Financial coach, 28, reveals how she paid off debt of $ 95,000 in three years instead of 16

A New Zealand financial coach has revealed how she paid off her massive $ 94,000 debt in just three years while managing multiple sources of income.

Tracy Hemingway took on huge debt when she had the opportunity to start her own business at the age of 18 and “jumped at the chance”.

The now 28-year-old woman admitted it wasn’t the smartest move as at the time she had very minimal business knowledge and a lack of support from those around her.

At the age of 24, doctors discovered a tumor in Tracy’s throat and had to prioritize her health, which meant she had to wind up the businesses.

“I had a debt of $ 94,000 that I personally guaranteed that was at risk of bankruptcy,” Tracy told FEMAIL.

Although a financial advisor told her it would take 16 years to pay off the debt, Tracy worked hard to budget and paid off the money much faster than expected.

Tracy Hemingway (pictured) revealed how she paid off her massive $ 94,000 debt in just three years while managing multiple income streams

In order to reduce the debt, Tracy managed to get a full time job in sales and also maintained several other sources of income.

“I started working to increase my income, sometimes working up to six activities while working for my full-time job,” she said.

She juggled driving Uber Eats delivery, dog walking, polls, lime juice (picking up Lime scooters from the streets after 9 p.m.), selling items online, babysitting. , home care and the organization of speed date events.

“I then worked incredibly hard to reduce my expenses, negotiated all of my insurance and fixed expenses to reduce them,” she said.

“I sold my BMW car and bought a Suzuki Swift that cost next to nothing, learned to live on $ 40- $ 50 a week in groceries and a generally frugal life.”

In order to reduce the debt, Tracy managed to get a full time job in sales and also managed several other sources of income.

She's juggled driving Uber Eats delivery, dog walking, polls, lime juice, selling items online, babysitting, home babysitting, and organizing events. by speed date

In order to reduce the debt, Tracy managed to get a full time job in sales and also managed several other sources of income.

HOW DID TRACY PAY THE DEBT IN THREE YEARS?

  • Worked full time
  • Uber Eats delivery drive
  • Baby sitting
  • Walk the dog
  • Complete surveys
  • Lime juice (pick up Lime scooters from the streets after 9 p.m.)
  • Online sale of personal items
  • Sitting at home
  • Hosting of speed date events
  • Sold his BMW for a Suzuki Swift
  • Budgeted all costs each month
  • I didn’t spend too much on groceries
  • Using the sinking fund method to budget costs

By manually tracking her finances, Tracy became a “budgeting queen” and tracked “every penny” of every source of income to ensure she was working towards her end goal.

Declaring bankruptcy also meant that Tracy should have given up on her beautiful dog Teddy, as the pet was considered a “luxury item” by an insolvency officer, but she was determined not to make it.

“I was in a bad emotional state at the time and I couldn’t bear the thought of losing my precious dog either,” she said.

Teddy finally helped Tracy believe she could pay off the debt and reminded her that it had to be done.

Declaring bankruptcy also meant that Tracy should have given up on her lovely dog ​​Teddy as the pet was considered a

Declaring bankruptcy also meant that Tracy should have given up on her beautiful dog Teddy because the pet was considered a “luxury item”, but she was determined not to make it.

Over the three years, Tracy used a range of budgeting techniques to pay off debt, but her preferred method was sinking funds – an account containing a certain amount of money that is set aside to pay off debt, a specific invoice or cost.

“For example, my car costs $ 1,576.30 per year for all tires and warranty (but not gasoline), so I put $ 131.36 per month in a bank account just for car expenses and when these expenses arise, I have the funds available to transfer them, says Tracy.

This tactic can be applied to all personal expenses – such as public transportation, phone bills, and insurance.

WHAT IS A SINKING FUND AND HOW DOES IT WORK?

A sinking fund is a fund that contains money set aside or saved to pay off a debt or obligation

A sinking fund helps businesses and individuals who have incurred debt in the form of bonds gradually save money and avoid a large lump sum payment when due

Prepaying debt through a sinking fund saves interest charges and prevents the business or individual from facing financial hardship in the future

Source: investopedia.com

By manually tracking her finances, Tracy became a

By manually tracking her finances, Tracy became a “budgeting queen” and would track “every penny” of every source of income to ensure she was working towards her end goal.

She also budgeted for groceries and only bought what she needed each week.  Tracy now shares what she's learned with thousands of others on Instagram

She also budgeted for groceries and only bought what she needed each week. Tracy now shares what she’s learned with thousands of others on Instagram

After paying off the massive debt burden, Tracy is now saving for a home deposit and has set a goal of having a down payment by Christmas 2021.

She has already saved $ 32,000 and will seek advice from a mortgage broker next year.

“I still apply the same concepts I learned on my debt-free trip to my financial habits, but instead of paying off my debts, I put the supplement in my home savings fund,” a- she declared.

“The hardest part about debt was figuring out what sacrifices I was going to have to make to either do other side work or be able to spend that money on debt.

“Mental health was also a big part of it, I had to dig deep to find strength (especially at the beginning) and make sure I still had time to take care of myself.”

After paying off the massive debt burden, Tracy is now saving for a home deposit and has set a goal of having a down payment by Christmas 2021.

After paying off the massive debt burden, Tracy is now saving for a home deposit and has set a goal of having a down payment by Christmas 2021.

When asked what advice she would give to others who are in debt, Tracy recommends trying to pay off the figure rather than letting the interest pile up.

Regarding savings, she suggested starting with saving small funds each week or after each payday.

“If you can manage to save ten percent on your groceries, put that ten percent in your savings,” she said.

“Once you get into the habit of taking care of small amounts, it will become easier to take care of large amounts. “

TIPS FOR BUYING AN INVESTMENT PROPERTY IN 2020

Spend less than what you earn and invest the rest in a savings account for a property deposit

Consider buying an older home in a well-established neighborhood that will rise in value

Consider how a property can be renovated to add value

Think about why you want to buy a property and if this is the right solution for you, because stocks are another alternative.

Save as much as you can for a 10 to 15 percent down payment – 20 percent is ideal for avoiding paying Mortgage Lender Insurance (LMI)

Seek professional advice from a mortgage broker or advisor if you feel overwhelmed

Try not to have credit card debt

Have a strong work ethic

Live at home as long as possible to save faster

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