Inspired Budget

#145: How Nika Paid Off Over $200,000 of Debt

• Allison Baggerly • Episode 145

Share episode

When $200,000 looms over you like a financial Everest, how do you begin the climb to freedom? Nika Booth didn't just start the trek; she conquered it, and in this episode, she's laying out the map.

We unravel Nika's enthralling journey, which started amid the chaos of a government furlough and led to the creation of an Instagram page for budgeting transparency and accountability. Her story is not just about escaping debt; it's a testament to the power of taking control, with candid insights into how confronting her own sizable tax debt changed her approach to personal finance forever.

This conversation goes beyond dollars and cents, delving into the emotional heart of debt reduction—community and vulnerability.  We discuss how the solidarity and accountability of an online community were instrumental in navigating the rough waters of financial instability.

Budgeting doesn't have to mean skimping on joy; it's about intelligently mapping your future. Nika and I dissect the overwhelming prospect of large debt into manageable pieces, emphasizing the importance of pacing and celebrating every step of progress.

Follow Nika on Instagram @debtfreegonnabe
Sign Up for Nika's Webinar
Follow Nika's Website

You Might Like:


Speaker 1:

You've talked about the way that your debt has made you feel. You've talked about not wanting to get out of bed in the morning because you know you're working and you're not getting anywhere with your debt pay off and with your fine payments. You've talked about the good and the bad. You shared when you fell short. You shared when you made an extra debt payment, and so why wouldn't you share this aspect with them, knowing that someone would also be able to relate, whether it's tax debt or something else?

Speaker 2:

Hey, this is Allison, and then welcome to the inspire budget podcast, where we talk all things budgeting debt and saving money. On today's episode, we are focusing on debt. In fact, we have Nika Booth joining us. She's one of my dear friends and she's going to be sharing how she paid off over $200,000 in debt. She shares some incredible insights, tips, action steps and guidance for people who are either on their debt free journey and just need some motivation to keep going, or are just starting out and have this dream to be debt free. Nika created debt free gonna be to document and share her journey to pay off her debt and now that she's debt free, she teaches others how to take control of their money and pay off debt without sacrificing fun.

Speaker 2:

I know you're going to love this interview with Nika. Let's dive in. Nika, welcome to the inspired budget podcast. We're finally having you here, yes, yes. So you began your debt payoff journey with a significant amount of debt, and I have to let you know that the listeners here we love a good debt free story, so can you share with us how much debt did you have and what was the turning point for you to make the decision to say, okay, I'm sick of this. I'm ready to pay off my debt. Yeah, so it's a little layered.

Speaker 1:

So I had actually started my debt payoff journey a number of times before I really got serious. I had found myself in public service working and I wasn't fulfilled Like I was I don't want to say I was bored, but I definitely wasn't challenged and at the time, I was enrolled in the public service loan forgiveness program. Also, at that time, the public service loan forgiveness program was just not working the way that it was supposed to be working, and so I'm like okay, I don't want to be tied to having to work in a particular sector or doing or working within a particular role in order to finally break free from my student loans. So okay, let's get serious about tackling this debt. You're tired of making decent money and just not having enough for the things that matter to you. So let's go ahead, let's make this list, let's order this debt smallest to largest balance and just start tackling it. And so I did that in September of 2018.

Speaker 1:

Well, in December of 2018, I got furloughed as a federal employee for 35 days, and those were those 35 days. I actually worked full time, but I received partial pay because not every project that I worked on was covered underneath the money that the agency had left. So there was like a lot of uncertainty around my paycheck, like when I was going to get it, how much money was going to be on my paycheck, if it was even going to be enough for me to cover my basic bills, because at the time I was following different advice and I only had $1,000 in my emergency fund and that wasn't hardly enough. And so I worked through the furlough. We ended up receiving retroactive pay for the pay that we did lose during those 35 days. But it was really that experience that like lit the fire, like I had, like I said I had started for real that time. But it wasn't until there was so much uncertainty and anxiety around my finances and someone else was in control of whether or not I would be able to provide for myself that I said, oh, never again, it's go time now. And to signify how serious I was, I created my Instagram page. That's pretty good to be, because no one holds you accountable like strangers on the internet, right? And so I did that really to document my journey, but also for an extra layer of accountability, because it's like, okay, you don't want to go through a furlough again, not wondering how you're going to make ends meet, and so let's put it out there for the world to see and let them join in with you on this process. So that was really like that. Government furlough was really the thing that made me feel like, okay, someone else is in control of your financial future at this point in time, and it's either you continue the same and keep doing the same thing, and you always be have someone else controlling your purse, or you can take this journey, take these strangers along with you and become more in control of your money and actually be able to live the life that you want, and so yeah, so anyway.

