I’m 25 and paid off £17,000 of debt in 10 months by following seven ‘baby steps’ – it’s so easy and set me up for life | The Sun

February 26, 2023

A SAVVY saver has revealed how she was able to pay £17,000 in 10 months following seven easy financial steps.

Rebecca explained in a TikTok video how she journeyed to financial freedom and set herself on the road to becoming a millionaire.

Rebecca said: “I wanna let you know how I paid off $20,000 [£17,000] in 10 months.”

The inspiration for financial freedom came to Rebecca from a book given to her by her uncle.

She said: “When I was 21 years old my uncle gave me a book called The Total Money Makeover. It's about paying off your debt and creating financial freedom for yourself and your future, for your kids, changing your family tree, all that.”

She continued: “I listened to it every single day, no matter where I was driving, school, work, literally every day, religiously. Once I finished the book, I literally was like, wow. It's that easy to take control of your money.”

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“Also listened to the podcast every day hearing other peoples stories that kept me motivated during my journey.”

Rebecca had $20,000 [£17,000] in debt to pay off.

She said: “My debt included student loans at a community college that I was at, as well as my car. I know $20,000 doesn't seem like a huge amount compared to what some people have, but it was for me and the fact that I learned this while I was younger.”

Rebecca said learning this method set her up for financial freedom at 21.

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She said: “I'm 25 now, but when I learned this at 21, like, this set up the rest of my life with financial freedom.”

Rebecca explained the first step is setting up an emergency fund.

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She said: “So basically you're gonna start with baby step one. You're gonna save $1,000 [£840] to your emergency fund. Sometimes it could take you a while. You may already have that money in your bank account.”

The next step is paying off all your debts one by one.

She said: “Baby step two you're gonna take your debt, and you're gonna debt Snowball. So your smallest debt to your largest debt, you're gonna pay it off. My smallest debts were my student loans, and then I worked on my car.”

Next Rebecca said she saved up three to six months worth of expenses.

She said: “Baby step three, You're saving three to six months of your expenses. So anything that you pay for for your house, utilities, things you want to spend money on, You are saving that months worth.”

Rebecca explained budgeting was essential for this step.

She said: “When I tell you budgeting is super important for this. We budget to the actual literal penny and once you start doing that, you really realise how much money you should have left over. You're like, I should have this money saved, but I'm spending it on stupid stuff that I don't need.”

Rebecca said with this step you would need to budget for the things you wanted.

She said: “And budgeting isn't like restricting yourself. You're giving yourself a budget. If you want to spend money, you're putting it in your budget.”

For step five Rebecca started to invest.

She said: “You'll start investing 15%. I open a Roth IRA, and I invest 15% of my income into that, and it grows money over the years, and I'm not touching it. I should have well over $2,000,000 [around £1,680,000] when I retire."

Rebecca explained her and her partner were currently on baby step six, which is paying off their house .

She said: “My husband and I are currently on baby step six we are going to be paying off our house early. We already switched to a 15 year mortgage which saved $80,000 [67,000] in the life of the loan."

The last step is to build wealth.

Rebecca said: “Baby step 7 is to build wealth and give. This whole process was extremely hard, especially being so young and wanting to spend money and not being able to go out and do things. But now I can do whatever I want.”