficult to splurge. I essentially got into the habit of saving more and spending less.”
Want to share your budget with the Business Insider community? Email lkane[at]businessinsider.com. Anonymous submissions will be considered.
Business Insider Emails & Alerts
Site highlights each day to your inbox.