A YouTube subscriber asked me this exact question the other day. Wow, it really has been a year already!
A year ago today I made the last payment on nearly $100 K of student loan debt!
Believe it or not, the actually payoff moment itself was anti-climactic. With good reason. At the time my son was in NICU after I had to have an emergency C-section just 25 weeks and 5 days into my pregnancy.
Because of what was going on with my son, I couldn’t really enjoy the moment. There was no debt free scream, no celebration, no time to truly reflect on the accomplishment.
My son Caleb came home a couple of weeks later, after exactly 100 days in the hospital. Today he is 14 months old and is a healthy, happy bundle of energy!
Going through such a stressful ordeal has a way of putting things into perspective.
Slaying the debt has allowed me to get a glimpse of what financial freedom truly means to me.
If you are new to my blog, check out my backstory for the details, nitty-gritty about how I ended up with so much debt in the first place.
The short version is that I valued education and saw it as a way to improve my circumstances. Reflecting on it now, I fully realize that I gathered some of my esteem from my academic accomplishments. So I blindly racked up a boat load of debt (while earning one, two, three college degrees). Then I basically I buried my head in the sand until it was time to pay the piper. I did not know exactly how much I owed until just before I finished my third (and final) degree.
Can you believe that?
Me, Mrs. FrugalChic herself..the budgeter, the numbers cruncher that I am (and have always been)…I couldn’t bring myself to tally up the debt while I was busy accumulating it.
Ignorance is bliss…Or is it?
I guess deep down I knew that the mountain of debt was a problem. But I was too far in to turn back. So I completed my doctoral degree and finally faced the harsh truth about what it would take to now get rid of it as quickly as possible.
Although it was foolish to take on so much debt casually, and even more foolish not to count the cost, I don’t regret the decision to finance my education. I wouldn’t be where I am professionally if I had not done so. I didn’t have any money saved for me for college and didn’t have anyone advising me on how to handle my educational costs.
It was a long road to pay off the debt and many sacrifices were made along the way.
But I made it! It was exactly a year ago today that I hit the high point, the most significant milestone (to date) of my journey to financial freedom, making that final student loan payment.
Here are some of the steps I took to pay off the debt aggressively:
-Started budgeting EVERY month. I had budgeted on and off over the years but never stuck with it consistently.
-Doubled my income by creating multiple streams of income. I was very blessed and fortunate that my advanced education allowed me to increase my earning potential. This was not something that happened my chance. I did a lot of research when selecting my undergraduate major. I changed course mid-way through undergrad from a pre-med major to a physician assistant major.
Based on my research I knew that I would be entering into one of the fastest growing professions in the country. Jobs are available in abundance.
And, once I earned a doctoral degree there were TONS of opportunity to teach as an adjunct instructor at community colleges and online colleges and university. I took every job I could get (in addition to a full-time hospital job at night) and threw nearly all of the additional money towards the student loan debt.
-Continued to live below my means.
This was a critical part of my success.
The new money that was coming in was enticing, but I was committed to resisting the urge to spend it on stuff that didn’t matter. I probably splurged a bit more that I should have, shoes that I didn’t need and spa days here and there. But the major things, my house, my car, all stayed the same despite the fact that we could have afforded a house twice the size of our 1,800 square foot town home.
-Embraced minimalism. About 4 years into my eventual 6 year journey to pay off the student loans, I stumbled across a concept known as minimalism. I realized that I needed to learn to be content with less.
This quote by The Dalai Lama seems to sum things up perfectly:
“If one’s life is simple, contentment has to come. Simplicity is extremely important for happiness. Having few desires, feeling satisfied with what you have, is very vital: satisfaction with just enough food, clothing, and shelter to protect yourself from the elements.”
The list of things that we “need” in life is very simple.
That realization freed me.
I don’t feel pressure to have a certain type of lifestyle, drive a particular car, or earn a certain amount of money.
-Cultivated frugality. To be frugal means to be prudent, to lack wastefulness, and to be a conscious consumer. The constant drive for more has the ability to rob us of our peace and our money! I decided to be a good steward over all of the possessions that I currently own and limit my purchase of new items. Practically speaking, to accomplish this I shopped my own closet, participated in spending fasts, curbed impulse shopping, and hacked my budget wherever possible.
The hard work has paid off tremendously.
Being debt free (other than the mortgage) has allowed me to:
- Work less by choice. I no longer feel pressure to work 60-hour work weeks to earn more to pay off debt.
- Prioritize family. I am more intentional about being engaged with family because I have more free time.
- Travel more. So far we have taken two ‘debt free’ trips. One to Cancun to celebrate our 13th wedding anniversary. And more recently, we took the kids to Niagara Falls. My husband and I have committed to traveling somewhere at least 4 times per year, even if it’s just for an extended weekend.
- Worry less about money. There is a certain peace in not owing. I still have the mortgage but I have plans to get rid of that too..more details in an upcoming post.
- Save more. All of the money that I was applying to debt is now being saved! I love the idea of actually keeping my hard-earned money. We now have a fully funded emergency fund, I am maxing out my 403B at work (up to the $18,000 max set by Uncle Sam), and am continuing to contributing to Roth IRAs. Also, I am also on track to complete my Car Fund later this year.
- Build wealth. If I want to retire early (and I do!) So, I will need to have money accessible in other accounts considering I can’t tap into my 403B until 59.5 years of age (without penalty). The fund that I want to begin investing in (Vanguard’s Total Stock Market Index Admiral Shares AKA VTSAX) has a minimum investment requirement of $10,000. I plan to invest that amount by January 2018 and automate my contributions every month.
- Penny pinch (slightly) less. Although I am always looking for new ways to optimize my budget (I just cut my cable this month and saved $70 a month!), I can relax just a little bit. After going a REALLY long time without buying new stuff, I have given myself permission to indulge..just a little bit. But, nothing too crazy, but we do need some new towels and bedding for the house. We have had the same towels for many years (most were wedding gifts from 13 years ago) and it shows! Even my husband mentioned it and he never notices stuff like that!
- Strive towards financial independence. The plot thickens… It’s time to up the ante. After a taste of freedom, I want MORE. The plan is to have a million dollar net worth by the time I’m 43 and be in a position where I no longer NEED to work in order to meet my financial needs. There will be more information to come on this in upcoming posts. I promise!
I am so glad that I made the decision to kick debt in the teeth! My life has changed for the better and I am wishing the same for you.
What does your debt-free future look like? What are you willing to sacrifice to get off the hamster wheel?
Until next time…live well and be blessed!