How I paid off more than $40,000 in debt

I spend a lot of time thinking about saving money—saving for retirement especially. But if I’m being totally honest, I’ve never been much of a saver.

Until, that is, a startlingly obvious observation hit me: My only long-term money goal, retirement, is being delayed by my spending. If I could spend less, I could retire sooner. The only problem? I had no idea how much I was spending.

Reining in revenge spending to pay off debt

I did know that I was burning through money. As a self-identified spender, spending frivolously has never bothered me as much as I thought it should. And it turns out, there could be a scientific reason for that. Research has found that people who identify as savers feel the pain of spending money more acutely than spenders.¹ Using brain scans, researchers saw that the area of the brain associated with pain lights up more for savers than spenders when they consider parting with their money.

But that’s not all. For some types of savers, the act of saving money is rewarding in itself. Spenders, on the other hand, enjoy the mood-boosting power of shopping and turn to it when feeling stressed, sad, or bored.²

Of course, this is all very general—most people fall somewhere along the spectrum of spending and saving and may go both ways under different circumstances. Case in point, the revenge-spending phenomenon following the 2020 COVID shutdowns: The mass shopping spree that buoyed the economy and puzzled economists may have served as a coping mechanism for people dealing with an unprecedented and alarming situation.³

As a gleeful revenge-spending participant, I went all in on hobbies and home renovations. Eventually though, my cash flow stopped flowing and I had to seriously think about what was most important to me. You-only-live-once (YOLO) spending wasn’t boosting my mood anymore; I was stressed and tired of going in circles with debt.

Take control of spending by tracking expenses

Fidelity’s free planning tools, including budgeting and expense tracking, helped me get my spending under control. If you ever find yourself in a similar situation, tracking expenses can be an incredibly helpful place to start. There are many ways to track expenses—like a pencil and paper, a spreadsheet, or any of the budgeting apps online. Here are a few tips I learned:

1. Don’t judge yourself for past spending decisions. Budgeting is just math so try to take a dispassionate approach. The first time I tried tracking my expenses I got so overwhelmed and freaked out that I abandoned it for weeks.
2. Get organized. If it helps to ease in, start with one step at a time. That could be linking accounts to a budgeting app, downloading your spending history to a spreadsheet, or beginning to write down everything you spend money on.
3. Limit payment methods and make a plan. To make tracking easier, “Simplifying spending would make sense. Using multiple payment methods can make tracking expenses much more work,” says Brianna Middlewood, director and behavioral research scientist at Fidelity. Using cash is convenient but it can be harder to track if you’re making multiple small purchases, interspersed with some credit and debit card spending.

   “Planning your spending makes it easier to track as well,” Middlewood says.

4. Think about what budgeting is helping with. Not everyone needs or wants a lot of detail. “Some people just need a hard limit; they aren’t curious about their expense patterns. You could just say, I’m not going to spend more than $2,000 this month and leave it at that,” says Middlewood.
5. Review ways to reduce expenses if you need to. Forgotten subscriptions and expensive supplements and beauty products were some easy ways for me to cut spending off the top. Curbing random online shopping sprees was a big help.
6. If you struggle with spending, make it a little harder to do. Unlink credit cards from favorite retailers and refuse to use services that let you check out online without entering card details. I know that if I have to get up to find my credit card, I’m probably not buying anything.

   Instituting a waiting period before making a purchase can also be a good idea. If you’re still thinking about the thing you want after a day or so, it could be worth spending on. Late-night online shopping can also be something to avoid, since being tired and relaxed can disinhibit decision-making.

7. Schedule time for your money. This is self-care. Check in regularly, as often as you need to, and make sure that you’re on track. “Make it something you look forward to with temptation bundling,” Middlewood says. “Like, I’ll only have my favorite wine when I have a date with myself to go over my expenses.”
8. Grow your confidence by learning and talking about money. Loud budgeting is a sign of the times. Be loud and proud that you are awesome with money and choosing to grow your wealth.

   To expand your knowledge, consider reviewing the topics in Fidelity Learn and find people who enjoy talking about money. Surrounding yourself with confident people who share your money values can help boost your own confidence.

From silent spending to loud budgeting

I ran into a lot of bad news as I combed through my expenses but facing everything helped relieve my anxiety. Some highlights:

• My average monthly spending for the preceding 3 months had been roughly twice my monthly take-home pay.
• Any spending above my take-home went on credit cards.
• My emergency savings were gone. And I had no extra cash to put toward emergency savings with so much money going to debt.
• “Unexpected expenses” seemed to hit nearly every month.

To get on track, I went back to the basics. For Fidelity’s suggestions for foundational steps, read Viewpoints: How to balance debt, saving, and investing and 5 small steps that can make a big impact

• I saved $1,000 for emergencies to start rebuilding my emergency savings.
• Most importantly, I paid off about $44,000 of credit card debt and a variable rate home equity line of credit.

Now I’m focusing on saving more for emergencies and aiming to save enough to cover 6 months of essential expenses. Then it’s full speed toward retirement. Focusing on my ultimate goal makes the choice between spending and saving much easier.

Setting money priorities

If you feel unsatisfied with your spending and saving situation, there may be a lot you can do to turn it around. “It’s not that spending is bad—you don’t want to feel bad about spending. You’re working hard to earn money so you should enjoy it,” says Nathan Young, director and behavioral research scientist at Fidelity.

Lining up spending with your values and priorities is one way to help make sure you’re spending on the things that really make you happy, now and in the future.

The good news is that you probably won’t need to track your expenses so closely forever, unless you want to. Building a strong habit of spending less than you earn and saving for the future can set the stage for more sophisticated wealth-building strategies like maximizing contributions to tax-advantaged accounts and saving in tax-efficient ways for other big goals. It’s a small step that can make a huge difference.