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Debt Free Journey

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$144,205 Paid Off in 4 Years on a Teacher’s Salary

$144,205 Paid Off in 4 Years on a Teacher's Salary

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Wow. I can’t believe it has been 4 years on this journey and I really can’t believe I have paid off so much debt. When I graduated from grad school in August 2015, I was drowning in $201k in student loan debt. And I went to school to become a teacher.

To this day, I regret taking on so much debt to become a teacher. The truth is, I didn’t know any better and this was what I was told to do. I was completely naive to what student loans were and what I was signing every semester.

The good news was that I had my realization when I had just started grad school and was able to make some serious changes and put a plan in place prior to even graduating. You can check out my financial breaking point story here, if you’re curious about the time I got a bill for $1,400 while making $1,100 every month. A reality check for sure!

But, back to the point of this post, celebrating my 4 year anniversary of being on this journey to pay off my student loans. This year has been a wild ride to say the least. It certainly didn’t go as planned and I’m honestly shocked by where I’m currently at while typing this post.

A year ago, I was living at my parent’s house, working as many side jobs as I possible could, and teaching in a school that gave me major anxiety, all to get these student loans paid off. I was in my fourth year teaching and completely lost as to what to do. It was my tenure year and I couldn’t imagine myself staying there any longer, like even one more day.

The reality was that I had to finish the year because of a grant I received in undergrad and grad school. If I left midyear, I would add $27k to my total student loan debt that needed to be paid off and that just wasn’t an option.

Finishing this last school year made me truly understand why I wanted to pay off my debt. I never want to force myself to stay in a horrible situation, just because of money.

At that point, I had paid off enough of my student loans that my minimums were about $1,100. Still incredibly high, but nothing compared to when I started. I immediately started applying to jobs in December, with the idea that I’d have a job for June, or the next school year.

The year felt like it dragged on, having to go to a place that gives you physical symptoms from anxiety, is brutal. It got to the point where my doctor put me on medication and wrote me out of work, as needed, to manage my symptoms.

Luckily, in March, I interviewed at a school that I truly felt was different and that I belonged there. It was for a reading specialist position and the culture of the school seemed to be completely opposite of where I currently was teaching. I was offered the job, accepted it in April, and took a pay cut for it.

To this day, I still struggle with if it was the right move to take the pay cut because it is drastically slowing down my debt pay off. But, the reality is, I am working somewhere that respects and supports me as a person and as a professional. That’s not something I was getting at my previous employer.

My mental health is in a far better place than it was 5 months ago. My days are longer, my commute is longer, but I still come home with so much more energy than I ever did before. Which speaks for itself.

My debt pay off may extend, but I just keep reminding myself that I’m still paying extra and I’m still in a significantly better place than I ever would have been if I never started. I never could have accepted this job, if I hadn’t paid off so much debt. I wouldn’t have been able to afford cost of living and my minimum payments.

So, even though I’m not debt free, paying off as much debt as I have has already positively changed my life and opened up more opportunities for me. Let’s get into the details of the last year.

Major Life Changes Happened This Year

I moved back home with my parents after I graduated from grad school. They lived in a high cost of living area, which allowed me to have a higher salary than most teachers (I started at $56k with a master’s degree and 3 teaching certifications). This allowed me to actually afford my minimum payments of $2,000/month. I lived there for the majority of the last 4 years in order to pay off as much debt as possible.

This past June, I moved out of my parent’s house and into a house with my boyfriend about an hour away. This increased my living expenses in the last couple of months. It also meant that all of my babysitting and tutoring clients I had, are gone, which was another hit to my income.

I started my new job on July 1st teaching summer school to a few of my students that I would have in the fall. It was an awesome way to slowly get used to the new school and my new coworkers. Other than summer school, I only worked VIPKID this past summer and took 10 days off completely to go on vacation to my boyfriend’s parent’s house. It was the perfect way to recharge for my new job.

Also, my boyfriend and I got the cutest mini bernadoodle puppy named Cooper in August. He has been a huge expense, but he brings me so much joy that it is worth every dollar. We had been talking about getting a puppy for a very long time, we both had started saving for a dog, so we’d be prepared when we found the right one.

$38,800 Paid Off This Year

It has been challenging for me to see my debt pay off slow down so significantly. I’m trying my hardest to shift my mindset and realize that I have been on this journey for 4 long years. I have made a significant dent in my debt and I have sacrificed a lot to get here.

