The above photo is from a protest hosted by the Backbone Campaign and Occupy Graduation to bring attention to America’s combined trillion dollar student loan debt. The protesters are chained to a giant trillion dollar ball and have price tags with various debt amounts.
It’s been a year and three days since I made the decision to pay off $60,000 in three years and I’m happy to report that I’ve paid off $19,317 in the last twelve months. Boom! 20k knocked out in a year. What an amazing feeling. And here’s some stats for you. According to Forbes.com, the average debt size when I graduated in 2005 was $17,233. That means most of my classmates if they were really motivated, could have paid off their loans within the first year after graduating. But I’m no average guy.
Right now, my debt repayment makes up about 75% of my after tax income. I went from 55% to 75% when I moved to South Korea, because the Navy took away my housing allowance to move me into a barracks room. No big deal. Just have to stretch that Korean won a little further. Next year I move to Italy, where, due to cost of living adjustments will nearly triple my income. Chang ching!
I was inspired by the whole idea of living on less from the book, Early Retirement Extreme which I talk about in my original post last year. The entire premise of the book is that anyone can retire in almost five years by saving at least 75% of their income and living on the rest. While my savings are practically zero, because I put all my money into debt repayment, I see how this is entirely possible. I live a great life. I go out on the weekends. I travel. I dress well. I hang out with my friends, but I spend very little on material goods. Just the clothes on my back and a laptop are I need to get by. I am by no means extremely frugal. I’ve just decided to prioritize what’s important to me in life.
Why I Will Never Be In Debt Again
Buying expensive things like cars, houses, and college degrees is the reason most people go into debt. We justify these purchases as something we need to survive. But after spending nearly a decade paying off just my student loans, I can’t justify jumping right into another long term contract to pay off even more debt. To me, debt represents taking away my freedom. Freedom to spend my life as I choose. When we decide to go into debt, we make an often unconscious choice to continue to work for money 10, 20 or 30 years into the future. For most of us that means spending all day doing something you’d rather not be doing to pay for something you think you need. While I don’t pretend to have all the answers in life, I definitely know one thing…freedom from debt will set you free.
My Vision Of What A Debt Free Life Looks Like
Maybe the idea of being debt free is difficult to picture, so I’ll let you in on what I envision for life after debt…
Rent Free Housing
You live in a small house or an apartment where you trade some of your time for a place to stay. Maybe it’s working in hostels overseas or in your hometown. Maybe its working part time for a landlord in exchange for a place to stay. In college, I was an RA for a year and had a free dorm room. Right now the Navy pays for me to live rent free in South Korea. You can live almost anywhere in the world if you want to and not be tied down to a single home that you purchased 30 years ago. Maybe you decide to start a family. You build your own home from money you’ve saved over the years. Maybe your family lives on a boat as you sail the world for a year. The possibilities are endless when you decide to look beyond the prescribed notion of living through a mortgage. If you don’t like where you live, then pick up and move.
Debt Free Work And Time Off
With no large debts to pay off, work can last for a few days to a few years depending on how much money you’ve saved and your spending habits. Maybe you decide to work for a few months at a time, take some time off to travel and return to doing something else. Maybe you spend your days volunteering for something you’re really passionate about. Maybe you like nature and decide to live in the wild for practically nothing. Vacation turns from two weeks a year to whenever you feel like it. You realize that when you don’t own much and require very little to live, then life is full of options. A career is no longer half of your life spent doing something you don’t enjoy. Retirement is spread out throughout your entire life rather than waiting for the end.
Pay As You Go Transportation
Need to go somewhere? Fly, take a train, subway or bus. If you’re feeling generous hop in a cab. Maybe you own the cab and people pay off your car for you. Maybe you live in a city where owning a car is not needed. If you want to get good at running, you might try jogging everywhere you need to go. Without a car payment, you only pay for the transportation you need. Maybe you own a used car you paid for with money you saved up. Maybe you decide to live on less and walk and ride your bike everywhere. Maybe you decide to live in a city like Venice and stroll around town in your gondola. The point being that there are options. Options that don’t include buying something that gets you into debt.
Hopefully I’ve made you realize how important your time is in life. For time is all we have. Each day is another we can’t get back.
I’d rather spend it doing something I enjoy rather than working a job I don’t enjoy to to pay for things I don’t need.
Photo Credits: (Flickr)