In 2013, when I was laid off from the small New Hampshire newspaper where I worked, I did what any other functional unemployed person would do: I decided I should move — to a city I couldn’t afford, without any savings!
We’ve all heard that famous New York City motto — you know, “The city so nice they named it twice” — but allow me to propose an updated version: They named it twice because everything here costs double.
Back when I first moved to New York, my thrilling life as a 28-year-old, college-educated person in the modern era meant I also brought along tons of student debt.
“How did I get here?” I pondered, while I attempted to sleep on a couch that wasn’t mine.
Well, it all started when I decided I would go to college. Ah, yes — it started when I decided to educate myself.
How I ended up with debt
A few years after I graduated from high school, I was still living at home, paying rent to my parents and working a third shift at a gas station in a rural Tennessee community.
I decided I wanted a change. I knew if I continued down this path, I would never be able to live the life I dreamed of.
Few in my family went to college and my high school didn’t exactly push higher education. I remember my guidance counselor telling a friend of mine to just leave and get a factory job, because college would be too difficult. So, incredibly late in the game, I stumbled my way through the Free Application for Federal Student Aid, or FAFSA, and received some money in the form of grants. My parents couldn’t help me with tuition and couldn’t even qualify for PLUS loans (federal loans for students’ parents who meet certain criteria).
With my limited knowledge, I took out my first student loan, based on an “estimate” from the college’s website.
It’s no secret that higher education is expensive, but I wasn’t prepared for how much my degree would end up costing me. Let’s start with the fact that the basic cost of college has gone up dramatically — in the past 20 years, according to U.S. News & World Report, in-state tuition and fees for the average public national university have increased 221%, while the average tuition and fees have gone up 154% at private national universities.
When I got my loans (known as Stafford Loans) in 2006, they came with one of the highest fixed interest rates federal student loans had had during the 21st century. The total made it incredibly hard for me to keep up every month.
After I graduated, my first job didn’t pay very well and any money I made went toward rent or my whopping mountain of debt: $57,000 in school loans, $1,500 of credit card debt and whatever was left on my car loan. Sure, I was more educated (thanks, college!), but I was still ignorant about finances.
Because I couldn’t afford it, I pushed off making a dent in my loans, spending a few years living on income-based repayment plans and deferments. Without paying my interest, my debt ballooned up to $66,307. (It’s debatable whether or not Albert Einstein was the one who said “compound interest is the most powerful force in the universe,” but whoever said it was spot on.)
Of course, I wasn’t alone.
Eighty percent of Americans have debt, according to a report by the Pew Charitable Trust. Seventy-three percent of Americans die with an average debt balance of over $61,000, according to a study by Experian and Credit.com. You hear a lot about the 1% but the 20% was always super rich to me.
Making a plan
Thankfully, through luck, connections and a little determination, I managed to land higher and higher-paying gigs. Side hustles became full-time jobs, which led to new career paths — and even more side hustles. I rarely had a day off of work, and if I did, I picked up more work. I sold my car, paid off my credit card debt and managed to get a little savings, because I worried work would dry up.
After I got out of my consumer debt, I wanted to tackle my student debt with full force.
I literally took a pen and wrote down the original balance, the unpaid interest, the current balance, the interest rate and the type of interest (fixed or variable) on my loans. Using all of this information, I calculated my minimum monthly payments and even the cost of the daily accrued interest, so I could know how much my student loans were costing me to the day.
It was $11.76 a day, by the way, so, yeah — that daily coffee seemed crazy expensive at that point.
With all the information I gathered, I plotted a course to pay off everything in two years.
Small changes make a big difference
These small, easy steps saved me more money than I’d imagined.
- I started to track every single penny that I spent.
- I always lived with one or more roommates to split the cost of housing.
- I cut my phone bill down to $35 a month, changing to a cheaper carrier after reading about it in Consumer Reports — which actually turned out to be an even better plan than my more expensive one!
- I canceled subscriptions like Netflix, Amazon Prime and HBO Max. I also utilized my library more than ever before to cut down on entertainment costs: They offer books, ebooks, audiobooks, movies and so much more.
- Rather than going out to eat with friends, I would have them come over to eat. Sure, some of the co-workers who come over for a dinner party might look at you strange when you pull out that mac-and-cheese casserole you froze months ago, but simple homemade meals produce less waste for the environment, are cheaper and usually taste better than ordering delivery.
- I pushed off making major purchases, such as buying a new phone. And when I did get one, I bought a used model.
- I signed up for all the overtime hours I could get at work, clocking almost 400 hours in three years. I opted to get paid for comp days and holidays when I could, instead of taking them as time off.
- I took side gigs, such as dog walking or pet sitting.
From a social standpoint, I felt somewhat ostracized. While I was trying to save money as aggressively as possible, people were always telling me to “live a little.” There was an obvious misunderstanding between what I wanted and what others thought I wanted.
Shortly after I created a plan to get out of debt, my father died. I was in the room when my mother and father decided to move to hospice care rather than seek other options. Despite my mother’s plea that they could afford it, my father thought pursuing another surgery would be too expensive and create another burden on top of future health complications. Having a loved one make critical health care decisions based on cost was a powerful and upsetting experience, which only bolstered my urge to become financially stable.
It took me 29 months to finally knock out all my debt after I formed a plan, and even that was ahead of schedule. Paying off large debt takes discipline and a long time, and sometimes it can feel like nothing is changing. But if you stick to your plan, you can really see results.
In terms of numbers, I spent an average of $2,529 a month on student loans and paid over $10,000 in interest on top of my initial loans.
By the time I finished this process, my entire relationship with money was altered. I now know where every dollar I spend goes and I can’t imagine not knowing that — a big change from where I used to be. I no longer stress when emergency expenses come up because I’ve stabilized my financial situation, though I worry more about the future than I did previously. I understand the value of a dollar and how easily it can vanish, which has pushed me to seek out and fully comprehend what it means to start retirement accounts and how to invest.
Getting out of debt can feel insurmountable, especially with the massive cost of education. But once you do it, the freedom you feel is well worth it.