I recently made the final payment to my student loan and officially became debt-free. I paid off $50,000 in six years while supporting myself (and my dog) and living in downtown Toronto. I was so proud of this accomplishment that I shared it on social media (because if you don’t Instagram it, did it even happen?), and the response was incredible. I had so many people reaching out to ask for budgeting tips and advice, and I could really feel the hopelessness in some of their messages. I know that feeling well — you go to sleep with the weight of debt on your chest, and wake up every morning to carry it around on your back. Here’s what I learned on paying back student loans, fast.
* I thought it would be important to note that throughout this post I am referring to student loan debt. If you have both credit card debt and student loan debt, I would recommend tackling your credit card debt first as the interest is usually much higher on a credit card than a student loan
Make a budget and stick to it
Do you have a budget? I don’t mean that half-assed list of monthly bills you have in the Notes app on your iPhone. I mean do you have an Excel spreadsheet that has a row for every single expense in your life, and a column for every other week? One that shows you where every single penny of your money goes? If you don’t, I can promise that you have no idea where your money is going, and that’s at least 50 percent of the reason you’re not any closer to paying off your debt. You need a budget. There are several sources online that offer free templates, or ask someone in your life that you know is financially savvy to help you get one set up. If keeping an Excel spreadsheet is just not for you (though I highly encourage it!), there are several apps (ie. Mint, Every Dollar, etc.) that can help you track your expenses and spending.
Once you’ve completed your budget, you can see how much money you have left for “you” every month. Now, take that amount and divide it in half. You don’t need as much money as you think. You can throw that other half at your debt.
Make short-term goals and start small
I know that if the amount of your debt is huge, it can be incredibly daunting. Have you been paying the minimum amount on your debt and pretending it doesn’t exist? Ignorance is bliss, right? Wrong. Ignorance will only accumulate more interest on your debt. Try breaking down your debt repayment into small goals. What worked for me was setting monthly payment goals. For example, a $600/month payment seems a lot more achievable than a looming $7,200/year payment.
Get a side hustle
If you’ve done your budget and you find that you don’t have enough money left to live off of monthly and make large payments to your debt, you’re not alone. The good news is that there’s an easy way around this, but you quite literally have to work for it. Get yourself a side hustle. Good at math? Tutor some kids. Love dogs? Walk some dogs or dog-sit. Love books? Work weekends at your favorite bookstore. Have a few evenings or weekends free and love to socialize? Try bartending.
Find a side hustle that brings you happiness and serves you in more ways than just that extra paycheck — you’ll be more likely to stick with it.
Prioritize what’s important to you
OK, time for some tough love. You’re not going to be able to “do it all” and “see it all” if you want to pay off your debt quickly. You might have to say “no” to vacations, nights out with friends, or to those vinyl records you want to add to your collection. I know we live in the Instagram world where everyone appears to have it all — vacations, clothes, homes, cars, etc. — but most of those people are likely racking up debt for that lifestyle.
Stop comparing yourself. Comparison is the thief of joy. Get your comfy pants on, grab a glass of wine (or a cup of tea if that’s your thing), and make a list of all the things you want to spend your money on. Once you’re done with that list, move the most important thing to the top. Make room for that item in your monthly budget and allow yourself to have it. Do not let anyone make you feel guilty about it. You will be more successful at paying off your debt if you don’t completely deprive yourself.
For example, if you want to take a yearly vacation make sure you include an allotted amount of money each month to put toward that. For me, group exercise was at the top of my list. I allowed myself to spend an allotted amount every month on group workouts because it benefited me mentally and physically, and gave me a space to be social (OH HAYYYY ALL DAY FIT!). Pick your thing and include it in your expenses.
Extra money is not free money
So, you got a tax refund, a bonus check from work, a $100 bill from your favorite uncle (I can’t be the only one with an uncle this cool). Guess what? That’s not free money to blow at your favorite store. Take that money, all of it, and make a big ol’ payment to your debt. Magical things happen when you make payments to the principal amount of your debt — no, you don’t get puppies — but your daily interest rate will lower significantly, making you that much closer to your debt-free goal.
Say no to bank and credit card fees
I can’t believe I was once paying $14/month to have a bank account. When was the last time you had to actually go and see a teller at a bank? If your answer is more than a year ago, you don’t need to pay them to keep your money in an account. There are perfectly fine banks that have no fees. Do you pay an annual fee on your credit card? There are also many credit cards that offer no annual fees. Don’t you dare pay an annual fee on your credit card! In fact, find a credit card that has an incentive for you. There are cash-back credit cards, points credit cards — you’d be shocked to learn how much those programs can help on your debt-free journey.
Become less of a consumer and more of a minimalist
Do you have a pile of shoes or purses in your closet that you never wear? Don’t lie. Take a look around your home, and you’ll likely see several things you own that you don’t need or don’t use on a daily basis—Marie Kondo it. Take all the things that “don’t bring you joy” and sell them on Facebook Marketplace, then throw that money you earn at your debt. Now that you’ve gotten rid of everything except your cat, you’re sitting at home alone missing that jacket you sold and you’re getting the urge to shop, aren’t you? Hold up. Before you click “purchase” on that online Aritzia order, ask yourself: “Do I need this, or do I just want this?” If you don’t absolutely need it, close that browser and walk away.
Make a meal plan and do some meal prep
How much money are you spending on takeout or at restaurants? I know, life gets really busy, and the convenience of ordering-in or popping over to your favorite restaurant is so easy, isn’t it? Try taking an hour or two out of your weekend to plan out some meals for the week. Prepare some of those foods in advance so they are in your fridge and ready to grab when you get home at 7pm after a long day at work. If you can cut your take-out and dining-out expenses in half every month, that’s a whole lot of extra money to put toward your debt.
Say bye to that no whip two shot grande latte
Have you ever added up how much money you spend at Starbucks in a year? Do the math right now. That latte is likely costing you more than $1,000 a year. Once I realized how much I was spending on specialty coffee, I quickly switched over to regular drip coffee and started saving nearly $2/day. If you can start making coffee at home and bring it in a tumbler, even better!
Share your accounts
Sharing accounts is another great way to lower your monthly expenses and have more money to put toward your debt. I’m talking Netflix, MLB.TV, CRAVE, Amazon Prime, etc. These services add up, and there is no need for you to pay full cost when you could be sharing that cost with a family member or friend.
Negotiate Lower Rates
I can pretty much guarantee you are overpaying for at least one of your services. Call all of your service providers (internet, cable, phone, insurance, etc.) and negotiate for a lower rate. If they won’t lower it, do your research for a better price and swipe left on your original provider. I lowered my monthly insurance bill by nearly $20/month by switching companies. That’s $240/year. It adds up.
Talk about it
Sadly debt is a taboo topic in our society, but we don’t have to let it be. I know it can be an uncomfortable topic to bring up with family or friends, but in my experience, if you are vulnerable and let the people in your life know you are a journey to being debt-free, they are almost certainly going to be understanding and supportive. They may even open up themselves and before you know it, you have a support system of people on the same journey as you. It was a little over six years ago that I opened up to a colleague at work about my student debt, and it just so happened that she had a knack for budgeting and shared her Excel spreadsheet with me. If I hadn’t opened up to her, I may not be where I am today.
Don’t quit when it gets hard
I know it’s hard. It is really, really hard. You will inevitably have some slip-ups and some set-backs (hello, that unexpected visit to the vet!). But remember, you are doing your best. Pick yourself back up and keep going. Your hard work and effort will pay off, I promise. I never thought I’d be on the other side of debt, but here I am. If I can do it, so can you.