00:00 Rita Soledad Fernandez Paulino
So guys, I had $23,000 of debt after 10 years of payments. And then I decided I wanted to pay it all off and become debt-free before turning 33. And the only reason I had decided I wanted to do that was because I had increased my financial literacy and I realized that carrying this debt, not building savings, not investing was just holding me back. I was 32 years old with two kids living in Los Angeles and I was determined to change our financial trajectory, even though I had disability income and my husband was looking for a job.
00:48 Speaker B
So, I’m curious, there’s a new trend in the personal finance space where they’re they’re taking the pressure off the financial anxiety off and saying there’s no need to pay off your debt in such a hurry. There’s not it’s not a competition. Uh so from your perspective, why was it important to you to pay it off within a year of making that decision?
01:10 Rita Soledad Fernandez Paulino
Because I wanted to start investing in the stock market. Now, I will say I lacked some financial literacy because I would have started to max out a Roth IRA with the student loan debt that I had given that it wasn’t high interest. I think there’s a different approach if you have high interest debt, anything above a 9% interest rate or even 10% interest rate, yeah, let’s prioritize paying that off. My interest on my student loans were probably like around 4%. But I had recei, you know, I had received certain information, the books that I had read that were like very like, no debt, and because that’s what I had access to, that’s what I believed. And I had shame. I had shame about being 32 years old with two kids and not even knowing if I was investing in investing for retirement.
02:08 Speaker C
Yeah. So folks, if you’re just joining us, this is Living not so Fabulously where we share the real life stories of folks doing the hard things to build wealth. We’re speaking with Rita Soledad Fernandez Paulino, host of the Wealth Paratodos podcast about her success in paying off debt and building wealth. So, let’s go back to this idea of you paying off your debt. Uh when you say you use zero-based budgeting to eliminate your debt, what is that? And and what did that budget look like for you?
02:41 Rita Soledad Fernandez Paulino
So, I had made a plan for I had a fixed income. I had my disability checks and I made a plan for every single dollar. I remember at the time, we only could spend $20 a week on eating out. And so that was still part of my budget. I I’m not somebody who likes to cook all the time. So I still wanted to budget for being able to eat out. but every single dollar that came our way was allocated ahead of time. Now, of course, life would happen. I’m first gen, I would have loved ones who would need money and I had to learn to adjust the budget and do so in a way that wasn’t so rigid and be more compassionate with myself. That’s what made it sustainable.