I’ve noticed there’s one thing I haven’t really written about since I started this blog and that’s getting out of debt. Well, I’m happy to say I’m no longer in debt and have been debt-free for almost two years. On top of that, I managed to pay off my student loan in less than a year after graduation (9 months to be precise).
How Much Did I Owe?
Now, before you scoff at me and start to feel like crap because you’ve got a $50,000 student loan currently kicking you in the junk every pay cheque, let’s get a few things straight. I’m no wunderkind, I do not come from a rich family, and I am not a lady of the night.
The truth is, I took out a small student loan of $5,000, so it wasn’t a crazy amount of debt to pay off. That being said, I did work my butt off to pay my tuition throughout university (thus avoiding a larger loan) and I worked even harder to pay down my debt once I graduated.
But I will level with you. Right after finishing school, I wasn’t at all concerned about paying off my student loan. Everyone I knew had way bigger loans to pay off than I did, plus there was a 6-month grace period which I wanted to take full advantage of.
Looking back, I really wish I hadn’t deferred it for those 6 months because I probably could have paid it off in half the time. Oh well, live and learn.
How Did I Pay It Off So Quickly?
About a month after graduating, I got this great contract job that paid more than I had ever made at any of my previous part-time customer service jobs. The excitement of my new-found wealth did not die down anytime soon either because I ended up blowing through 70% of my earnings in just 4 months.
On what you ask? I have no clue! I had no expenses besides my $40 phone bill and my $120 transit pass (I still lived with my parents you see), and I definitely wasn’t keeping receipts or sticking to a budget.
But I’ll tell you what, as soon as the stench of unemployment set in once my contract ended, with no option of getting Employment Insurance (I didn’t qualify because I didn’t work long enough at my contract job), that’s when I started getting really interested in learning how to manage my money.
I started reading finance books, I switched banks to pay less fees, I set up automatic payments to pay off my bills on time, and I came up with a budget and deadline to pay off my student loan.
Besides setting this goal for myself (and I do not back down from a challenge, so I knew it would work), what really motivated me to aggressively pay down my debt was the fact that once it was completely paid off and was working full-time, I’d be able to afford moving out of my parents’ place before my 24th birthday. Failure clearly wasn’t an option.
So, what are the key takeaways from my experience that you can apply to your debt repayment plan? It’s simple really: create a budget, track your spending, find ways to make extra money and set a firm deadline.
I feel like setting a deadline is the most important thing you could do. Without that date set in your calendar, there’s no sense of urgency. I believe that’s why so many young people are taking years if not decades to pay off their student loans.
You need to make paying off your debt your main priority. I promise you, once you’ve paid off your debt for good, you’ll be so thankful you made those small sacrifices to finally live a debt-free life.
And on top of that, once your debt is gone, you can start putting that same amount of money you were putting towards debt-repayment right into savings. Just think of all the things you could do with that extra cash!
What is your debt story? How much student loan debt did you graduate with and how long did it take you to pay it off (or when do you intend to have it paid off by)?
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The first step in getting your finances right is starting a budget. I've been using mine for over 6 years, so why don't you give it a try!