How I paid off my debt and grew my net worth to $100,000 in 5 years


Recently, I accomplished a major personal milestone: I now have a net worth of $100,000. I'm really proud of the strides I've taken to bolster my finances, especially since five years ago a goal like this seemed almost out of reach. 

In April of 2015, I had $2,250 in savings, $5,000 in a retirement account, and still had to pay off $45,000 in student loans and $15,500 in credit card debt. When I calculated it all together, I had a net worth of negative $53,554.24. With that information in hand, I knew had to create some healthier money habits. 

There's a lot of great advice out there about building your net worth, and no two journeys are exactly alike. Still, here are the steps that allowed me to make some positive financial changes and end up with not just a positive net worth, but one in the six figures.

1. I started tracking my net worth 

Your net worth is one of the most important numbers in your financial life. And yet, up until I was 25, I had no clue what mine was. It's a straightforward figure to calculate but if you are in debt, like I was at the time, the truth can be a tough pill to swallow. 

To figure out your net worth, add together your assets (everything with a positive value) and your debts (everything with a negative value). I've found that tracking it can help you understand whether or not you're making progress towards your goals, even if your net worth is at $0

Sitting down and calculating my net worth was a life-changing moment for me, because it forced me to confront just how much debt I was carrying around. It showed me where I was starting from, helped me realize where I wanted to go, and empowered me to create a plan of attack to make those goals a reality. 

Tim Stobierski is the founder of Student Debt Warriors.
Courtesy Tim Stobierski

2. I developed a plan to tackle my debt

When I calculated my net worth, I was confronted with a negative number because my debts, in the form of student loans and credit card bills, were greater than my assets. 

On top of paying back the principal — the amount I had borrowed — each month, I was also paying interest. The longer I carried these debts with me, the longer I would be paying interest and limiting my ability to save and invest for the future. I needed to pay them off.

The first thing I did was convert my credit card into a personal loan. I did this because the loan carried a much lower interest rate of 4%, compared to the 15% on my credit card. And then I decided to close my credit card account, in part to make sure that I wouldn't use it to take on more debt. It's not the right move for everyone but it was the right move for me at the time.  

Next, I chose to follow the snowball method to pay off my loans. In the snowball method, you make minimum monthly payments on all of your debts but apply any extra funds to the loan with the lowest balance. This instantly frees up money that you can put to use to invest or pay down your debt even faster. Once one loan is paid off, you repeat the process with the next loan, and the next, until you're done.

This past January, I finished paying off my student loans, three years ahead of schedule. And I will be done paying off my credit card debt in six months.

What's the difference between a debt avalanche and a debt snowball

Video by David Fang

3. I built an emergency fund for security

At the same time that I was working to pay off my debts, I also worked to build an emergency fund that I could fall back on if I was ever confronted with an unexpected expense. This fund has proven critical over the years, allowing me to cover things like emergency dental work and car repairs, all without needing to take on additional debt to get by. 

Most experts recommend that your emergency fund holds 3 to 6 months' worth of expenses so that, in the worst case scenario of job loss, you're able to pay your bills.

That can be an intimidatingly large number, especially when you're just starting out. That's why I started small. I aimed first to save $500. Once I hit that goal, I upped my target to $1,000, and then a month's worth of expenses.

I currently have three months' worth of expenses set aside, with plans of growing that to six months' in the coming year. 

4. I made smart investments

Paying down my debts allowed me to save more of my money each month. But to really grow my net worth, I needed to start investing my money so that it could grow.  

When I first started out with investing, I dabbled in picking individual stocks, investing in a handful of companies that I believed would grow. I was lured by the siren song of quick, easy money. But as often happens, those picks turned out to be duds. Fortunately, most of them stayed relatively flat, but a handful actually lost quite a bit of value, like the $5,000 that turned into $2,500 in a little over over a week.

The smartest thing that I ever did was to begin investing on a regular, set schedule in index-tracking exchange traded funds (ETFs). I was able to worry less about losing money in the long run with ETFs because they create instant diversification, which meant my risk was spread out across thousands of different investments. 

Because I was investing for the long haul, most of these investments have been made through various retirement accounts, including an employee-sponsored 401(k) and an IRA. Investing through my 401(k) was especially beneficial, because my employer matched a certain percentage. 

Farnoosh Torabi busts 4 common investing myths

Video by Courtney Stith

5. I changed how I thought about spending

Even though I wasn't regularly going out and making big purchases, my smaller habits — lunches, happy hours, cigarettes before I quit, weekly lottery tickets — were adding up more than I had realized. I knew that if I kept spending this way, it would be difficult to make meaningful progress in paying down my debt or investing for my future. 

I completely revised my budget and cut out a lot of discretionary spending. Every time I decided not to spend money on one of those small habits, I immediately moved the amount of the item into a savings account. For me, that was a critical part of the equation. It also empowered me to stop relying on credit cards, grow my emergency fund and invest intelligently. 

I've relaxed quite a bit since my most Spartan days. A particularly stressful point was when I was laid off in 2016. I remained pretty strict about my spending during that period, even through much of my first year at a new job. But in 2017, I hit a $0 net worth and got a raise that gave me some more flexibility. 

Today, I still try to think critically about each and every purchase I make, to ensure that I'm using my resources in a way that brings me joy and helps me work towards one of my big goals. 

Tim Stobierski is an inbound marketing consultant at Pepperland Marketing, a freelance writer and editor and the founder of, a website dedicated to helping college students and graduates understand the complicated world of student loans. He was formerly in the publishing industry.

More from Grow: