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14 Ways I Paid Off $40k in Debt and Saved $150k in 2 Years

In a little over two years, Clo Bare paid off $40k in debt and saved $150k for retirement. She got started on a five-figure income, and as her salary grew, she avoided lifestyle inflation and managed to make huge strides in paying down debt, investing and saving. In this post, Clo Bare describes exactly how she went from a negative net worth of -$70k to a positive net worth of $124k in just two years.

how I paid off $40k of debt and increased my net worth in two years

Back in 2018, I was BAD with money. Like $70k in debt yet still blowing $600 every two weeks on eating out, drinking cocktails, going on dates and ordering in Grubhub level bad. I had almost nothing saved for an emergency or retirement, other than the $10k sitting in my 401(k) that I had been contributing the minimum to for 3 years. 

Despite making an above-average income for a 27-year old millennial, I lived paycheck to paycheck, never quite sure why I wasn’t saving more money. I, like lots of millennial peers, thought I’d never stop working– so why worry about retirement?

Read more about how bad with money in this post “I am $67k in Debt”.

Fast forward today and I don’t think 2018 Clo Bare would recognize 2021 Clo Bare.

These days, I’m pretty damn good with money. I have over $150k saved for retirement, $15k saved between my emergency fund and house fund, and I’m just under $30k in debt. 

I’ve increased my net worth by almost $200k in just two years, and that number grows monthly. Gone are the days of living for payday, and instead, I have a pretty awesome budgeting system that is easy and effective and doesn’t make me feel deprived. 

Learn how to Budget like Clo Bare in “How to Budget”.

How’d I do it?

Glad you asked.

In this post, I’ll share exactly how I went from -$70k to $150k+ in just over two years.

Watch this Post on YouTube

1. Tracked Everything I Spent Money On

This is probably the most important thing I did and do, and it was also the first thing I did when I decided to start my financial independence journey.

Seeing how much I spent in certain categories like food, booze, essentials and personal items shocked me. More importantly, tracking everything I spent money on made me realize something life-changing: I had money for the things I really wanted in life. I was just spending it on the wrong things. 

My very first “track everything I spend money on” experiment revealed that I spent almost $600 in two weeks on eating out, drinking, ordering in food and being hungover. And this wasn’t an exceptionally spendy month for me at the time.

If you’d asked me before looking at my spending what my values were– I would’ve said traveling, spending time with family and friends, new experiences, etc. You know, all the things that millennials say they’re into.

But when you looked at my spending?

It showed I valued eating and drinking out more than anything else. And that made me uncomfortable enough to change.

Tracking my spending is a habit I’ve kept up with for the last few years, and now? I know exactly where all my dollars go and it helps me keep tabs on when my money isn’t aligned with my priorities. 

2. Got a Clear Picture on Why I Wanted to Be Good with Money

After I tracked everything I spent money and realized just how much money I was blowing a month, I got real clear on what I wanted my money to do for me.

The thing about the journey into financial freedom is it’s a long road. It takes years, even decades to get there and it’ll be easy to give up. In order to stay the course long term– the WHY of why you’re doing something is SO friggin important. So I got real specific and wrote down what my ideal life is like, from morning to night.

When I picture my ideal life, peace is the resounding characteristic. 

I’m not worried about money. I’m not worried about my job. I wake up and I have slow mornings, reading and drinking coffee and taking my dog for a walk.

Later in the morning I do a little bit of work, maybe working now full time on Clo Bare and other passion projects. Then I spend the afternoon outside, taking my dog to the park or going on a bike ride.

And that evening I spend time with people I love, cooking dinner or having drinks. There’s no rush to my day and of course I live somewhere where the weather is great year round. But because I’ve managed my money and no longer need to worry about it, I’m free to spend my time in the way that I like. 

This vision is so enticing to me and it keeps me motivated to keep going even when I want to blow all the monies on Grubhub.

3. Created a Budget and Adjusted Accordingly

This may seem obvious, but creating a budget was also an essential part of me managing to pay off my debt and save for retirement.

Money will go where you tell it to. And trying to money without a budget? It’s like driving to a destination without a map or directions.

There are LOTS of different ways to budget, from the envelope method, to zero-based budgeting, to values-based budgeting to the anti-budget. I had to find out what works for me by trying a bunch of things out until one sticks.

And, figuring that out took some time. 

When I first started my budget, I had no idea what I was doing so I downloaded some spreadsheets I found on google sheets, and just started tracking in those sheets instead of with pen and paper.

For the first several months, I went over budget.

And not by a little– by significant amounts. My very first month of budgeting, I went over budget by $800! I had to learn how to adjust my budget according to what was on my calendar in order to more accurately budget. 


I also learned about a year in that I prefer super specific categories. It makes it easier to spend money in the places I want to spend money on, like travel, home, and debt. Doing this also makes it easier to spend less in the areas of my life I want to cut back on– like dating, entertainment and transportation.

how I paid off $40k in debt

4. Gave Up Black and White Thinking

While learning how to budget in this way, I struggled with black and white thinking. If I blew the budget just a little bit in one category, instead of brushing it off and moving on– I’d let going over the budget control my spending for the rest of that budgeting period.