It’s okay to slow down now. It’s okay to spend money on the things I value most. I have been sacrificing for so long that it feels weird to be spending money now and to have so much less left over at the end of the month.

This is a number I am so proud of because this is with a significantly lower income and significantly higher expenses the last few months. It’s a number I reached while only paying minimum payments all summer.

I know my debt pay off will be less in year 5 and I’m slowly accepting that it’s okay. My minimum payments have dropped to $541, which is SO much more manageable than they were. I know I will still pay off my debt early, it just might not be by my 30th birthday.

I also refinanced my private loans again with Earnest. I’m not sure I can say enough good things about this company and I truly mean that. They dropped my minimum payment without telling me because I had paid off so much. Then, started making additional principal only payments for me. Of course, I called to confirm this was correct.

You will never guess what their answer was, “Of course it’s correct, it’s to pay off the loan faster!” I still can’t believe it honestly. I highly recommend them because they truly do want you to get out of debt, which is clear based on what they did when I had paid off a significant amount of my loan. We can both get $200 when you refinance your student loans with my link. If you’re not sure if refinancing is for you, check out my post that walks you through the questions you should ask yourself before refinancing.

Current Debt Totals to Be Paid Off

I still have my federal and private student loans. I have always used the debt avalanche to target my specific loans. The snowball never made sense for my situation because my smallest debt was 5 figures, I had no quick wins (Don’t know what I’m talking about? Check out my post about the debt snowball vs. debt avalanche). So, I wanted to save the most money in the long run.

It has helped me significantly because now, so much more of my payment goes to the principal. Having large debt figures with high interest rates is so hard to tackle. But, once the higher rates are gone, it makes it so much faster to pay off the debt.

I just refinanced my private loans for a second time to get a slightly lower rate, but mostly to lower my payment from $865 to $239. This will allow me to put more money towards my federal loans with a higher rate, paying them off faster. And it gives me such peace of mind to have a manageable payment now, instead of $1,100.

My federal loans currently total $44k and my private loans are just under $12k. I’m currently focusing on my smaller loans within my federal loans that have higher interest rates. Once I am done tackling the higher rates, I’ll pay off my private loans and then finish off the last of my federal loans.

My Plan for Year 5

Year 5 is going to be interesting. My debt pay off will definitely be less. I can realistically put $1,500 to my debt every month. Anything over that is awesome, but not very likely. This is significantly less than I have been paying in the past.

I also have a ton of expenses next year I need to cash flow. Next year I have 4 weddings and one of them I am a bridesmaid in. I’m so excited to watch some of my best friends get married and I want to think nothing about money when I’m celebrating them. So, I’m cash flowing it slowly every month before.

Cash flowing and sinking funds are awesome for these kinds of expenses. I’m contributing to my emergency fund, car sinking fund, and wedding fund (Not for me! For my friend’s weddings!). This is a lot of cash going to these funds. I know it’s for good reason though, so I’m okay with it.

These are big expenses I know I need to make, so I might as well prepare for them. Then, I won’t be scrambling when they come up. I’ve been realizing more and more that I need to consider the unknown and be more prepared for it. I’d rather have more cash sitting in my savings account, then not have the cash when an emergency comes. That’s why I’m beefing up my emergency fund while paying off my debt.

Also, I really hope to increase my income, but it’s hard with my minimal time I have with my long commute and long day at school. But, I have found one tutoring client I see on Sundays, which has been perfect.

I’m ready to see what the next year has in store for me. I can’t wait to see where I am in one more year. Six figure debt can be seriously intimidating, but you can get out from under it, just take it one step at a time. I’d love to hear about your journey to pay off your debt in the comments below! 

Debt

Debt Free Update: $130,947 Paid Off!

Debt Free Update_ $130, 947 Paid Off!

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Whenever I hit a milestone like this, I like to reflect on my journey. It’s not easy paying off $201k in student loans, especially on a teacher’s salary. But, I have paid off $130k in 3 and a half years. So, it obviously can be done.

I still have $70k left to pay off, but this feels like nothing when thinking about where I was. I panicked when I hit my financial breaking point and received my first bill in the mail for my private loans. While in grad school, my minimum payment was $1,400, not including my federal loans or grad school.

Of course, I got things squared away so I didn’t need to pay that at that moment. Since I was in school full time, I could defer my loans. But, I knew this would be my reality on graduation day.

I’ve completed changed my priorities over the years. Some of them were definitely sacrifices solely for paying off my debt. Like moving back home to my parent’s house. At first, I moved home because I had no other choice. After my student loan minimum payment was paid, I’d only have about $1,000 leftover every month.

This was with me earning a New Jersey teacher’s salary, which is typically higher. But, that is because cost of living is so high. I would never be able to afford to live on $1,000 in NJ and move out.

After paying off some of my debt, I have stayed to pay off even more. As my income grew from teaching and my side jobs, I continued to throw more and more at my debt. I have now lived at home for almost 4 years and I’m getting ready to move out in 2 weeks!

This will obviously slow down my progress a bit, but I am now ahead of my goal by about a year. I am confident that I will still be able to get my loans paid off by my 30th birthday in 2022.

Here’s an update of where I’m at in my journey.

Private Loans

I am destroying these things with everything I have. I want these things out of my life so bad. Generally, I don’t hate them as much since I refinanced with Earnest, use my referral link to get $200 when you refinance! Earnest is a thousand times better than my previous provider.

But, since private loans are near impossible to get rid of, I want them gone ASAP. This month I was able to get them down to $17,500. I still can’t believe that when I refinanced, they were at $46k, just in September. The lower interest rate that I got has been allowing me to put so much more towards my principle.

When I first started my journey, these were about $142k, with very high interest rates. I was making very little traction because of it. That’s what motivated me to refinance and I’m so happy that I did.

These will continue to be my focus account until they are gone. I originally wanted these gone by the end of the year. Now that I am moving out and have a new job for next school year, I just don’t know if that’s possible.

Federal Loans

My federal loans minimum payment increased this month by about $50. I am currently on an income based repayment plan to lower my minimum payment while I pay off my private loans. This means that every year I need to re-apply and I get a new payment based on my taxes from the previous year.

No matter what my payment is, I always pay off the interest every month. This is because I don’t want the interest to capitalize into the principle. When this happens, my loan principle grows, which means I’ll pay even more to interest. You can read more about this in my post all about making blind student loan payments.

Having my minimum payment is actually great for me. Now, my minimum payment covers the interest the accrues each month. I no longer need to make an extra payment to pay off the interest.

I will continue to do this until my private loans are paid off, then I will use the avalanche method to pay off each of my federal loans.

Debt Free Plan

My plan is a bit up in the air at the moment. There are so many changes coming in the next few months. I’m super excited for all of them and I have created a mock budget, but I won’t know definitely how it will change my journey until it gets here.

In the next two weeks, I will be moving out of my parent’s house and into my boyfriend’s house. This will obviously increase my expenses. Also, the school year is ending at my current school and I will be the reading specialist at a new school for next school year.

All of these changes impact my budget and my debt payoff. I know my debt payments will be decreasing, especially because I am going from 10 month pay to 12 month pay. This I am very excited about because I will no longer need a summer sinking fund and that money will be able to go to debt.

But, it is definitely an adjustment getting paid less each month. I’m excited to see what happens with my debt free journey and plan to track it closely in undebt.it to make sure I still pay off my debt by my 30th birthday.

Debt

How to Navigate 6 Figure Debt

How to Navigate 6 Figure Debt

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6 figure debt is no joke. And I’m not talking about a mortgage, I’m talking about all the other fun kinds of debt that are out there.

I’m 27 years old and had $201k of student loan debt to my name once I graduated as a teacher. Yeah. You read that right and yes, I was stupid to take out that much debt to become a teacher. I’m well aware now. But, that doesn’t get rid of my debt.

I’m at the point now where my debt doesn’t feel so overwhelming. It definitely makes my budget trickier, still having a minimum payment of $1,100, but it’s a lot better then $2,000. And now that I’ve paid off $127k, the process is moving much faster.

I’m now in the 5 figure debt club. This was absolutely something I celebrated. 5 figure debt is so much better than 6 figure debt. And it was right around my half way mark too.

I’m at the point now though that it’s frustrating to think about the things I could have done with this money. I could have bought a house in cash with the amount of money I have put towards my debt. 6 figure debt is not fun, especially on a single income.

Over the last 4 years I have found some ways to help get myself through this. It’s been a long journey, but one that I know will be worth it once it’s done.

1. Don’t deprive yourself to pay off your 6 figure debt.

Yes, you need to cut your expenses to pay off your debt. But, learn from my mistakes. Slowly make these changes. Don’t try to drastically change your life in the beginning. All this will do is set you up to fail and feel down on yourself.

When you have 6 figure debt you know you’re going to be on a long journey. There is no avoiding it. This means you need to be realistic with what you cut from your budget.

But, how can I actually do this?

My biggest tip is to look to see what expenses you can live without. How I managed this was by looking at my transactions the previous month. I was so angry by how much I spent eating out, that I cut this from my budget first. This would be hard to cut out completely, but I limited it. I made sure I was aware of my spending in this category throughout that first month. Also, I made sure I only went out to eat to be social and not for convenience.

I suggest you do the same when you’re first starting out. Cut whatever makes you the most angry. Every time you go to make a purchase in this category, check in with yourself. Is this necessary, how has my spending been in this category so far?

Once you have done this, I suggest seeing if there are ways to do the things you enjoy for cheaper. For example, I won’t give up getting my hair cut and I won’t do it myself. However, I do spread out my hair cuts much more and make sure I get a cut that doesn’t need to be maintained.

Being in 6 figure debt is hard, which is why you shouldn’t deprive yourself throughout the journey. You should be more intentional about where you spend your money though.

I also love a good no spend month with 6 figure debt. You can go one month with not spending anything on extras, it’s short and super effective. I don’t recommend this for long term, since you’re going to be in debt for a longer period of time.

2. Get creative about big monthly expenses.

Unfortunately, there are just some things in the budget that you can’t cut out. Like, your housing. But, you can get creative with this category. Depending on your situation, you may need to make some major changes. I think housing is one of the best ways to save money. It’s typically a huge monthly expense. If you can get it as low as possible, you’re going to help yourself a lot.

For me, I literally didn’t have any money for housing with my minimum payments when I graduated. No teacher salary gave me a high enough salary to afford both. That’s when I realized I had to move back home with my parents.

This did 2 things for me, lowered my housing costs and put me in a high cost of living area. Which also got me a higher teaching salary. Is it ideal to live with your parents at 27, no. But, it has allowed me to pay off a ton of debt in a short period of time.

If I didn’t move home with my parents, I would have been putting every single expense on a credit card. There was no money left over in my budget, if I had rent. My current situation would have been so much worse then it was when I graduated.

Figure out ways to cut your housing expenses. Can you rent a smaller apartment? What about getting a roommate? Could you move in with a friend and split rent? The more money you can save in housing, the more that can go to your debt payoff.

3. Create a plan to pay off your 6 figure debt, but don’t be afraid to change it.

Like I have said a few times throughout this post, this is a long journey. When you’re first starting out, you’re going to make this perfect debt payoff plan. You’re going to be so excited to get things moving. But, life happens.

You need to make changes for life, or you’ll never get out of debt. It doesn’t make sense to be tied to a financial plan. These plans can’t take into consideration the things that life will throw at you. You’re better off delaying your plan, then going into more debt.

This also means that you can change the order that you pay off debts in. Nothing is telling you how to pay off your debt. Of course, there are plans out there and I’m sure you created your plan based on one of them. But, that doesn’t mean you need to follow it exactly.

Right now, I’m paying off my private loans. It doesn’t follow the snowball or the avalanche method. But, it makes sense for me and my current situation. In general, federal student loans are a bit more forgiving than private student loans. For that reason alone, I am paying them off first. My private loans also come with a minimum payment of $865 and I can’t wait to take that out of my budget.

Figure out what works best for you and make changes to keep yourself going. With 6 figure debt, paying off debt is paying off debt. Get it gone in whatever keeps you going on this journey.

4. Increase your income.

When you have 6 figure debt, you absolutely need to increase your income. It’s simple math. There is no way to get out from where you are without more money coming in. Figure out what you can do while keeping your sanity.

My rule is that I’ll always try it to see how I like it. If it’s too much with my teaching schedule, I eventually stop it. Of course, I can always do something short term. It makes it so much easier when there is an end date in mind.

With that being said, make sure that you enjoy what you’re doing. If you’re miserable, going to another job is going to slowly drain you. It’s just not worth it. You need to find something that you enjoy that also brings you in some extra money.

However, I also remind myself a lot that I can do anything for a short period of time. So, maybe you get a side job that you know you will be done with in a month. You can feel stretched for one month and you know you will be done soon.

It all comes down to what you are willing to do.

That’s really it. What are you willing to do to get out of debt. Some of us are willing to go crazy intense to have it be gone. Others want to live a little while they tackle their debt. It’s all about what you want to do. For me, I was very intense for about 3 years. I needed to take my foot off the gas though. I was burning out and getting very frustrated by how much my debt was holding me back from.

The reality was that my debt was no longer holding me back. I had paid off enough that it was no longer a huge burden anymore. I had put those restrictions on myself trying to see how quickly I could get this gone. The issue with that though was that I wasn’t living my life. Now I have a better balance and I’m still making extra debt payments every month.

So, I want to know, do you have 6 figure debt? Are you actively trying to get rid of it? If you aren’t, what’s holding you back? Sometimes all it takes is someone else to look over your situation and I’m happy to be that person for you. What have you done to pay off 6 figure debt?

Debt

How to Get Quick Debt Relief

How to Get Quick Debt Relief

This post may contain affiliate links. Check out my Disclosure Policy for more information.

It took time to get into debt, so of course it’s going to take time to get out of debt. But, there are things you can do to experience quick wins to get you some debt relief. When you are feeling completely overwhelmed by your debt, sometimes you just need to free up a little cash flow to feel better.

I know when I hit my financial breaking point, I was totally overwhelmed. When my student loans went into repayment, I’d have a monthly payment of $2,000. And that was just the minimum, on a teacher’s salary.

To say I needed some debt relief was an understatement. I remember being in grad school and having no idea how I was going to afford everything.

That’s when I started getting into personal finance. I started looking at my situation differently. I stopped thinking about how much debt I had. The only thing I thought of was how to get my cost of living down and paying down my debt.

You need to stop thinking about what you can’t do in your situation. What can you do right now to help get you some debt relief.

And I’m not saying you should do any shady things. I’m saying look at your situation and start getting creative to get some quick debt relief.

1. Call every monthly bill you have and try to get a lower payment.

I’m not saying your monthly debt bills, I’m talking about other bills that you can negotiate. Most of the time, if you say you are going to switch providers, your internet and cable will lower. Worst case that happens is they say no. Then, you start shopping for other providers.

If you do this with a few of your monthly payments, the money saved will add up. This won’t help with your debt relief, but it will help with your cash flow. The money you save will go to adding more to your smallest debt to pay it off.

By spending some time shopping around for different options, you’ll be surprised how much you can save. A lot of the time we get loyal with the company that we originally did service with. The problem with this is that there are constantly new companies starting for all services.

This is fine, but when you’re struggling with your debt, it isn’t helping you. Shop around and see if you can get a better price. Lowering multiple monthly bills will free up money to go to debt.

2. Cancel any subscription you don’t use for some debt relief.

Cut out any subscription or monthly bill that you don’t use. After a while, we get complacent spending money on subscriptions we don’t even need. Get rid of them. It’s not helping your situation.

If there is a subscription you like, see if you can get something similar for a lower price. Or, cancel it for now until you pay off some of your debt.

Whatever money you save by not having these subscriptions, throw it at your smallest debt amount.

3. Sell big ticket items around your house.

Just like how we get with our subscriptions and monthly bills, we tend to hoard things in our houses. Anything that you can part with that will earn you some money, sell it! You’d be surprised by how much stuff you have in your house that can be sold.

I suggest looking at furniture items that you don’t use or can see your house without. Personally, I like using Facebook Marketplace to sell my furniture that I don’t need anymore. It’s easy and immediate cash for your items.

Whatever money you get from selling things, put it towards your smallest debt. Are you seeing a pattern here?

4. Lower your housing costs.

This was the true game changer for me. If I didn’t move back home to my parent’s house, I would never have been able to pay any debt off. This brought my housing cost down to zero. When I felt like I was drowning with my payments, this saved me.

You don’t need to move back home, but think about how much money is going towards housing. How can you lower that expense. Can you get a roommate? Move to a lower cost of living area? Downsize?

There are so many ways to lower your housing expenses. It just depends on what you’re willing to do. I see so many people spending SO much money on housing. And are drowning in debt.

To me, thats a no brainer. It’s such an easy way to free up some cash flow. Downsize to a smaller living arrangement and put all the freed up cash towards your smallest debt.

5. If you have a large car payment, sell the car for debt relief.

I know, you’re probably thinking that you need a car! I get that, I need my car too. There is no public transportation for me to use. I’m not saying get rid of your car, unless you truly don’t need it.

I actually babysat for a family that moved so that they could be walking distance to work. This allowed them to drop to a single car family. It was awesome and serious goals.

Back to where I was going with this. Sell your car and get a car with a lower car payment. If you have savings, use the savings to buy the car outright. Not all of your savings obviously, but take what you’re comfortable with. Make sure to keep at least 1 month of expenses in there.

If you’re someone that bought a new car with nothing down, chances are your payment is very high and on very long terms. Get rid of it! If you’re drowning in debt and feel helpless, there is no reason to have that car. And I’m not saying get a car that isn’t safe. I’m saying get a used, reliable car, with a low car payment, if needed.

By doing this, you will lower your monthly expenses. The freed up cash will go towards your lowest debt amount.

It’s all about what you’re willing to do.

The only way you are going to experience some debt relief is to make changes. You got into debt living this kind of life, you can’t continue it and get out of debt. What it all comes down to is what you’re willing to do to get some relief.

A lot of people aren’t willing to do the hard work and change their life. These changes that I mentioned can help you within a month. Others will take longer, but will see bigger changes. For example, moving might take longer to do, but you will experience a huge change with doing so.

This is a lot to do on your own, but you can do it. If you need more accountability, check out my 1:1 coaching that I offer. It’s for you if you know that your debt is overwhelming you and need to make a change. What have you done to experience quick debt relief? 

Debt

Making Sacrifices While Paying Off Debt

Making Sacrifices While Paying Off Debt

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Paying off debt can be a scary thing to start. I know for myself, I was terrified of my reality when I hit my financial breaking point during grad school.

6 figures of debt and a teaching salary scared the living you know what right outta me. I didn’t know what I was going to do. I had dug myself such a massive hole and I had the absolute smallest shovel to get myself out with.

To this day I thank my grad school advisor for smacking some sense and reality into me when I was still in school and my loans were in deferment.

Without her, I would have been in a longer program, making less money in grad school, getting less scholarship money, making less as a teacher in NY, and paying for rent. The numbers literally didn’t add up and I most definitely would have been living on credit cards for my daily expenses.

Because of her, I made sacrifices so that I can build myself a much better future. I moved home after graduation to live rent free and get a higher salary in NJ. This allows me to reap the benefits of living in a high cost of living area (higher salary), while not paying the sky high rent in the area.

Sometimes you need an outside person to look at your situation and help you create a game plan. I didn’t think to actually create a fake budget at the time, I didn’t know anything about money back then. She got me to start being interested in personal finance and taking an active role to get out of debt ASAP.

If you’re someone that needs help with this, reach out! Find someone to help you. I’m always available to help and if you want something with more structure I have email coaching to help you.

The reality is that you’re going to have to make sacrifices while paying off debt, if you want to do it quickly. For me, I really enjoy my life now while paying off debt. Of course, I’m planning to move out shortly, but this journey has showed me what I truly value and enjoy. Most of which costs little to no money.

Here are some reasons why you should make sacrifices while paying off debt.

1. It can help you save money on high ticket expenses while you pay off debt.

The classic example is the money you spend on housing. This is always a high ticket expense in your budget and one that you should try to get as low as possible. By figuring out ways to lower your housing expenses, it will allow you to spend a little more in areas that may bring you more joy.

For example, by living at home with my parents I am making my housing expenses zero. This allows me to put a ton of money to debt, but also lets me still go to the gym, have a larger grocery budget, and occasionally go to happy hour or dinner with friends.

I’m not saying move back home with your parents. That’s not always realistic, but start thinking creatively about your housing situation. Can you get a roommate(s)? Can you find a smaller or cheaper apartment to rent? Recently, there have been people in the #debtfreecommunity on IG that are selling their houses to pay off their debt.

You need to figure out what you value and what you want to spend your money on. For me, the sacrifice of living with my parents is by far worth getting out of debt faster.

2. It can increase your income while you pay off debt.

I love a good side hustle and I think everyone should have multiple streams of income. It’s worth it to sacrifice a bit of time short term, for the long term gain of being debt free.

Currently, I work a lot of side hustles and it does take a decent amount of my time. Is it ideal? No, but I know it is temporary while I pay off my debt. Without a doubt, by working these side hustles it has brought my debt free date closer and there is no way I would have paid off as much as I have without them.

The great part about side hustles is that you have total control over them because they aren’t your main source of income. I always try out a side hustle and see if it works. If it doesn’t, then I figure out an exit strategy and stop that side hustle.

By making the short term sacrifice of working extra side jobs you will be able to increase your debt payments and ultimately save money in interest in the long run. Figure out what you can realistically manage and see how much you can make to move your debt free date closer.

3. It can create habits that you end up keeping.

When you’re paying off debt, of course you’re going to start doing things for the short term. At first they may be considered sacrifices, but I guarantee that you will eventually adopt some of these new things as habits.

For example, I know that I will always work multiple jobs. It’s just in my nature. I enjoy changing things up and doing different things. I think that’s why I like being a teacher, every day is always different. Eventually I won’t work as much, but I think I will always work extra jobs.

Also, at first my living arrangement was solely so that I could pay off debt. Now, I want to always make sure to live way below my means. This definitely means that I don’t plan on buying a big house, I enjoy small, minimal living now and I don’t plan on changing that.

The sacrifices at first that you create might just end up being habits that you create and end up enjoying. I am shocked by how much my life has changed since committing to paying off my debt. It’s amazing what you end up valuing in the long run when you have big goals.

Remember, the sacrifices you make are temporary.

Ultimately, the sacrifices you make are temporary and once you have reached your goal, you can change things again. What it comes down to is always having a goal you want to reach. This will help you to determine what you are willing to sacrifice.

If you want to reach your goal faster then going out to dinner, you may decide that night out isn’t worth it. The best part about personal finance is that it’s all up to you. You can do whatever you want and you need to decide if your goals are more important than certain things. What have you sacrificed to pay off debt?

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Debt Free Update: $124,378 Paid Off!

Debt Free Update_ $124,378 Paid Off!

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I feel crazy typing this, but now that I’ve been on this journey for roughly 3 and a half years, I feel so close to being debt free, even though I have $76,718 left. Maybe that isn’t crazy, but I know I’m no where close to being done, it just seems so much more manageable.

I remember when I hit my financial breaking point and absolutely freaking out about just affording my minimum payment on my teaching salary. Now I’m at the point where it’s no longer a stress in my life.

Of course, I still have about $1,100 as a minimum payment every month, but that’s a lot less than the $2,000 it was when I started. My monthly minimum payment would be $1,000 now, if I didn’t refinance.

Yes, I took about a $100 increase in minimum payment, sounds crazy right? But, this allowed me to get an interest rate of 4.97% instead of 7.05%, totally worth it in the long run.

Refinancing isn’t for anyone, but for me and my student loans, it was something I had been working to do for years. I am so happy to have a lower interest rate because so much more of my payment goes to the principal now. If you are considering refinancing your student loans, check out my post that outlines some questions to ask yourself before doing it!

Debt Free Update: Private Loans

I hate all of my student loans, but especially my private loans. I especially hated them when I had my old provider. I will say, I don’t hate them as much since I refinanced them with Earnest back in September 2018. They are awesome to deal with, listen to feedback and actually make the changes, and I am finally seeing actually movement in my pay off of them.

In September 2018, I refinanced $45k of my student loans, which was all of my private student loans. Now, I have $23,981 in private loans, I’ve paid off $21k in 7 months, just in my private student loans! This never would have been possible, if I didn’t refinance my loans, because I was paying so much in interest every month. If you are considering refinancing your student loans, you can use my referral link to get you $200 when you refinance!

Things are very up in the air for the second half of the year for me, my plan is to pay my private loans off by the end of the year. This goal will change depending on how things pan out after June.

Debt Free Update: Federal Loans

My federal loans are still on income driven repayment. I just renewed it and my payment is going up $50 to $300. This is actually a good thing because my loans accrue about that much in interest every month.

While focusing on my private loans, I have been paying the minimums on my federal loans, but making an extra payment every month to make sure the interest is paid off every month. The reason I do this is because I don’t want the unpaid interest to be added to the principal, making the loan increase. This will require me to pay even more in interest and even more in the long run.

