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I paid off $169,000 in 20 months and now focus on building generational wealth: Here's my best advice

"The biggest mistake I made prior to creating my first budget was that I never paid myself first."

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Shaquana Watson-Harkness is the founder of Dollars Makes Cents.
Courtesy Shaquana Watson-Harkness

On December 31, 2017, while I watched the ball drop, instead of looking ahead to the new year, I was stuck thinking about all the financial goals I hadn't accomplished over the last 12 months. 

I had set a resolution the previous January to stop funding my lifestyle with credit cards and to get out of debt without taking on any more. Ashamed and frustrated, I realized how tough longtime habits were to break.

I had been struggling with learning how to manage my finances for nearly 20 years. My freshman year of college, I got my first credit card so I could cover a spring break trip with my roommates. Maxing out that card was the beginning of my toxic relationship with debt.

But as I entered 2018, I decided that I needed and was ready to make a drastic change. I wanted to get rid of the financial stress of living paycheck to paycheck. And I felt a great amount of financial anxiety because I knew that I wasn't prepared for an emergency or an unexpected job loss. 

So in February that year, I decided to enroll in a course focused on saving money and eliminating debt. During that time, I created my first budget and was able to develop my debt payoff plan

Over the last 20 months, I have paid off $169,000 of consumer debt and counting. Now I am working toward my next goal of becoming completely debt-free and building generational wealth

Here are the steps I took to get here. 

I changed my money mindset

As I started getting serious about my debt, I realized that I had a negative mindset when it came to managing money and achieving financial independence

As a broke college student, I had very little financial literacy and no understanding about the consequences of using a credit card. When I received financial aid, which included federal student loans, I had no idea how much student debt I would accumulate over the next four years.

Once I graduated from college, I leased a car, got an expensive apartment, and started using my credit cards to travel to various destinations. 

As a young, single, Black professional who was working as an industrial engineer at the time, I felt that I was on top of the world as I was making money in my career. I figured that if I was able to get all these things with credit and loans, then I should take advantage of this opportunity today versus waiting 20 years. 

But as I started working on my belief system, learning from others who had similar experiences and getting more confident that I could live a debt-free lifestyle, my mindset shifted in order to attract more financial abundance and opportunities into my life.

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I created a monthly budget 

Before I created my first budget, my idea of what budgeting entailed was seeing how much money I had in my bank account. If my bank account was overdrawn and had a negative balance, I would use my credit cards or another form of debt to cover the difference. 

Once I started writing down how much I earned and spent, I was surprised to find out that I was overspending by $3,000 each month. This totally shocked me. In hindsight, it made sense because I got paid every two weeks and I had a zero balance three days later.

Creating my first budget helped me to organize my finances and keep me on track with my spending. Also, it helped me to allocate my dollars and understand how I was spending in certain categories like on food, vacations, and housing. 

And it helped me control and reduce any overspending so that I could avoid reverting back to living paycheck to paycheck.

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I identified expense reduction and saving opportunities

Once I was able to develop my budget and understand how to manage my cash flow each month, I looked for opportunities where I could save money by reducing my expenses. 

The easiest way for me to accomplish this task was looking at my highest expense categories within my budget (excluding debt payments), which were groceries, dining out, and cable. I needed to figure out how I could reduce these expenses without making a sacrifice that I wouldn't fully commit to in the long run.

One of the first steps I did was reduce my grocery bill from $800 to $500 a month. I did this by using digital coupons at my local supermarket and clipping coupons from the Sunday newspaper. I also signed up for Facebook Groups that were focused on couponing strategies and how to find the best deals and sales. 

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One of the most effective saving strategies I learned from joining those groups was that some coupons are "seasonal," so stock up when you see a great deal. For example, coupons and discounted prices for beauty and body products are often in circulation during the winter months between January and February. Once I see these items on sale, I will stock up for the year to maximize my savings and keep an inventory that will last me until next winter.

