Paying off a ton of student loan debt in 3.5 years

Nav.ing $60k in Student Loan Debt

by Liz Brenner | 11 August 2020

I remember the day vividly. It was late May in 2017 and unseasonably cold for that time of year. Or, rather, what should be unseasonably cold for that time of year; this was Chicago after all. Cold, wet and erratic springs are unfortunately fairly common. My friends and I just left a Cubs game and we were looking to get out of the cold as quickly as possible. We headed to a nearby restaurant. A spot cleared by the end of the bar: I swooped in, ordered a beer, and laid down my debit card.

Let me rewind for a second. At this point I was one year out of grad school with about $60,000 in student loans.

I had another $10,000 in consumer debt, which can be attributed to poor money management skills and an obstinate will to live above my means. 

During grad school I took evening classes, which fortunately, allowed me to work full time during the week. I wasn’t making great money as it was, in a new career and I started at the very bottom.  I made enough that I could have supported a humble lifestyle in a less expensive neighborhood with a few modest lifestyle changes.

But twenty-something me didn’t care for humble living. I wanted to live like my friends. Like my colleagues. Like the way I was supposed to live in my mid-twenties. I chose the downtown apartment in a premium neighborhood, took European vacations, got LASIK surgery, racked up expensive bar tabs, and bought new clothing faster than it was going out of style.

Keeping up With the Joneses 

Some of this was brought on by societal pressures; everybody appears to be successful so I must be too. But the bulk of it came from self-imposed persuasion. I justified financial decisions based on emotion, not logic. I wanted to be this self-sufficient adult version of myself. The one who “made it”. The working woman who could pay for her own lifestyle. Or at least appear to. 

I envisioned my twenties being the “time of my life.” Financial struggles were never part of the picture. And certainly living with my parents or working two jobs to financially survive never made its way onto my adult vision board. Perhaps it was my own naiveté. Or perhaps social media, sitcoms and society made me believe otherwise. Regardless, I found ways to warrant my lifestyle and spending habits. 

But as my financial behaviors festered, I increasingly turned a blind eye to the problem. I often waited weeks to check my credit card statement. 

And worse, I started normalizing my debt.

Everyone has debt, I told myself. I’ll pay it back when I make more. This was a lethal combination that only spurred more debt. Because I was just barely able to support my financial necessities, all the non-essentials and discretionary spending went on loan. I had no concept of how to live within my means.

Okay, back to 2017 and the life-changing beer I’m about to order.

Within minutes of laying down the card I received a text alert from my bank: OVERDRAFT FEE: $25. I overdrafted my debit card for a $7 beer. A non-essential beer! As I sipped my premium $32 beer trying to hide my shame behind a half-hearted smile I found myself in a daze and detached from conversation with friends. I quickly made an excuse to get out of there and went home.

It became clear that the days of financially ‘YOLO-ing’ it through my twenties were over.

On the train ride home I thought about my financial situation. Waves of guilt and frustration rushed over me. But perhaps most motivating: internal shame. This was somehow worse than my parent’s “I’m not mad, I’m just disappointed” speech I heard a few times in my younger years. The sense of shame came from deep within. I was embarrassed. I’m a smart woman. I did well in school, performed exceptionally at work. How did I let myself get to this point?

I wasn’t completely oblivious. Whether or not I fully acknowledged it, I knew my financial situation leading up to this moment was less than ideal. In fact, within the first few months of graduating I made an effort to stop paying for things on credit. 

I needed to learn to pay for things I could afford with money I actually  had

This was great in theory. But I had no system in place for paying off the debt. And I had very little understanding of just how difficult it would be to climb out of $10K in debt with 19% APR. I was paying around $500 a month toward my debts. Between my student debt, credit card debt and LASIK loan, I could barely keep up.

Reflecting On My Debt-Inducing Habits

Aside from no longer being able to ‘YOLO’ it, it also became clear that simply not using my credit card was not enough to get out of my financial situation. I was spread pretty thin. I needed to reduce my expenses and, ideally, make more money. But with six months left on my lease there was not much I could do in the immediate to reduce my fixed costs. 

Fortunately, I managed to snag a generous raise and two bonuses at work during that time. Both helped sustain my current situation and pay off a little of my consumer debt. Meanwhile, I tried to be cost- conscious when it came to discretionary spending. However, this proved challenging as I had no buffer savings in place.

Anytime an unexpected expense occurred I’d have to break out the credit card again.

I was stuck in a vicious cycle of making progress on my debt repayment, then getting hit with more debt.

