Finance coach, 28, reveals how she paid off a $95K debt in three years instead of 16

A finance coach from New Zealand has revealed how she paid off her massive $94,000 debt in just three years by managing multiple sources of income. 

Tracy Hemingway acquired the huge debt when she was given the opportunity to launch her own business at the age of 18 and ‘jumped at the chance’. 

The now 28-year-old admitted this wasn’t the smartest decision because at the time she had very minimal business knowledge and a lack of support from others around her. 

At the age of 24 doctors discovered a tumour in Tracy’s throat and needed to prioritise her health, which meant she needed to liquidate the businesses. 

‘I was left with $94,000 of debt that I had personally guaranteed and was facing bankruptcy,’ Tracy told FEMAIL.

Although a financial advisor told her it would take 16 years to pay off the debt, Tracy worked hard at budgeting and paid back the money much quicker than expected. 

Tracy Hemingway (pictured) has revealed how she paid off her massive $94,000 debt in just three years by managing multiple sources of income

Tracy Hemingway (pictured) has revealed how she paid off her massive $94,000 debt in just three years by managing multiple sources of income

In order to chip away at paying off the debt, Tracy managed to get a full-time job in sales and also maintained multiple other sources of income. 

‘I started side hustling to increase my income, sometimes working up to six side hustles while also working for my full-time job,’ she said. 

She juggled Uber Eats delivery driving, dog walking, surveys, lime juicing (picking up Lime scooters off the streets after 9 pm) selling items online, babysitting, house sitting and speed date event hosting.

‘I then worked incredibly hard on reducing my expenses, negotiated all of my insurances and fixed expenses to drive them down,’ she said.

‘I sold my BMW car and got a Suzuki Swift which cost next to nothing to run, I learnt how to live on $40 to $50 per week groceries and just generally frugal living.’

In order to chip away at paying off the debt, Tracy managed to get a full-time job in sales and also managed multiple other sources of income

She juggled Uber Eats delivery driving, dog walking, surveys, lime juicing, selling items online, babysitting, house sitting and speed date event hosting

In order to chip away at paying off the debt, Tracy managed to get a full-time job in sales and also managed multiple other sources of income

HOW DID TRACY PAY OFF THE DEBT IN THREE YEARS? 

  • Worked full-time
  • Uber Eats delivery driving 
  • Baby sitting 
  • Dog walking
  • Completing surveys
  • Lime juicing (picking up Lime scooters off the streets after 9 pm)
  • Selling personal items online
  • House sitting 
  • Speed date event hosting
  • Sold her BMW for a Suzuki Swift 
  • Budgeted all costs every month 
  • Didn’t spend too much on groceries  
  • Used the sinking fund method to budget for costs 
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By manually tracking her finances, Tracy became a ‘queen at budgeting’ and would trace ‘every single cent’ from each source of income in order to ensure she was working towards her end goal. 

Declaring bankruptcy also meant Tracy would’ve needed to give up her beautiful dog Teddy as the pet was considered to be a ‘luxury item’ by an insolvency officer, but she was determined to not make this happen.

‘I was in a bad emotional state at the time and couldn’t handle the thought of losing my precious dog as well,’ she said.

Teddy ultimately helped Tracy believe she could pay off the debt and acted as a reminder that it needed to be done.

Declaring bankruptcy also meant Tracy would've had to give up her beautiful dog Teddy as the pet was considered to be a 'luxury item', but she was determined to not make this happen

'I was in a bad emotional way at the time and couldn't handle the thought of losing my precious dog as well,' she said

Declaring bankruptcy also meant Tracy would’ve had to give up her beautiful dog Teddy as the pet was considered to be a ‘luxury item’, but she was determined to not make this happen

During the three years Tracy used a range of budgeting techniques to pay off the debt, but her preferred method was sinking funds – an account containing a certain amount of money that’s set aside to pay for a particular debt, bill or cost.

‘For example, my car costs $1576.30 per year for all the tires and warrant (but not petrol), so I put $131.36 per month into a bank account purely for car expenses and when those expenses come up, I have the funds available to transfer them over,’ Tracy said.

This tactic can be applied to all personal costs – such as public transport, phone bills and insurances. 

WHAT’S A SINKING FUND AND HOW DOES IT WORK? 

A sinking fund is a fund containing money set aside or saved to pay off a debt or bond

A sinking fund helps companies and individuals that have floated debt in the form bonds gradually save money and avoid a large lump-sum payment at maturity

Paying off debt early via a sinking fund saves interest expense and prevents the company or individual from being put in financial difficulties in the future

Source: investopedia.com 

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By manually tracking her finances, Tracy became a 'queen at budgeting' and would trace 'every single cent' from each source of income in order to ensure she was working towards her end goal

By manually tracking her finances, Tracy became a ‘queen at budgeting’ and would trace ‘every single cent’ from each source of income in order to ensure she was working towards her end goal

She would also budget on groceries and only buy what she needed each week. Tracy now shares what she has learnt with thousands of others on Instagram

She would also budget on groceries and only buy what she needed each week. Tracy now shares what she has learnt with thousands of others on Instagram  

After paying off the burden of the huge debt, Tracy is now saving for a home deposit and set herself the goal to have a down payment by Christmas 2021.

She has already saved $32,000 and will seek advice from a mortgage broker next year.

‘I still apply all the same concepts I learnt on my debt free journey to my money habits now, but instead of paying off debt I put the extra towards my house savings fund,’ she said.

‘The most challenging aspect of the debt was figuring out what sacrifices I was going to have to make in order to either do another side hustle or be able to put that money towards debt. 

‘Mental health was also a huge aspect of it, I had to dig deep to find the strength (especially at the beginning) and made sure I still had some time to look after myself.’ 

After paying off the burden of the huge debt, Tracy is now saving for a home deposit and set herself the goal to have a down payment by Christmas 2021

After paying off the burden of the huge debt, Tracy is now saving for a home deposit and set herself the goal to have a down payment by Christmas 2021

When asked what advice she would give to others who are stuck in financial debt, Tracy recommends attempting to pay off the figure rather than letting the interest accumulate. 

In regards to saving money, she suggested starting by saving small funds each week or after each pay.  

‘If you manage to save ten per cent on your groceries then put that ten per cent towards your savings,’ she said. 

‘Once you have started getting into habits of taking care of the small amounts it will become easier to take care of the big amounts.’

TIPS FOR BUYING AN INVESTMENT PROPERTY IN 2020

Spend less than you earn and invest the rest into a savings account to put towards a property deposit  

Consider purchasing an older house in a well-established area that will increase in value 

Consider how a property can be renovated to add value 

Think about why you wish to buy a property and if this is the right solution for you, as stocks are another alternative 

Save as much as possible for a deposit of 10 to 15 per cent – 20 per cent is ideal to avoid paying the Lenders Mortgage Insurance (LMI)

Seek professional advice from a broker or mortgage consultant if feeling overwhelmed  

Aim to not have any credit card debt 

Have a strong work ethic

Live at home for as long as possible in order to save money faster

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