How I Lived In NYC on $45K a Year — and Paid off $10K in Debt

I’m somewhat of a debt ninja. After all, I paid off over $8,000 in debt in just 90 days after the renovation of my first home spiraled out of control. But before the first home and a debt-payoff challenge I completed in front of the entire internet, I paid off $10,000 in credit card debt that my nasty shopping addiction in college got me into while living in New York City.

Admittedly, this is a dated story. I graduated college in December 2009 and moved to New York City in the fall of 2010 with only $300 because of the big debt hole I was in. Even though this happened years ago, I feel there’s still merit in sharing my story.

Here’s the slow-and-steady approach I took to pay off my mountain of debt after college while living in notoriously expensive New York City.

1. Get a High-Paying Job

I graduated with a Bachelor of Arts in theater, and my lifelong dream was to be a Broadway actress. Admittedly, this is why I set my sights on New York City: It’s the place for stage actors. After graduating with so much debt, I made my move with nothing but $300. The only way to stay in the city was to bite the bullet and get a job.

I’m not talking about a retail-so-you-can-audition job; I mean a real job with a decent salary and benefits.

I knew the only way to get rid of my debt for good and get on my feet was to take a high-paying, salaried position. Maybe I would’ve been able to make it in acting if I took a more flexible job so I could still chase my dreams and audition, but I knew I wouldn’t be able to pay off the debt. And, honestly, the minimum payments were crushing me.

I ended up landing a full-time job as a hedge fund administrative assistant, which paid $45,000 per year.

2. Make Low-Cost-of-Living Choices and More Sacrifices

This is the thing no one likes to talk about when it comes to paying off debt. Most people, myself included, do not want to accept the reality that debt means you’re living a lifestyle you simply cannot afford.

I feel people tend to forget that they dictate their own circumstances. Here’s what I had to do to accomplish my goals:

• Prioritize my debt repayment
• Make big sacrifices.
• Put my Broadway dreams on hold for a year to take care of the priority.

Putting my dream on hold wasn’t the only sacrifice I made. I also chose to live in Harlem in a three-bedroom apartment with three other people because it was cheaper. Making those sacrifices allowed me to make and save enough money to pay off the debt, and put some breathing room into my budget as well.

3. Create a Bulletproof Budget

This all took place when I was 23 and knew very little about personal finance. As a newbie to finance, I didn’t investigate other options for lowering my interest rates, such as 0% balance transfer offers or a debt consolidation loan. Not that my credit would’ve been good enough to qualify for either.

I was also on my own for the first time and living in one of the most expensive cities on earth. I’d never had a budget before, and I knew it was time to start.

After some investigative detective work, I found my way to the 50-30-20 budget, so I used this as a guideline to divvy up my first grown-up job paychecks.

After taxes, I took home $2,924.11 per month, and my paychecks looked something like this on the 50-30-20 budget:

• 50% = $1,462 in living expenses like rent and utilities
• 30% = $877.00 for spending money
• 20% = $584.82 for debt repayment

4. Enroll in Autopay

This point is important.

Looking back on it as I write this piece, it almost seemed easy to pay off that $10,000. I committed to a timeline, set my payments to autopay and let online banking do its thing. I was living and working in New York City, and, while paying off my debt was the priority, I don’t remember devoting as much mental energy to the $10,000 debt payoff as I did when I paid off $8,000 in 90 days.

Autopay is what made this a reality for me. I had autopay set for the minimum payments and used the snowball method to pay my debt down faster. Once I paid off a card, I routed that minimum payment to the next card and so on.

5. Stick to Your Budget

Ironically, even though I lived in a place where many people easily pay over 30% of their incomes in rent, I had very low living costs because I chose to live with multiple roommates.

Being able to swing this was due, in part, to being young and very much part of the culture of living in NYC — everyone has roommates. Now that I’m 30, I doubt I’d want to live with that many people, but at the time, it was super-economical and fun.

Other Ways I Shaved Money off My Monthly Budget:

• I received many perks at work that allowed me to lower my cost of living. My employer paid for my cell phone, home internet, gym and gave me a daily lunch stipend, which I often stretched to two meals a day, because, hello, I was poor.

• My roommates and I entertained at home a lot. We always had people over for wine instead of going out. We also took advantage of lots of free events in the city. Read the paper to find free events or, at the very least, grab friends and do a picnic in Central Park.

• But I also made other “budget savvy” choices. I wore the same seven outfits to work all the time. I took the subway whenever I could instead of grabbing a cab. I also often brought home snacks from the snack closet at work to offset my grocery bills.

6. Create Visual Reminders of Progress

It’s super-cheesy, but anytime I paid off a card, I printed the zero-balance screen, highlighted the “$0” on the page and tacked it to my refrigerator.

It felt so satisfying to print the screen and put it on my fridge, and I know firsthand how little efforts like this go a long way to keeping you motivated and encouraged.

7. Make Extra Payments, No Matter How Small

Using the breakdown above, I should’ve paid off my credit card debt in around 17 months, but I did it in just 14.

Whenever I had an extra cash leftover at the end of the month, I’d make an extra payment. It was slow going, but every little bit — and it was always just a little bit! — helped.

I hope this piece inspires young people — think right out of college — to pay off debt ASAP. Paying off debt when you’re young and on a small salary isn’t as tough since you’re still living a college lifestyle. Looking back on my two debt-payoff journeys —  one at 23 and the other at 28 — the latter one felt way more difficult because I had to cut back a lot more.

At age 23, my $45,000 salary felt massive. Hold onto this feeling as long as you can.

When I was paying off that first $10,000 after college, I didn’t have a side hustle or a blog. It was just me with one stream of income and living on a budget.

Lauren Bowling blogs weekly at FinancialBestLife.com and is the author of “The Millennial Homeowner: A Guide to Successfully Navigating Your First Home Purchase.” Bowling’s expertise has been featured in Women’s Day, Redbook, and on Forbes.com, Business Insider, The Huffington Post, U.S. News and World Report, and Lifehacker (among others). Find out more by following @finbestlife on Twitter.