“Thought I’d get a prize at the end,” I casually said to my wife last week as we made the last payment on our student loans. This rather anticlimactic event marked the end of my personal journey to pay off over $83,000 in student loan debt and be completely debt free.
We did it! Like most people I thought I was going to be in debt forever. I started to really get serious about debt re-payment in 2013 and continued each year to lower my loans. The payments seemed endless, but on January 23, 2017, my family became completely debt-free. No bills to no one. The only way is up from here. Here’s how I did it.
First, Learn To Seriously Save Money
- Save at least 50% of your income. This is a big one. You are never going to get out of debt or save for retirement in a reasonable amount of time if you don’t put away at least half of your income. The popular mantra is to save 10-15% until retirement. For the last four years, I’ve saved anywhere from 50-75% of my income and applied most of it towards debt repayment.
- Save first, instead of using credit. When you need to buy something big first figure out how much it’s going to cost, then put away the cash and buy it when you need it. For some reason, it’s a lot harder to spend money that you’ve saved than paying off debt. After saving for all that time, you’re going to be very careful about spending that money.When I first proposed to my wife, I immediately started saving for our wedding. It did slow down my debt repayment, but 13 months later we had a completely debt-free wedding. Think about what you will need in the future and start saving now.
- Automate your savings and bill payment. I rarely if ever need to transfer money into savings or bill my bills when I get paid. My bank does it all for me. Once you decide how much and how often you’re going to save, just automate it. Your future self will thank you.
Next, Avoid Spending Money
- Be Car Free. In 2011 I decided that cars cost too, much and decided to structure my life around not having one and it’s been great. I still run part of the way to work and take the bus the rest of the way. Cars are most people’s second highest expense before their house. But with amazing services like Uber and Lyft, why would you want to pay for a car to sit in your driveway when someone can drive for you?
- House Free? This one is up for debate, but it all goes back to ownership. If you own things, then they own you. Being in the military, I’ve moved around a lot and not needed to buy a home. But I know if I’m going to buy one, then I’m definitely going to save for it first.
- Experiences are more fun than things. My wife and I rarely buy each other things. For us, memories are more fun and that is why for our birthdays we usually celebrate it by going on a trip somewhere new. We usually come back with some great pictures, wonderful memories and stories to tell. What we don’t come back with is a bunch of new things we now have to care for. Remember that everything you buy has a cost of ownership associated with it.
That’s my secret. Save money and don’t spend it all.