Brooke Allison
One second. That’s all it takes for the student debt in the United States to increase by $3000.
After graduation, that monthly payment makes the list, plus any credit card debt, an auto loan, and potentially a mortgage.
As students leave school and enter the never ending cycle of debt, a newly married couple, both with teaching degrees, decided to break out and make their own way.
Over the course of 5 years, Bobby and Susan got rid of $40,000 in student loans while starting at a $37,000 household salary. This doesn’t include the master’s degree, a few cars, and home improvement repairs on their home paid for with cash.
Talk Goals
There’s a fine line between dreams and goals.
Many people will talk about getting out of debt, but they never talk about how.
Bobby and Susan decided that they needed to actually sit down and map out what they wanted to do. They even created a list of things they couldn’t do in order to hit some of their financial goals and posted it on their fridge for the daily reminder.
Without talking through and even writing down goals, they become arbitrary. When working as a team especially, it is important to be on the same page as your partner.
The first easy step is dividing your loan up by the years you want to pay it off in.
Double Check That Budget
Make sure your budget is helping you win.
By adjusting their expenses, they were able to funnel that money into savings, paying off debt, or paying cash for their more expensive purchases.
Start thinking about what you can live without. Try writing a needs and wants list. And then rewrite it.
You will be surprised with what gets marked off the second time.
It is critical to financial success to have a working budget. Remember that tip on writing down your goals? This is the ultimate solution. Having a specific category for that loan payment is vital to hitting that monthly goal.
Be Willing to Make Sacrifices
There is an overwhelming amount of people who are house poor or have extremely expensive cars while balancing student loans.
Hitting that debt free goal may include making some big sacrifices.
How many times do we hear the thought “I am so tired of working hard and feeling like I have nothing to show for it?”
As Bobby and Susan kept feeling that exact same way even while they both had jobs, two cars, and a house, they decided to make a change. This included covering big purchases with cash, but more importantly it included their mortgage.
They had bought a foreclosure, flipped it while living there, and sold it at a profit. From there, they used the extra cash to pay off all of their student debt and start an emergency savings fund while moving into an affordable apartment.
Whether it’s downsizing or getting rid of that $500 car payment each month, some temporary changes will need to be made. As debt-free becomes more realistic, those sacrifices are going to become the cornerstone of the journey there.
Find what makes sense for your financials goals to let go of temporarily.
Use the Momentum to Start an Emergency Fund
One of the best things to do after being debt-free is to keep the same budget.
Starting to save now to decrease the chances of future debt is a sure way to keep that peace-of-mind that was just created.
It’ll be easier to keep stockpiling the loan payments into savings after the loan is paid off than starting anew all over again a year later to cover a new car payment or emergency repair on the house.
Bobby and Susan decided to create a fund that would cover 6 months of unemployment if one of them were to leave their job. If any unexpected car repairs or medical bills popped up, they were set. They had paid off all of their debt, moved in to the new apartment, and stuck to the plan.
Not only does this ensure some financial peace, but now, they get to enjoy that extra income guilt-free.
Creating wealth and eliminating debt is going to look different for everyone, but creating a budget, cutting some big expenses, and planning for the future is going to help make the journey less stressful.
With careful planning and a determined mindset, debt free may just be down the road.