Overcoming My Debt

As my lease was nearing expiration, I explained the situation one morning to my mom over breakfast. While she wasn’t in a financial position to offer an interest-free loan or simply throw money at my money problems, she offered the next best thing she could: living with her rent-free. I had some initial reservations about the idea. I mean, what soon-to-be 28 year old wants to move back in with her parents? But I also knew this was the best chance I was going to have at repaying my debts. So I took it. 

I lived with her for the first six months of 2018 and in that time I managed to pay off all of my consumer debt, a good chunk of my student loans and fund emergency savings. 

By living with her I saved money not only on rent, but all the costs associated with renting: utilities, wifi, cable, laundry. Not to mention, groceries were pretty much taken care of for me. As was the occasional laundry service á-la-mom 😇. All in all, I not only reduced my monthly expenses by about $1,800-2,000, but also got to spend some quality time with my mom. Win-win.

Financial Lifestyle and Priorities

Moved to a less gentrified neighborhood

I eventually moved out and rented a small studio in a less gentrified neighborhood a little further out from downtown. In other words – cheaper living! I knew that if I wanted to stay out of consumer debt and focus on paying back the rest of my student loans I didn’t just need to change a few habits. I needed to overhaul my lifestyle and priorities. While most people can change a few habits to curb some expenses and save for important items, I never actually made my financial well-being or my financial literacy a priority. I wasn’t leveraging debt to invest in personal growth, education or even a business. I was leveraging debt to pay for a lifestyle that was not sustainable.

Immediately I began my ascent into the world of personal finance. I picked up every finance book I could get my hands on and read through every money blog out there. Deep into my investigation on personal money management and learning how to curb my consumer habits, I discovered the minimalist and FIRE movements. I was instantly hooked. 

Minimalism, FIRE and Finances

Adopting a minimalist lifestyle was the perfect antidote to the Joneses effect. 

I started practicing gratitude and found ways to be happy with what I have, instead of focusing on chasing what I don’t. Of course, like most skills in life – this takes habitual practice and I’m by no means dogmatic about it. Minimalism, for me, is an evolving process; one that I fine-tune as I grow and my priorities change. 

FIRE, on the other hand, stands for Financial Independence Retire Early. The concept behind the FIRE (or FI) movement is to achieve a high savings rate in the hopes of accumulating enough wealth to retire before standard retirement age. 

But depending on who you ask – you may get vastly different definitions of what FIRE or FI means. Like minimalism, it’s personal. While my partner and I don’t intend to retire early, we strive to save anywhere from 40-60% of our income in an effort to achieve financial independence. Or perhaps more appropriately named, financial freedom.

Money can be a contingency for many life decisions. Financial freedom will allow us to remove that contingency and take some calculated risks; maybe work a lower paying dream-job, start a business, or take a year off to travel. It doesn’t mean reaching millionaire status so we can live lavishly and never work again. Instead, it’s the freedom to pursue what truly matters to us and peace of mind that our needs (and then some) will be covered should our income change in the process. 

It’s a balancing act. And the two lifestyles are symbiotic; wanting less leads to less spending and spending less helps you realize what you truly need and don’t need. We spend where we see value so we can enjoy the present, but save more than enough so we can become financially free in the future.

Grateful for My Debt Experience

Reading through this short story it might sound like I breezed by from $70K in debt to a financially “successful” lifestyle. But that’s far from the truth. 

My financial habits took several years to build and are like any other skill that require regular adjustments and practice. 

It also took me around 3.5 year to pay back all of my debts – to undo decisions that took all of 3.5 seconds to make. Whether or not that seems like a long time may be a moot point. The real struggle was – and is – the emotional tool that debt had on me. Something I’ve only just now begun to heal from and cannot fully explain through prose.

While I struggled with anxiety, frustration and low self esteem when it came to my debt, that doesn’t mean some good didn’t come from this experience. Being in debt ushered me to take an active role in my finances, not just paying off my debts, but investing too. I learned how to manage my day to day money and maybe most importantly – this experience taught me gratitude and the power of our choices.

Personal Finance is Personal

Don’t get me wrong – not all debt is necessarily bad. And not all debt will induce emotional distress for you the same way it did for me. But if there’s one piece of advice I can offer, it’s this: be careful with debt. Understand it and whether or not you can afford it before you put yourself in a financially strenuous situation. And if you’re currently struggling with debt – be patient with your financial journey. No two journeys will be the same, so do not compare yourself to someone else’s. Personal finance is exactly that – personal. 

And maybe most importantly – spend less than you earn, invest the rest and be mindful of what you do today as it matters tomorrow.


Liz Brenner

Liz Brenner is a 30-something US expat living in Germany exploring a more mindful approach to finances after paying off $70K in debt. Catch more of her regular posts on her blog, Instagram, Facebook, and Twitter.

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