This is why it is so important to understand these programs and stop making blind student loan payments. Your payment may be as small as $0 every month, which means your principal is going to increase on your loans. So, yes your loan is in good standing, but you are increasing your principal every single month!

My loan amount doesn’t really change much on my federal loans for now, I’m basically just paying off my interest every month. Right now my federal loans are $52,736. These are broken down in many smaller loans. Once I pay off my private loan, I plan to pay off my federal loans by avalanching the smaller loans based on their interest rate.

Debt Free Plan

I have been going very hard at my goal to pay off this debt as fast as possible. I’ve increased my income, moved back home with my parents, and cut my spending down. Currently, my debt free date is May 2021, which is incredible! It’s amazing what consistent choices over and over can do.

I’m not sure where my debt free journey will go by the end of the year. I have plans to move out, maybe get a new job, I’m okay to slow down my journey a bit to move out of my parents house. I have paid off so much debt, way more than I ever thought would be possible at 26 years old, that I’m okay with it all.

Right now, if I continue with my current plan, I will have just turned 29 when becoming debt free. My goal has always been to have my student loans paid off by my 30th birthday. Right now, I have a nice buffer of time on my side and I feel really good about where I am at with my finances. How is your debt free journey going?

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Why Tax Deductions Shouldn’t Change Your Debt Free Journey

Why Tax Deductions Shouldn't Change Your Debt Free Journey

This post may contain affiliate links. Check out my Disclosure Policy for more information.

This time of year everyone is figuring out their taxes, filing their tax returns, making sure they get all of their tax deductions, and waiting on their tax refunds. It comes with this time of year. There is a huge personal preference to get a large refund or a small refund. I outlined why I plan to make myself get a smaller refund, but I understand why some people like a larger refund.

Currently, I get a larger refund because when I originally did my paperwork at work, I had no idea what I was doing. If I’m being totally honest, I’ve just been too lazy to change it! I plan to change it when I get a new job though.

A lot of times people get wrapped up in the tax deductions and it can be overwhelming. Lately I’ve been getting asked a lot about my debt free journey, especially by friends and family. Most of the comments I’m getting are surrounding my student loan tax deduction and not getting it when I pay off my student loans.

I try really hard not to eye roll at this, but it can be very difficult. Yes, I’ll lose my tax deduction when they are paid off, but I’ll get to keep all of that money. My friend shared this article with me that does a wonderful job explaining the math behind this, if you’re into that kinda thing like me!

Why Tax Deductions Don’t Matter

Okay, that’s being a bit dramatic. But, it isn’t exactly wrong. Yes, tax deductions are nice, but they shouldn’t dictate how you manage your finances. You should never do something solely because you’ll get a tax deduction for it, or it will lower your taxable income.

If your money move that you are making adds something else to your financial picture, then absolutely go for it! But, I wouldn’t make a move solely because you get a tax deduction. For example, I’ve literally heard people say they don’t want a higher income because it will push them into a higher tax bracket. That’s insane!!!! Taxes and tax deductions should not dictate your money moves, keep them in mind, but don’t let it sway you this much.

Let’s go back to my student loan interest tax deduction and losing that tax deduction once I’m debt free. The tax deduction would lower my taxable income by $2,500, but I’ll then be able to pocket and invest the $40k a year I’m currently paying towards my loans. Even if I just put it in a high yield savings account, that money would give me a nice return each year.

What you should do instead.

Pay off those pesky student loans! Put that money back into your budget because student loans are evil! I outlined why they are and how blind student loan payments will cause you to pay so much more on them, here. I encourage you to sit down, track your expenses, get that zero based budget going. Send all of your extra money to debt, after you have your emergency fund, and get those things out of your life for good!

If you need help with this, comment below, I love helping people get their budget set up and be sure to get my Google sheets template to help you get started with your own budget.

Don’t fall into the tax deduction trap.

It can be easy to listen to others when they are talking about finances. Don’t be afraid to be a little weird! If I listened to the vast majority of people, I’d still be drowning in $201k of student loans, instead of only $85k (HA!). But in all seriousness, the long term benefit of not having student loans definitely outweighs the small tax deduction I’d get every year, or not if my income increases. So, let’s get moving on freeing ourselves of student loans! I’d love to hear your experiences, have people told you not to pay off your student loans for the tax deduction?