How to pay off debt, from a millennial who paid off five figures

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  • Sean Allen racked up $81,000 in debt between student loans and credit card debt.
  • He lived in the red for years before taking the improvement in his financial situation seriously.
  • His first step to getting out of debt was to create a vision statement and set goals.

Between undergrad and graduate school, Sean Allen racked up $48,000 in student loan debt.

He earned a civil engineering degree from North Carolina A&T State University in 2010, then moved to Rochester, New York, for a one-year Master of Science in Business Administration program.

Allen incurred another credit card debt of $33,000 while living in Southern California, where he moved for his first job as an engineer, in his early twenties. “I was doing what 20-year-olds do — Vegas and travel — but I was also buying property and paying utility bills,” he said.

After buying his first investment property, a $53,000 short sale in his college town of Greensboro, North Carolina, Allen knew he wanted to continue investing in real estate. But his debt is holding him back.

“I realized that if I was going to buy more properties, I had to make sure I paid off the ‘bad debt,'” he said. “That’s when I came up with a plan.”

It was in 2016, when Allen was 28 years old. Less than two years later, just before his 30th birthday, he made his last payment. “I felt free. I felt like I could allocate more money to invest and take care of myself a bit more,” said Allen, who now owns six properties, built a


net value

over $1 million and considers himself financially independent. Working for someone else is technically optional for him at this point, he said, but he still works full-time as a corrosion engineer.

Insider verified all of Allen’s claims regarding debt repayment, net worth, and property.

Here are the three steps he took to pay off $81,000 in debt.

1. Visualize what you want your future to look like and make a plan

Allen lived in the red for years before seriously tackling his debt. The turning point for him came when he reflected on what he wanted his future to look like. His vision was clear – to create wealth through real estate – and to do that he needed to eliminate his “bad” high-interest debt.

sean allen

Allen graduated with $48,000 in student loans.

Sean Allen


“Sit down and visualize,” he advised. “What do you really see yourself doing at 30, 40 or 50? Now hold that vision and ask yourself if the plan you are making now aligns with that vision. Because every decision you make brings you closer to or further from that vision.”

Go further and create a vision board, he said. Next, write down specific goals that will help you turn your vision into reality. If you want to lead a debt-free life, set numerical goals, such as how much money you’ll spend on your debt each month and the exact date you want to make your last payment.

“I always had a written goal plan with a vision statement,” Allen said. “Now it’s about six pages. It has my real estate goals, career goals, and family goals. Goals get you to your vision, so write them down.”

2. Assess your spending habits

Allen’s next step was to get his spending under control.

He started by tracking his finances. “I set up a spreadsheet that tracks bills and income, so I can see where my money is going and how I can plan better,” he said.

Tracking his expenses helped him better understand where he could cut spending. For example, after combing through his credit card statements, he found 28 recurring charges. “I probably only needed about 18, so I started cutting them down,” he said. “I took the bus if I was going to Vegas. I stopped splurging on plane tickets and took the Greyhound. I drove a dented car that had no rating car. I did it up to 340,000 miles. No one would ride with me, but it saved a lot of money.”

Allen also reduced his biggest monthly expense: housing. At the time, he was living in a three-bedroom house he owned. He was already renting out two of the bedrooms, but he decided to live in the property’s garage so he could rent out the third bedroom.

The garage was finished but unfurnished, so he bought some furniture and moved in. It was less comfortable, but it made a huge financial difference. The extra rental income covered all of his mortgage, then part of it, so he lived there for free and enjoyed an extra $600 every month.

3. Increase your income

Once you’ve got your spending under control, think about ways to increase your income. That’s what can speed up your debt repayment process, Allen said.

He revamped his resume business, Sean’s Resume Shop, which he launched in 2013, and earned certification as a career coach. He made up to $2,200 a month doing career coaching and helping people write resumes, he said. Moreover, he was still earning a salary from his full-time job.

He continued to coach even after paying off his debt. The extra money helped him expand his real estate portfolio. If he needed more money for a


deposit

or


closing costs

, he would put his head down and focus on finding more customers. “I would say, ‘Okay, I don’t hang out on weekends. These will only be resumes. “And I could make $600 more in a week,” said Allen, who still does career coaching today and is currently working on launching an online real estate investing course to further diversify his income.

Especially if you have big financial goals, Allen added, “it’s really important to have access to ways to earn a little extra money on top of your job.”

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