Speaker 1:

I started with $189,000 in September of 2018, but I had actually failed. Don't do what I did. I had failed to file two years of tax return. So we're talking state and federal taxes, I know, and because I was serious, I come through the furlough unscathed. I said, all right, you've got to hire someone, you've got to get a professional involved. You have to come face to face with this tax debt. So I hired a tax guy. He helped me fill out the paperwork and fill out the returns and at the time, I thought I was only going to owe like $17,000.

Speaker 1:

It's still a significant amount of money by the time the actual tax bills with interest and penalty came in. Mind you, I paid off some debt. I paid off almost $16,000. But that tax bill came in, or those tax bills came in, and they totaled $21,946.35. I will never forget that number. Ever forget. That number Hit me like a ton of bricks. So again, I thought I started with $189,000. That was student loans, credit card debt, car loan. Paid off some of that. This tax debt comes at nearly $22,000. And it puts me over my original starting balance.

Speaker 1:

And when I tell you, I thought this was the university sign just saying listen, girl, I know you said you want to get out of debt, but it's not happening for you. This is not meant for you. I thought it was going to give up.

Speaker 2:

Oh my gosh. Okay, there are a couple of things that you said there that I want to hit on. The first was that you said you, this wasn't the first time that you decided, oh, let me pay off debt. You said you had kind of started and stopped before. And for our family's journey, the first time we started, we saw it through because we had that moment of no return that the very first time. It was a very dramatic moment for us, but I find that we are the exception, not the rule, and that, and that a lot of people say I want to do this but then they give up. I want you to give some advice to people, right, Because this is coming out in February. We have these desires. We want this year to look different. Can you give some advice to people that maybe have found themselves on that cycle of paying off debt and life happens and they give up. Can you give them some words of encouragement? And then we're going to talk about that setback.

Speaker 1:

Yes, all right. So, first and foremost, one of the things I did that caused me to start and then stop was I was being too restrictive. You and I know you talk about this too you absolutely have to budget for fun. You have to, because it is no point in being miserable while tackling a mountain of debt. You just you can't do it. One of the reasons why I started and stopped was because, you know, I made a little progress here. I was also racking up debt over there because I didn't understand one the concept of focusing on one thing at a time.

Speaker 1:

We're in a society where there's so much coming at us and we often feel like we have to multitask, but in actuality it doesn't work.

Speaker 1:

One, focus on one thing at a time and two, make sure you are allocating money for fun things.

Speaker 1:

It doesn't have to be extravagant. It can be something like I love nothing but cake and I put that in my budget, or going to baseball games. It can be inexpensive, but it just needs to be something that brings you joy and it's kind of like like I equate it to trigger warning dieting, where, if you're too restrictive, you're going to end up. You're just going to end up binging, you're just going to end up overspending the more restrictive you are, and so by allowing that line item I used to call it, blow money that line item in your budget for fun, as you are also focusing on this, on this financial goal, it makes you feel like you're also still living. Because you are, you're still living. Life is not stopping. There's still things. There's still birthdays and holidays and occasions and things you want to celebrate and fun things you want to do, and so that can increase the likelihood of you being successful in seeing it through, like you and your family did Exactly.

Speaker 2:

It's almost like life can still be fun while you pay off debt, and actually allowing that fun might slow down your progress some in the long run versus being super restrictive, but it's so minimal and you're more likely to stick with it because it's realistic.

