Hey everyone! I’m out in NYC this weekend, staying in one of the most expensive hotels in NYC that I booked for free using credit card signup bonuses! Score! Anyway, since I’m busy enjoying my trip here, I thought it’d be a perfect time to share this great guest post from Jacob over at Dollar Diligence. He talks about how he crushed his student loan debt and gives some great advice for anyone who’s looking to do the same.
Over the past few years, I meticulously tracked every dollar that came into my account and every dollar that I spent in order to pay down over $25,000 in student loan debt as fast as possible.
I could have waited around for my loans to be forgiven (assuming I would be eligible) or I could have enrolled in an income-driven repayment plan to make low monthly payments, but I was simply sick of the anxiety that came along with my debt.
What did I do instead?
I promised myself I would do everything in my power to aggressively pay off my debt in under 2 years. It wasn’t easy by any means, but I did it.
Now that I am debt-free, I am now working to build my wealth and passive income so I can retire by the time I’m 35.
Some of the things I’ve done and am doing could be considered “extreme.” However, I’m happy, which means I don’t find them to be extreme at all if it means I can have the financial freedom I desire.
One thing I did that some people give me side eye over is moving in with my aunt and uncle. They can’t believe I’d sacrifice my “freedom” just to save some money. The fact is that my aunt and uncle respected my reason and what they did was give me a financial boost with their generosity.
I wasn’t moving in with them for a handout or so I could be lazy and live off them. I moved in with them for respectable reasons important for my future.
Other Things I Did
There are many other things I did to help pay off my student loan debt as fast as possible.
I also changed my cell phone plan. I had to have my phone so friends, family, and work could reach me. Eliminating it wasn’t an option, just as it is not an option for many people. In fact, it is safer to have a cell phone so you can get help in an emergency.
I will not tell you to get rid of your phone. However, there are ways to reduce the bill. All you have to do is call your cell phone company and say you will switch to a company with a better deal unless your provider can match or beat the deal of the other company. Companies sometimes have something hiding up their sleeves to retain you as a customer, so don’t cancel the phone.
What I could cut out was going out with friends as much as I used to. Multiple nights out a week can become very expensive. Before long, the bar tab can hit $50 or $60. It doesn’t take much.
Dining out is also another incredible expense. It is much cheaper to grocery shop at a discount grocery store and use coupons for things that you need than it is to buy a single plate of food at a restaurant. Your dollar stretches more when you make the food at home.
Keep in mind that you don’t have to eat like a king or queen. You want to keep it healthy, but you can do it smart. I know people that are growing small gardens in their backyards and cutting their food expenses that way.
Now that I’m no longer living with my aunt and uncle, I have had to find ways to decrease my household expenses. Making sure the cable bill is in check is one of those ways. It can be very tempting to sign up for a package that has all the movie channels but consider how much TV you really watch. If you’re taking on side jobs to make more cash to help you save more money, you’re probably not watching much TV.
You can opt for a promotional deal with the cable company, but keep in mind that the price will skyrocket at the end of the contract. The contract is usually one year, so you need to stay on top of it. The cable company will usually have another promotion the following year that will save you money.
I also minimized my road trips. If I didn’t have good friends, they would have thought I was a horrible person for never wanting to go anywhere with them. The fact is that I was taking the money and putting it in the bank. That’s still the case. I don’t travel excessively.
Evaluate Your Situation
The best way to cut your individual expenses depends on your situation. Evaluate EVERYTHING. You would be amazed at how much money you are hemorrhaging every month. If you ever wonder why you’ve worked so hard and have nothing to show for it, there is a good chance your money is slipping through your fingers. A thorough evaluation can make a world of difference.
Once you create a plan based on that evaluation, stick to it. I am not going to sugarcoat it because it will be hard at first. Try living like you did when you were a broke college student. As you get used to it, you will be able to adhere to it with no problem. Simply have faith in your ability to save and tell yourself that it will all pay off because you will live a more financially secure life. Financial security means less worrying and more living.