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Paying off $300,000 in 3 years taught me 3 money lessons that are helping during coronavirus

Bernadette Joy, who paid off $300,000 in debt in 3 years, shares the strategies that have helped her deal with financial uncertainty and get better at handling money.

Bernadette Joy
Bernadette Joy.
Courtesy Bernadette Joy

Before becoming an entrepreneur, I spent the first 10 years of my career in human resources. I started a new business in January 2020 to provide in-person training and workshops about money. Two months later in March, I saw all of my planned engagements postponed, and eventually canceled, as stay-at-home orders were implemented where I live and do business in Charlotte, North Carolina.

Right now, everyone is feeling a sense of urgency around job insecurity or loss, increased medical payments and simply covering everyday basic needs.

Even though this moment was unprecedented, though, I felt oddly prepared to meet it. I understand what it is like to feel uncertain about my finances. My husband and I paid off over $300,000 of debt in three years. Doing that required us to entirely shift how we thought about our money. 

When we really had to think carefully about debt and spending, these three strategies helped us ease our stress and put things in perspective, and they're still helpful to us now during this period of economic upheaval.

Carve out specific times to talk about money 

I felt like I could handle it when my first and second engagements were canceled. But the third cancellation sent me back into panic mode. I felt frantic starting to think about how I was going to cover my expenses without that income. I wondered if I should pause my retirement investing.

I could feel my heart and head pounding, so I stopped to get some fresh air. On my walk, I decided to wait on making any decisions until our April money meeting. 

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My husband and I have a regularly scheduled money meeting on the first Sunday of every month from 5 p.m. to 6 p.m., and have done so without fail for the last four years. That's when we discuss any money concerns we have for the rest of the month.

We chose that time because we're both readily available and are not tired from a long day at work. We do some yoga beforehand to make sure we are not bringing any additional tensions with us into our conversation. It's a time when we can control our mood and distractions. 

By waiting until our money meeting, I was able to make decisions using logic and reason, not based on my initial feelings of shock and fear. During our conversation, my husband and I were able to come up with a plan for the rest of the month that included continuing our investments. Giving myself a moment to breathe and consider our options allowed me to think not just about this tough moment, but about what could best set us up for the future. 

Decrease the number of accounts you have to manage

When we first got married, my husband and I each had separate checking accounts, savings accounts, multiple credit cards, and expenses that took pages to write out. Four years ago, when we started to track all of our spending, I felt overwhelmed not only by the dollar amounts, but by the sheer number of line items in our budget.

We decided to decrease the number of lines so there was less to manage and feel overwhelmed by. We eventually consolidated by half into four spending accounts, all of which are jointly visible:

  • A checking account for daily and monthly expenses like utilities, gas, and food
  • A savings account for quarterly and annual expenses like taxes and quarterly car insurance payments
  • A high-yield savings account for our emergency fund, and
  • A checking account for my business

It became a lot easier to track spending because we had fewer accounts to look up. As we paid off our debts, including our student loans and our mortgage, and reduced our credit card usage, we were able to take things off the list altogether.

Having a few years of using this strategy under our belt has helped us right now. A simple change we've implemented for the time being is combining our dining out and groceries into one line item simply called "food." We previously separated them because we tend to overspend on dining out.

We also typically allocate $150 a month for gas but since we haven't been driving our car as frequently, we've put that money towards savings. 

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Have an emergency fund that can serve as a severance plan

In 2007, my first job out of college was in the human resources department for a Fortune 100 insurance company. The following year, the Great Recession hit, and at 23 years old, it became part of my job to fly around the country to close offices and tell my colleagues that they were being let go. 

My company provided its laid off employees with a severance agreement for at least 30 days of pay. Severance pay unfortunately isn't always given. Anticipating that one day I might be on the other side of the table, I made it a goal to have 30 days worth of pay in my emergency fund, just in case. 

As the owner of a new company, I never thought to have a contingency plan for a global pandemic, but I had continued to contribute to my emergency fund. Even though I didn't plan for my speaking business to shut down in March, the fund that I had saved up while I was launching — effectively, my personal severance plan — has given me flexibility and some peace of mind. It helped me buy myself time, and that has allowed me to pivot and develop a new game plan for generating income, including teaching online and learning new skills, like video editing.

If you are still working but are worried about potentially losing a job or income, prioritizing your savings right now can help take some of the tension down.

My debt-free journey taught me to expect the unexpected. No one can predict the future, but we can help ourselves to feel more ready by coming up with a plan. 

Bernadette Joy is a personal finance enthusiast based in Charlotte, North Carolina. She is currently enjoying #debtfreelife after paying off $300,000 of debt in three years. Follow her fun, debt-free tips at @bernadebtjoy.

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