Speaker 1:

Absolutely, Absolutely.

Speaker 2:

So okay, let's talk about that tax bill, that surprise tax bill of almost $22,000 that you were hit with, because this was not totally unexpected, but the gravity of it was unexpected, and you said that you felt like it was your, it was the world basically saying Nika, this isn't for you. Nice, try, good effort, but debt freedom is just not within your reach, and I know that so many people have these same experiences. It might not be a $22,000 tax refund. It might be a $500 car repair or an unexpected medical expense, things that come up, even great things like bringing a new family member into the family, and it costs more than you expect. How did you get past that feeling of frustration and say, okay, this happened, but I still am gonna work toward my goal?

Speaker 1:

Yeah, community. Honestly, it was community. I think community is important in general in life, but especially when you are embarking upon any type of journey. I have a supportive community still and not just on Instagram, but that actually factored into it as well but in my personal life friends, family, my therapist I talked about it. I wanna make it clear I definitely felt a way about it. I probably although my therapist would say, don't you know that's not what it was, but I probably, like I was sad. I was sad, I felt defeated. I won't put the label of depression on it, but I had experienced that throughout the journey, while I was suffocating under the six-figure debt. To be honest, I thought about giving up.

Speaker 1:

I did end up talking to one of my best friends, talking to my therapist, about how I was feeling, and it was actually them both that said you've conquered harder things Like right. You've gone through things in life related to money, not related to money, and you are stronger than you think you are. And one of my friends actually phrased it like if this was any other debt or if this was someone else, and they got hit with something unexpected or mildly expected, but also just something big. What advice would you give them, and that advice would be treat it like it's any other debt. Roll it into your debt payoff plan, whether it's you're tackling the smallest balance first or the highest interest rate. And oftentimes we talk, we say things or we just like practice what you preach, like we're able to help other people, but when it comes to ourselves, it's like, oh yeah, I forgot, I did say that, I do say that to people, and so with that that's exactly how I got over it.

Speaker 1:

I ended up looking at my debt payoff plan and saying, okay, what order? Where would I put this in the order of the way that I'm paying off this debt? But on top of that, when I'm talking about community as well, my Instagram community, I think at that time, was maybe 10,000. It was smaller than what it is now, but I was terrified to share that with them. But I had to remind myself.

Speaker 1:

But so far, you've been transparent with them. You've talked about the way that your debt has made you feel. You've talked about not wanting to get out of bed in the morning because you're working and you're not getting anywhere with your debt payoff and with your finances. You've talked about the good and the bad you shared when you fell short. You shared when you made an extra debt payment, and so why wouldn't you share this aspect with them, knowing that someone would also be able to relate, whether it's tax debt or something else? And it's still on my page? I created a post and a video of me explaining this tax debt, and I'm boo who crying in this video. Okay, alice, that's okay, but I was worried, I think. When I started this journey, I assumed that it was going to be linear. I would get from one place, I would get from point A to point B, without all the other hills and the valleys and the gorges in between.

Speaker 2:

Yeah, isn't that what we all think we're like? Okay, once I get started, it's just going to be like a straight path. Yeah, it's not at all. Life isn't I mean?

Speaker 1:

and I'm still dealing with, like I'm still dealing with ups and downs, you know, because that's life.

Speaker 1:

So I was terrified because I thought people would also think that I couldn't do this, that, oh, you've made so much progress and oh, here you go, now you owe more debt than what you originally started with. But it was in fact my journey and I was serious about the journey and I was serious about sharing what I went through on the journey. And so, yeah, I took the social media and shared it, and the amount of support that came in through the comments and direct messages, it was overwhelming and it got me emotional, but it made me realize that I was building a community here and this community was not it's not blind loyalty. It is kind of unconditional to an extent until you know.

Speaker 1:

You know how social media is, oh, yeah, but by sharing my life and by sharing the journey that I was on, I was able to bring people of like mind, similar paths and create this supportive environment. And people were rooting me on and they rooted me on as I paid off that text. They were there from when I got the first set of bills and was down and out, felt like I was down and out to pay in the last payment. And so community is so important, whether you have to build it yourself, whether it exists already and you introduce yourself to it, but it's so important when you are going through things to have people who genuinely wanna see you win around you.