If I overspent by $20 in my entertainment category because brunch was more expensive than I anticipated– I’d then say “fuck it” and spend as much as I wanted on entertainment until the next budgeting period. This resulted in me going WAY over budget instead of just going over budget by $20. 


To solve this issue, I started adjusting my budget as I went. For example, if an unexpected expense came up in a category, like an oil change or a trip to the doctor or even accidental overspending on brunch, I would add the amount I expected to pay to my budget in whatever category I needed the extra room in.


It might sound like cheating, but it took me out of the all or nothing mindset that caused me to constantly go over budget. You’ve gotta work with your brain, and my brain tends to go towards all or nothing thinking. What I found was increasing certain budget items on the fly when unexpected expenses arose, I actually spent less money than if I had thrown in the towel and decided to start over in the next budgeting period.

5. Gave Every Dollar a Job

One of the biggest game changers for me is that I started giving every dollar a job.

This is a type of budgeting called zero-based budgeting.

I do a combination of zero-based and values-based budgeting. I make sure that every dollar of my income has a job, while simultaneously making sure that my largest annual expenses are aligned with my highest values.

Learn how to create a values-based budget.

For example, my biggest expense last year was debt– I spent over $22k just on debt. One of my highest values is financial freedom, which I equate to just regular old freedom– and paying off debt? It’s one of the ways I’m going to reach financial freedom, so I make sure most of my resources are going towards achieving that financial freedom.


With zero-based budgeting, I also make sure that there’s no money unaccounted for at the beginning of the month. Because I budget based by pay period, when I get paid, every single dollar from that paycheck is assigned to some category, whether it’s a savings category or an expense category. This way, I know where all my money is going and there’s never a question of where my money went.

This helps me save a lot more money because I treat savings categories just like expenses. My savings is just as high of a priority as my expenses so when I get paid, I automatically transfer what I’ve assigned to savings and I don’t touch it again unless to transfer it into a high yield savings account or to purchase investments. To me, that money is already spent so there’s no wondering what I can do with “leftover money” because there is no leftover money.

6. Said No-- A Lot

I’ve gotten a lot better at saying no to things in order to reserve my funds for what really matters to me. Prior to starting this journey, I’d say yes to pretty much anything my friends or sister wanted to do, but over the years I’ve gotten really picky with where my money goes.

I’ve turned down trips that weren’t in the budget, events, concerts, or I’ve offered alternatives to dinners out in order to save more money. The thing is– none of these things were worth more than my goals and choosing myself over the things I said no to meant saying abso-freaking-lutely yes to the life I really want. 

how I paid off $40k of debt

7. Allowed Myself Splurges-- and Budgeted for Them

In the same vein, I made space for spending on things that bring me joy, like travel or special occasions that call for treating people to dinner or doing an impromptu trip.

I’ve gone on at least 20 trips since starting this journey, and I currently allocate $5,000 a year to travel.

The difference between 2018 Clo Bare and 2021 Clo Bare is that now I only say yes to the trips I REALLY want to go on. I also plan my splurges and make sure they’re in the budget.

There’s no reason to treat a budget like an exercise in deprivation– what’s important is to work those splurges that are really important to you into the plan.

8. Refinanced My Student Loans-- Twice

This has saved me thousands of dollars. When I first started this journey, my student loan debt was at about 8% in interest.

I’ve gotten that down to 3.54% now, which is why I’m not concerned with paying off my student loans early.

My payments each month are definitely higher than what they were when I had an 8% interest rate. I think when I first started paying my debt, my payments were closer to $400 a month. But since the lower interest rate is actually saving me money in the long term, I don’t mind paying an extra $270 to get my loans paid off in five years instead of 15.

9. Paid Down the Smallest Debt First

When I started this journey, I owed about $10k on my car and $57k on my student loans. My car payment was at less than 8% interest rate, but because it was such a small number, I wanted to pay it off first because I knew it’d be a quick win for me that would inspire me to keep going.

If I had done the reverse–paying the minimums on my car and putting more money on my student loans which were at 8% interest at the time, it would’ve been the smarter move mathematically speaking. But psychologically, the encouragement from paying off a small debt first was exactly the kind of motivation I needed to keep going. Which reminds me…

10. Made Small Goals

I made a lot of small goals along the way.

In the same way that the why is so important in order to stay motivated to keep going, these small goals are SO important when working towards financial freedom.

Financial freedom can take decades– so breaking those goals down into smaller chunks like yearly, quarterly and monthly goals makes the whole process seem a lot more achievable.

Some of my goals were as small as spend $50 less on entertainment this month, to as big as put $20k down on student loan debt this year. Achieving these goals gives me the serotonin boost to keep going and it makes the process feel like a game, in a way.

Read more about how to make yearly goals with a yearly budget.

11. Made Extra Money in Side Hustles

I have a love hate relationship with side hustles.

I love them because I love making more money to apply to things that I care about– and I hate them because they really make it easy to get out of balance.

