Whitney Hansen writes about her experience hacking personal finance by paying off $30,000 in 10 months and paying $472 for her Masters in Business degree. We had a chance to pick Whitney’s brain about maintaining control of your finances, saving money, and paying down debt.
Tell us a bit about yourself. How did you become a “money nerd,” and why did you decide to start a money blog?
I live in Boise, Idaho. I became a money nerd when I was really young. I was the kid selling candy on the playground and writing goals when I was in high school. During my senior year of high school, I took an accounting class and thought it was a blast, so I decided to pursue accounting as my undergraduate degree.
I started the blog as a way to help educate people. I was frustrated that I never received practical personal finance education in high school or college, and I wanted to prevent people from making the same mistakes that I made. My friends and family kept asking for help with their financial lives, too, and I realized that there was definitely a market demand for personal finance education.
How were you able to go to grad school, get your master’s degree in business, and graduate debt-free?
After working in public accounting for a couple years, I realized that I needed a change. The “cube life” was not what I wanted. At that time, I had already paid off student loan debt, so I promised that I would never get into debt like that again. So I made a list of all the ways to pay for college. This included “cash flowing” college, getting a job with tuition reimbursement, military service, and scholarships. Fortunately, I discovered that working for a university in a full-time (or sometimes part-time) position allows you to receive discounted tuition. I worked full-time for the university, enrolled in a part-time MBA program, and was responsible for paying $472 for my entire grad school education.
During the ten-month period when you managed to pay down $30,000 in debt, what kinds of sacrifices did you have to make?
Paying down that $30,000 was a pain in the butt. All through undergrad, I worked as a nail tech at a salon to help me get through school. Once I graduated, I got a job as an entry-level staff accountant. Instead of quitting the salon job, I kept working there on nights and weekends. I already knew I could live on the salon income only, since I had been doing it for four years. This allowed me to put my entire accounting check towards debt.
On top of working 70-80 hours a week, I also cut coffee and eating out completely out of my life. This sounds so simple until you realize how much planning it takes to be sure you prep your meals every week and commit to drinking the “amazing” office coffee.
I also rented out my home and moved in with my boyfriend. This allowed me to split rent and save a bit more money than I would from living alone. And because my home was a rental, I sold all my beautiful furniture and put all the money towards debt.
It got hard toward the middle – right about the time tax season kicked in, and I started getting fed up with never spending money. I felt like I deserved to buy coffee, lunch, a new shirt, etc. because I worked really hard. To overcome this, I taped my budget to my debit card as a reminder to my commitment to paying off debt.
For a typical adult, what’s the biggest hidden drain on their finances – and what should be done about it?
Eating out is hands down the biggest budget killer for most of the people I work with. It’s so easy to overspend on lunch and coffee here and there. The next biggest financial drain is car payments. Too many times, I see people making $2,000 a month driving cars that cost $500 between the payment and full-coverage insurance. Those two things usually hurt most people financially.
What is the most important habit to develop in order to improve your personal financial situation?
Tracking your expenses on a daily basis is the most important habit. Tracking expenses is a keystone habit that, when done well, trickles over to other areas of your life. Every time you spend money, immediately write down what that purchase was. After doing this, you immediately build awareness about your spending habits and start to see why you may or may not have a financial life you are happy with.
What is your philosophy when it comes to saving money versus investing it?
I think we should do both. We should save money for rainy day funds, vacations, a new car, or even a home remodel project; but I think a majority of our net worth should be in investments.
The only way to become financially independent is by investing your money and allowing compound interest to take over. The best way to do this is by setting up multiple streams of income. In my opinion, maintaining multiple streams of income keeps you recession-proof.
I think people should live on very little for as long as they can and invest as much money as they can until they hit financial independence. That’s the point when your money produces more income than you make from working.
For people who are looking for additional sources of income, what are some common methods or approaches that are popular today?
One of my favorite methods of earning additional income is by selling your current skills as services. You already have some unique skill sets that you could sell to others in the form of online courses, consulting, e-books, or freelance writing. With a global economy, we can literally reach millions of people from the comfort of our home.
The best way to begin this is by jotting down what people come to you for. Are they asking for help with Excel? Are they asking for your favorite healthy recipes? Whatever it is, there could be a side hustle income in there.
Maybe you decide to record videos of you teaching a topic and sell them on Udemy. Or maybe you reach out to your friends and family and offer to help with a task they have been asking for your help on. You have to get creative, but there are a million ways to make extra money. The secret is taking action and doing it before you feel comfortable reaching out to people.
Finally, give us the one finance or money hack that you tell people about that almost always makes them say, “WOW!!”
This is an exercise that I do with anyone I work with. I call it the Bank Statement Exercise. Print off the last 30 days of your checking account/credit card transactions. Then think about three things you typically overspend on – for instance, eating out, coffee, and Target trips. Then assign a highlighter color to each of the categories. Eating out might be yellow, coffee might orange… you get the picture. Then go line by line through your transactions and highlight each of the categories with the corresponding color. After you do that, summarize each color and write down the total amount spent. This exercise is simple, but extremely powerful. You will be shocked by where your money is actually going. Try it out today!
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