Speaker 2:

Oh my gosh, I love it. And can we just say that sometimes the internet is good because, these were strangers on the internet that were supporting you.

Speaker 2:

One of the things that I think about your experience and just sharing everything is that you did it while you were going along the journey. I think that is very unique because it puts you in a much more vulnerable space. I mean, I know I didn't start my Instagram until I was debt free and I realized, hey, I still like talking about this and I love that you shared the ups and the downs and people were able to literally just go on this journey and this path with you. But I do wanna know for anyone that's listening and says I could really benefit from having some accountability. Maybe it's not via Instagram. Did you ever have any concern about over sharing in terms of your numbers or your personal life that I don't know? Just for me, I would be so worried about just sharing too much and almost putting yourself at risk of just people knowing information about you Maybe the wrong people knowing information about you.

Speaker 1:

Yeah, oh for sure, I share less than what I shared before because that you know our communities grow and we don't know everyone in the community. Like you said, you don't know who's friend and who's foe. There was a time that I actually used to cash budget and I would actually share, when I would go to the bank, the breakdown sheet that I would use to get the denominations that I needed. Take a picture of this money all laid out and I'm like wait, a second girl, you don't need people knowing how much cash you have in your home you know, I did the same thing, right, and so I've stopped that.

Speaker 1:

Well, the pandemic. The pandemic changed that also, because I wasn't going to the bank to get as much cash, so it was things like that. The most I'll share is that I work for the federal government. I don't share exactly where that is. People have identified locations where I am when.

Speaker 1:

I'm traveling or even around town, and it's very scary when people message you and say, oh, I know exactly where you are and it's like, oh, I understand wanting to connect, but that's a little sus, so relax, so yeah. So, of course, because we're in such a sensitive niche, it is important for us to be aware of what we're sharing. I don't share as much personal stuff on my page as I used to. Maybe in my stories I'll kind of share, like my day-to-day or things that I'm doing, but as far as my feed on social media, it is typically just focused on personal finance.

Speaker 2:

Yeah, I definitely have been the same way whenever I first started, I just wasn't aware. I wasn't aware of what it could grow to which was amazing. I was able to really just live in the moment on social media and on Inspired Budgets Instagram page really. But as I started getting more followers and people started recognizing me, my biggest thing and this is, we've kind of gone off tangent We'll be back after this.

Speaker 2:

My biggest thing I realized because this happened is I never want someone to recognize my children before they recognize me. So if I am somewhere and someone sees my son or one of my children, my two sons I don't want someone to say, oh, that is Alison Baggerly's son. And that was the moment when it happened in person. Yes, and I'm walking down the street and someone says I didn't know, you lived in this neighborhood and your kid went to this school and it was all innocent. It really was, but it was really scary for me as a mom and just saying okay, what do I value in terms of my privacy?

Speaker 2:

And so since then I've stopped really sharing a lot of their faces just as they grow. I just want more privacy.

Speaker 1:

Yeah, and you want them to have the choice as well. Exactly, yeah, wow.

Speaker 2:

So, just for anyone that isn't paying off debt and they think, hey, maybe I could start an Instagram to have some sort of accountability, it's a great idea. It really is. I mean, it's turned out beautiful for you. I know other people that have done it and it has really been helpful. Don't not do it. Just go into it with some boundaries and some kind of rules in place to protect yourself Physically and mentally as well. Yeah, yeah, absolutely.

Speaker 2:

Today's episode is brought to you by my budget to build wealth. Here's the truth. I do not believe actually I refuse to believe that wealth is just for the rich. I believe that wealth can be built on a budget without sacrificing what you love to spend money on. I fully believe that budgeting is the quickest, most effective way for you to reach your money goals. So, whether your goal is to stop living paycheck to paycheck, pay off those student loans that have been hanging over your head, or find room in your budget every single month so that way you can start investing for your future, you're going to need a guide, a plan to get yourself there, which is exactly what I'm sharing in my free training budget to build wealth.