Honestly, I’m not a huge fan of our hustle culture and this idea that you just have to hustle in order to make anything of  yourself.

To me, it’s pretty toxic to tell everyone that they need a side hustle in order to get their money right and it’s also kind of fucked up that some of us have to have side hustles just to make ends meet.

Most of the time, I think most people should focus on making more money in their main gig so that they can save more and eventually stop working. The only time I think a side hustle is a good idea is if you really LOVE doing it and it happens to make you money, you really really need the money, or if you are trying to turn your side hustle into your full time in the future.

I fall into the first and third category– generally, I love my side hustles. I love coaching folks on how to money and I enjoy doing pet portraits. Do either bring in a significant amount of money? Not really, but it’s allowed me extra flexibility in my life to make more money if I need to.

That’s worth some peace of mind.

My most lucrative and favorite side hustle is investing in real estate, and it accounts for $62.3k of my retirement portfolio. Which brings me to..

12. Invested in Real Estate

I would have NEVER started investing in real estate if I hadn’t gotten my money right and real estate accounts for about 40% of my investment portfolio at the moment.


I invest funds in local real estate flips with a contractor I am friends with. Last year I made about $30k in interest income, before taxes. It’s been the highest performing investment I’ve made, and it’s also opened the door to my new plan which is to purchase a rental property within the next year.

I’m a big believer that real estate is a great wealth builder for the average joe, and I’m really looking forward to getting more into the real estate game over the next couple of years.

13. Maxed Out My 401(K)

When I started this journey– I thought maxing out your 401(k) was just getting the employer match. I had no idea there was something called a max each year, and the idea of putting almost $20k in investments in a year was absolutely bonkers to me.

Now? I do it.

I max out my 401(k) and I manage my own portfolio. 

What I love about the 401(k) is the simplicity of it. I never see that money so I live like I make 20% less than what I do, automatically. 

If I relied on my 401(k) alone, and maxed it out every year for the foreseeable future, I’d be a millionaire just from my 401(k) in just 21 years. I’d be 50 years old. That’s so easy! Obviously, I want to be a millionaire a LOT sooner than this, so I plan to do more than just max out my 401(k) BUT it’s nice to know that worst case scenario– I just max out my 401(k) every year and it happens when I’m 50.

Learn more about retirement accounts in “Retirement Accounts 101”. 

14. Stopped Trying to Keep Up with the Local Scene

This was huge. And something I think a lot of people struggle with.

When I first moved to Chicago and was making $42k a year with more than $70k in debt– I would hit up the hottest restaurants and bars every single freaking week. I’d use my credit card and barely keep my head above water as I lived way above my means.

I now make more than three times as much money, and rarely go out because that shit, when you do it every single week, is a car payment and quite frankly? I don’t enjoy it like I used to.

It was really fun when I was 23 and blowing money out the window without a care, but now? Now I have things I really want in my life, way more than trying out the trendiest bar or restaurant this week. 

how I paid off debt and saved $150k in two years

Looking Forward

I could’ve never predicted the changes above. Like I said, I’m pretty sure old me wouldn’t be able to recognize this “know-how-to-money” version of myself. But I do know one thing– she’d be stoked and super friggin’ proud that she figured this stuff out. 

I’m excited about what the next couple of years will bring. If I couldn’t have imagined this– what on earth do the next few years have in store for me? 

Who knows. But either way, I know I got this.

What have you changed in the last couple of years money-wise?

Share in the comments below. Any big or small changes that added up for you?

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14 things I did to pay off $40k of debt
how I paid off debt and saved $150k in two years
how I paid off $40k of debt
14 Ways to Pay Off $40k of Debt and Save $150k in Two Years
Article Name
14 Ways to Pay Off $40k of Debt and Save $150k in Two Years
1. Track everything you spend money on. 2. Get a clear picture on why you want to be good with money. 3. Create a budget and adjust accordingly. 4. Give up on black and white thinking. 5. Give every dollar a job. 6. Learn how to say no. 7. Allow yourself splurges. 8. Refinance your student loans. 9. Pay down the smallest debt first. 10. Make small goals. 11. Make extra money in side hustles. 12. Invest 13. Max out retirement accounts 14. Stop trying to keep up with the local scene.
Publisher Name
Clo Bare
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2 thoughts on “14 Ways I Paid Off $40k in Debt and Saved $150k in 2 Years”

  1. Your financial journey is so inspiring! I started budgeting a year and a half ago, and I am so much more confident in my life because of it. I generally use 1/4 of my salary on bills and spending, 1/4 on savings and sinking funds, and the rest goes to extra debt payments and savings. I would never be able to do this if I didn’t know exactly how money I have left every month, and I would never have been this calm when our HVAC needed replacement or one of the dogs needed to go to the vet. Setting aside money every month for expected but rare expenses like yearly shots, quarterly water bill, or Christmas gifts, makes sure my monthly budget isn’t touched and I can simply take that money from the appropriate sinking fund. Like you, my past self would be so impressed with how much I have saved and how on top of my finances I am now. Nothing like it. 🙂

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