Jul 18, 2023
Brittany Xavier and her husband Anthony say they were able to pay off $150,000 in debt in just two-and-a-half years.
In a “get-ready-with-me” TikTok video, the millennial fashion influencer does her makeup while the couple break down the steps they used based on radio host and finance personality Dave Ramsey’s “baby steps” to financial success. The clip has garnered over 2.2 million views since being posted March 22.
Advertisement
The pair shared that when they got married, they collectively owed about $120,000 in student loans and $30,000 in credit card debt. With money being one of the top reasons for divorce, they decided it was important to take Ramsey’s finance course while they were engaged.
“We knew our spending was a little out of control,” Brittany admitted, to which Anthony added: “We were living paycheck-to-paycheck.”
U.S. millennials had collective debt of over $3.8 trillion at the end of 2022, according to data from the Fed, as reported by the Wall Street Journal.
With young people racking up debt at a record pace, the Xaviers clearly aren’t the only ones struggling with managing their money. Here’s how they got themselves on track — and how you can too.
1. Make a $1,000 emergency fund
The Xaviers started off with building their emergency fund. It’s important to have some cash tucked away in case of an unexpected expense, like car repairs or a big medical bill, and Ramsey recommends beginning with $1,000.
You could stash funds aside in a regular savings account, or consider a high-yield savings vehicle with a higher interest rate.
Of course, Ramsey now admits $1,000 isn't going to be enough to float you for long. You'll need to boost your fund eventually, but $1,000 should be enough to get you through an unexpected emergency without having to reach for your credit card and digging yourself deeper into debt.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
2. Pay off all your debt (except the house) using the snowball method
The debt snowball method is a repayment strategy where you pay off your smallest debt first and work your way up.
Advertisement
The Xaviers listed all their debts in order of smallest to largest — excluding their mortgage — and paid off their account with the lowest balance first, while making minimum payments on their other bills.
To help with their debt repayment plan, the couple also made a budget — and most importantly, they followed it.
“We were really strict,” Anthony said. “We didn't go out to eat, we were on a clothing budget, we were on a gas budget.”
This also motivated them to find other streams of income, like doing SEO work on the side and selling paper flowers on Etsy.
Dave Ramsey’s other baby steps
Although the Xaviers didn’t detail Ramsey’s other baby steps for building wealth in their video, here are the remaining five:
-
Save three to six months of expenses in your emergency fund. Once you’ve paid off your debts, you can beef up your emergency savings. Ramsey says a single-income household should aim for six months worth of expenses, while double-income households can save for three.
-
Invest 15% of your household income for retirement. Delve deeper into planning for the long term. If you have a 401(k) matching plan, Ramsey suggests maxing out your employer’s contributions and then making the maximum contribution to a Roth IRA. After that, if you still haven’t hit the 15% mark of your household’s income, put the rest into your 401(k).
-
Save for your kids’ college fund. Of course this doesn’t apply if you’re childless, or your kids are fully grown and out of the house — so many will get to skip this step. If not, consider opening up an Educational Savings Account (ESA) or a 529 college savings fund to help your kids graduate debt-free in the future.
-
Pay off your home early. Now you can finally get to that remaining debt and decide whether you want to pay your home loan off early. You could refinance if you find a better rate, or make an additional payment each quarter to help you speed up your repayment time and save yourself some interest, too.
-
Build wealth and give. Finally, you’re now free to grow your wealth. Continue contributing to your investment accounts and giving back by making a donation to your favorite charity.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