Speaker 2:

In this training, I'm going to be sharing three massive mistakes that people make with their budget and their financial plan, so that way you can avoid them. I'm going to be sharing with you the secret to freeing up more money in your budget each month, so that way you can send extra money to your goals, and I'm going to be sharing with you my tried and true four step framework to budgeting your way to wealth without giving up what you love. Plus, there is a very special free gift for anyone who stays until the end. You can sign up by going to inspiredbudgetcom slash class or just click the link in my show notes. You'll be able to choose a time that works for your schedule and I'll see you there.

Speaker 2:

Based on your personal experience, which you have a lot of, you have a lot of wonderful personal experience with paying off debt. I know people are listening right now that want to be debt free. They are going to be debt free. They're going to be debt free. What advice would you give those who are just starting their journey? Maybe they have started before and they've given up, but they said, okay, this is the year I want to start. What are just maybe one to three things you would tell them to do so they don't become so overwhelmed and do all the things.

Speaker 1:

Managing overwhelm is so crucial, especially if you actually it doesn't matter how much debt you have to tackle, but especially if you have six figure debt like I did. First things first, the easiest way to eat an elephant I don't know if you've heard this before the easiest way to eat an elephant is small bites at a time, even though you may have. Whatever your total debt number is, break it down into smaller chunks and goals. For example, for me, it was $5,000 of credit card debt at a time. That's how I would celebrate. That's how I broke it down into smaller goals and made it more manageable.

Speaker 1:

It's not ignoring the bigger mountain, it's just that that bigger mountain isn't my focus, it's this smaller goal. Once I reach this goal, I move on to the next and the next. Guess what? Eventually, that mountain's gone or it's smaller than what it was when I started. Yes, you absolutely need to know your debt numbers. You need to know exactly how much you owe, who you owe it to, but break it down into more manageable chunks. Number two build in little rewards for yourself along the way as you reach these milestones. For example, after I paid off, even though I had the goal of okay, I'm going to knock out $5,000 at a time. I also had these micro goals where if I paid off a card because, listen, I had 15 credit cards to pay off it's absolutely insane After I paid off a credit card, I would go to Costco get a $7 bottle of champagne.

Speaker 2:

It's not really champagne Nice. It's a sparkling wine.

Speaker 1:

Yeah and go to Nothing. Bunt Cake, or maybe earlier on it was Georgetown Cupcake. I absolutely love their cupcakes. That would be my celebration. It would be a couple of glasses of sparkling bubbly and a nice sweet treat. That was enough for me. I would just sit in, understanding the journey and what I went through and the sacrifices, the hustling, because at the time that was probably me working Instacart or selling stuff for extra money on Mercari or Facebook Marketplace and I would celebrate in what I was able to accomplish by my lonesome in this whole journey of tackling six-figure debt.

Speaker 1:

So break down your debt into small chunks, small, manageable chunks. Make sure you celebrate your wins, big and small. Paying off debt is not the only celebration to be had. It's paying bills on time, getting caught up, saving your first thousand dollars. Make sure you're present in the journey, not just paying off debt. That's the focus.

Speaker 1:

But there's all this other growth that takes place along the journey that you don't want to ignore, and I think the other piece of advice that I would give someone really just starting out or restarting is to go at your own pace.

Speaker 1:

In order to go at your own pace, you absolutely have to minimize the amount of comparing that you do to other people, that you may see either other people in your life, in your personal life, that are doing things that you'd want to be doing, or, if you do decide to be on social media, whether you're sharing your journey or just paying attention to what other people are doing. Don't compare, because you have no idea what you're comparing your life to theirs and everyone starts in different places. Everyone has different resources, everyone has different challenges and, especially on social media, you don't know what you're comparing and so just do your best that you can pull things from other people and what you might see Like they may be using a strategy that you're not using, and it's fine to take in and see if you can apply it to your life, but if it doesn't work, move on. You go at your own pace. Don't get caught up comparing what you see other people doing to what you're able to do.

