Online Creator Proposes 70-20-10 Debt Hack for Faster Payoff: Effective or Not?
Millions of TikTok users consume personal finance content, with the #personalfinance racking up 79.2 million views on the platform. Financial gurus, content creators, entrepreneurs, and even users share advice on various aspects of finance, and debt has been a hot topic. Recently, Taylor Money (@taylor_money_), a rising star on the platform, struck a chord with the audience through a video outlining a strategy to pay off debt quickly. While the advice was taken from a book he read, it seems to be backed by finance experts.
Taylor Money's Debt-Busting Hack
In the video, which now has over 314,000 views, the creator outlines a hack taken from a popular book. Taylor claims in the video that his hack helped him pay off over $150,000 while he was making only $2,000. He recommends people spend their energy towards finding ways to grow their money instead of worrying about debt. As focusing on debt may end up growing it.
Taylor then reveals the book is called “The Richest Man in Babylon”, which shares the hack that can allow people to pay off debt fast. Citing the book Taylor recommends people to put aside at least 10% of income towards investments before paying a dime on debt.
Then 10%-20% should be allocated towards paying debt and no more than that, Taylor says. He then urges people to keep doing it on autopilot so that they don’t focus too much on their debt and continue paying it off a chunk at a time.
The video has resonated with many viewers struggling with debt, as evidenced by the comments section. While some people claimed that the hack worked for them, others had questions about how to start. “Please tell me which as a beginner to investing, one to start with 💻 1-3 would be great,” wrote a user, (@chrsta__)
Meanwhile, several others shared that Taylor’s hack works and they have tried and tested it. “I did this and paid off 150k”, one user (@corymichelle) wrote. While another user (@candidlylaura) supported the method saying, "Yes!! And it’s so easy now that it can happen without you doing anything. Automation!
Is Taylor Money’s Technique valid?
What Taylor explained is close to the 70-20-10 rule that recommends rationing income for different purposes. As per the rule, 70% of the after-tax income should go towards living expenses, 20% should go towards savings or investing and the remaining 10% should go towards paying off debt. However, the method would be slow to pay off debt and not particulary fast.
As per a U.S. News report, living expenses include mortgage or rent, utilities, transportation, insurance, food, clothing, entertainment, and more. Furthermore, high-interest debt payments like credit card debt and personal loans, should also be included in this.
Thus, Taylor’s hack can indeed be beneficial for paying off low-interest debt over some time. This is crucial as getting out of debt will reduce financial stress and help free up income that could go towards achieving bigger goals.
For more such personal finance advice and tips, follow Taylor Money (@taylor_money_) on TikTok.