I spend a fair amount of time fantasizing what it’ll be like to be debt free. I imagine I’ll feel lighter and finally free when that day arrives. I have been dreading these loans since my senior year of college, 2010-2011. I realized that I was going to be shackled to 25K for ten years (according to the payoff plan given me by my lenders) and I resolved to get out of that debt in less time.
At first I didn’t have a specific timeline. I just knew that the earlier I paid them off, the less I would pay in interest and the sooner I would be ‘normal.’ I saw normal as being debt free. Several of my closest friends in Austin graduated college debt free and I wanted to be like them. I wanted to have the flexibility they had with their money, the selectivity they could have in their job searches and the generally less miserly lifestyle they lived. None of my friends were or are living over-the-top lifestyles of luxury. None of them are irresponsible with credit cards. They are all hard working and wonderful people! But none of them have monthly debt payments to make. They just don’t.
I wanted that lifestyle. When I moved to Texas and got myself a serving job and an internship, I decided that I wanted to be debt free by 30. That was three years earlier than my payment plan called for and would save me a few thousand in interest and ensure that I headed into the next big phase of my life debt free. I could get married, start saving for a house, travel anywhere in the world- all debt free. I started generally tracking my expenses with my forgotten Mint app and closed my credit card. I started making double payments on my loans again. I was making some progress!
I thought I had them =(
In reality, I was spreading my extra payments across all my loans and seeing very little impact. I was still living an inflated lifestyle in some areas, I was still tens of thousands in debt and I was frustrated with my finances. I always felt broke. In January of 2014 I quit my waiting job and was left with just catering to pay my bills. I took a deferment for my Sallie Mae (now Navient) loans and looked for any type of non-waitressing work. I found a part-time job coaching lacrosse, which gave me a few thousand dollars in stipend form. I got to eat at the school for free. I also found a part-time receptionist job for $9 an hour. I worked 5:15am-10:15am, Mondays and Fridays.
In May 2014, my coaching job ended and I was left with almost no income. I was working 10.5 hours a week as a receptionist and catering 1-3x a week. For three months my income was about $800 a month and my expenses were just above that. My loans were still in deferment from earlier in the year, but that grace period ended in late August. Meanwhile, I was still accruing interest on them and I had no idea how I was going to make my payments when they started up again.
I felt trapped, scared and panicked. I had no control of my life. I was at the mercy of two fairly unstable jobs. If there were three catering events a week to work, I could make good money. If there was only one, I was barely keeping my head above water. My receptionist paychecks came bi-monthly and were abut $180 each time. My debt hung over my head as I asked myself the same question over and over again: What was I doing with my life? How had things gotten so out of hand? Was I ever going to stop worrying about money? Was I ever going to find a real job?
I was freaking out. That’s pretty much it. Oh, I re-read the entire Harry Potter series, cried a whole bunch and railed against the world for being unfair. But I was in a full blown quarter-life crisis, that’s for damn sure. It sucked and it was scary and really hard.
Just free falling into fear and panic
In late August a good friend recommended me for a nonprofit job and after two interviews I got it. My income went up a bit with that. Fall is also the beginning of the busy season for catering, and I was working 4-7 times a month. With renewed job options, slightly more money and a firm understanding that I never wanted to be as broke and option-less as I had been that summer, I decided to pay off my loans. I found a determination within myself I didn’t even know I was capable of. All of a sudden, everything else was secondary to becoming debt-free.
I found myself stalking personal finance websites, reading everything that talked about debt pay off plans. I became familiar with payment ideas like the snowball and avalanche methods. My google history showed searches like “How to pay off student loans” or “debt reduction ideas.” I was reading multiple stories a day of people paying off large sums like $75,000 in credit card or student loan debt. I stopped going out for drinks, I stopped browsing clothing websites in my spare time and I got serious about my catering leftovers.
I began to realize I was not alone. There was a whole community of people who had the same debt problems I did, who wanted to be rid of it just as intensely as I did. They had tips and tricks to reduce interest rates, ideas to speed up payment rates and stories of their highs and lows to share with me.
Thanks to the online personal finance community, I was able to reduce my interest rates by .25%, employ the debt avalanche payoff method, start this little blog and see huge results in a short time on my loans. From September-December 2014 I paid off two loans entirely and made headway on the remaining three. All told, I paid off just over $4500 on my loans, while making under $1900 a month. Not too shabby for someone who spent four months basically unemployed and three months crying in her car last year.
I still have a ways to go on my loans (even though last month was my highest payoff ever!) I still have a lot of work to do on the investing and savings side of things. But for the first time in my life I feel capable of handling these things. I know, rather than hope, that I will be debt-free this year.