Speaker 2:

Oh my gosh, I could not agree more. Nika, you have had so many amazing, like actionable things that people can do in this episode. I know it is going to be incredibly helpful for anyone who is on their debt-free journey or is interested in starting their debt-free journey. Can you go ahead and let listeners know where they can learn more about you?

Speaker 1:

Yes, primarily on Instagram at debtfreegonna G-O-N-N-A-B. I am also for anyone who is a burden with student loans, confused about all of the ever-changing information about student loans and really want to master repayments and pay off for student loans, I am hosting a free webinar on Thursday, February the 29th it's a leap year at 7 pm Eastern and you can sign up at escapethedebtrackcom.

Speaker 2:

Yes, and we will link to all of that in the show notes. Go check it out because, nika, if you have student loans, nika is your girl. She is so informed, like I'm always very impressed with what you put out, so I really hope people sign up for that and go and just soak in your wisdom. At the end of all of my interviews, I'd like to ask our guest just three really quick questions to get to know you a little better outside of your amazing debt-free story. Don't think too much about these, okay, I'm just going to dive right in.

Speaker 2:

The first one is what is one thing you are looking forward to?

Speaker 1:

Oh, Costa Rica. I am actually considering living in Costa Rica for a month next year. Costa Rica is one of the top countries on my list of places to live. I love it. And so I'm going to spend at least a month away. I'm going to take leave from work and grab my laptop and take my business with me. But, yeah, I will be staying in Costa Rica for a month next year.

Speaker 2:

Oh my gosh, that is amazing and that's in 2024, right 2024. Yes, are you going to be sharing about that?

Speaker 1:

Yes, absolutely Okay. Good Okay In my stories though, because, like I said, not too much personal stuff on my feet. So, yeah, in my story, yeah, go watch her stories.

Speaker 2:

The second question is what's one money mistake you've made that you would tell everybody to avoid?

Speaker 1:

Oh, my goodness. Okay, so student loans were the bane to my existence and, the complications and issues with the system aside, I borrowed more than I needed to and that is how I ended up owing way more money, especially once interest started to capitalize. And so my biggest I would say my student loans were my biggest money mistake. They aren't. It's how I managed my student loans because I didn't know as much as I know now and teach people. So, yeah, it was definitely taking on more student loan debt than I needed to, above tuition and fees and supply.

Speaker 2:

Yes, I think a lot of people do that just because you're young and you don't know Exactly. A lot of times back then, our parents had no clue, because they didn't have the internet, they didn't have access to people that would help them. Yeah, they just gave you your amount of money and you thought this is awesome, I'll take it all. Yes, please.

Speaker 2:

Yep, you got to pay that back yes, or you didn't even know you could take less, right, right, okay, our last question isn't a question at all. Just finish this sentence, okay. My favorite thing I've ever spent money on is World Series.

Speaker 1:

Baseball Tickets. Oh, I love it. The Washington Nationals were 2019 World Series champions and I was able to attend two World Series games. Oh my gosh, that's amazing.

Speaker 2:

You didn't hesitate at all. You knew, yeah, you knew.

Speaker 1:

What's in a lifetime experience, especially for my team. I love it.

Speaker 2:

I love you were able to experience that and still spend money on fun things. Yeah, wow, you were paying off debt and living on a budget. So thank you, nika, for joining us. Thank you, alex, I'll leave to your. Instagram and your webinar down below in the show notes Awesome, thank you so much.

Speaker 2:

I hope you enjoyed today's conversation with Nika. She is seriously one of the most amazing people genuine, vulnerable and, just overall, a wonderful person. If you're interested in giving her a follow on Instagram or signing up for her student loan class, then go ahead and check the show notes and, as always, if you're enjoying the Inspire Budget Podcast, go ahead and leave a rating or review. These ratings and reviews. They just help our podcast reach new listeners and it would mean the world to me to hear what you're thinking of the Inspire Budget Podcast. I'll be back next week with another brand new episode. See you then.

People on this episode

Head Shot

Allison Baggerly

Host