Also, I constantly compared prices of certain food items. If something was too expensive at Whole Foods, for example, I would find a substitute at a lower price at a different store.

Some coupons are 'seasonal,' so stock up when you see a great deal.

When I started to develop my budget, I realized that I was spending $275 a month for cable television. This was ridiculous to me since I didn't even use half the channels I paid for and the same movies were shown constantly. 

A co-worker told me that they purchased a Roku and started to stream the channels they preferred to watch at home or on their cellphone. They added that they could purchase any channel a la carte and cancel at any time without any contracts. I was unsure at first, but once I started streaming, I saved $150 each month and never looked back.

I developed and executed a debt elimination plan

To eliminate my debt, I decided to use the debt snowball method. With this strategy, you list your debts in chronological order from smallest to largest and put any extra money towards the smallest debt. Once the smallest debt is eliminated, you apply the same method to the next highest payment until you are debt-free. 

In April 2018, I started using the debt snowball method and I was seeing results within the first 30 days. I paid off $10,000 of credit card debt by August 2018, $120,000 mortgage on my rental property in January 2019, and $30,000 in student loans by July 2019. 

Less than two years later, I had eliminated $169,000 of my consumer debt. Even though the journey to get here was not easy, I felt so proud of what I accomplished.

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I consistently paid myself first 

The biggest mistake I made prior to creating my first budget was that I never paid myself first. I always paid my bills and everyone else before I put any money in my savings or set anything aside for personal purchases. 

Normally, once I was paid, my money would be gone as I was constantly overspending and not very organized with tracking my expenses. I didn't know at the time that this was a problem as my thinking was that I just needed to make more money to cover my expenses. 

Within my budget, I determined that I could save between $750 and $1,000 a month and still pay all my expenses. In order to stay disciplined and consistent with my savings plan, I automatically deposit funds into my savings every time I receive my biweekly paycheck. 

I also set aside a portion of my savings into my retirement accounts with my employer and with a Roth IRA. Understanding that I could take advantage of continuously increasing the value of my retirement accounts while eliminating my debt at the same time has been game changing. 

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I discovered my purpose

As someone who works in the financial services industry, people automatically assume I know "how money works" or am really good with my money. I would constantly get questions on "how do I improve my credit score" or "how much should I invest in my retirement account." The truth was that I was struggling to pay my bills and save money. But I always enjoyed giving advice based on my personal knowledge.

When I started to create my monthly budget starting in April 2018, I shared what was working for me with my family and friends. I never considered it "coaching" at the time. But talking with them about my experience made me feel confident that I could share something that I was passionate about and actually worked.

In November 2019, a few things happened. I had been focusing on my debt-free journey for nearly two years and had been regularly fielding financially related questions from family and friends. Then I got laid off by my employer. It was unexpected, but because I had prioritized my financial health, I was ready.

I got laid off by my employer. It was unexpected, but because I had prioritized my financial health, I was ready.

When I spoke to people who sought advice from me, I realized that so many didn't know how to develop an effective budget or didn't understand financial concepts like compound interest. A lot of them had never met with a financial advisor or simply didn't see an urgency in saving for a retirement that was at least 30 years in the future.

But I knew firsthand how important it was to feel good about managing money. So in December 2019, I founded a financial education company called Dollars Makes Cents. I'm focused on providing coaching and services that will help people change their mindset about money and help them become financially independent.  

Today, through my side hustle business, I strive to help women understand that building wealth can be achieved with consistency, discipline, and having a vision about how you want to live your life in the future. 

Shaquana Watson-Harkness is a personal finance and wealth literacy expert with 16 years of experience in the financial services industry. She is the founder of Dollars Makes Cents and her goal is to help professional millennial women achieve financial independence by shifting their mindset towards wealth building. Through her savings challenge called Stack That Rack, she is focused on helping you save $1,000 in the next 21 days. You can follow her on Instagram for more personal finance tips and resources.

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