My Debt Repayment Story
I had no debt before I went to law school, but in a matter of 3 years of law school, I had accumulated $68,500 in student loan debt. At the time, I didn’t think that was that much money. Mostly because I didn’t understand the worth of $1 until I actually had to pay back the money back to the bank and it felt like it was taking FOREVER. I also thought that because I had a budget in school (unlike many of my peers) and had applied for student grants and bursaries and was a successful recipient every year, I was better off than others. Some of my colleagues had racked up over $100,000, but at least their debt included a trip through Europe.
Tip to my younger self: Stop comparing myself to others because when it comes to paying back the debt, it’s ALL ME.
Although I grew up having several jobs at the same time and working before it was even legal to do so (thanks Mom & Dad), it wasn’t until recently that I have started to actually understand and care about the power of money. I didn’t really have any concept of money (e.g. the effect of compound interest, investing, saving, and the impact of a professional bank loan that had an interest rate of 8.99%).
You’re probably wondering where the other $30,000 of debt came from … Well, shortly before I became a full-fledged lawyer, I “needed” to buy a new vehicle because the one I had stopped working – literally. I was driving home from work on a cold day, when I heard some racket coming from the engine and decided to pull over in a grocery store parking lot. The car never turned back on after that. I should add here that I did later sell that car for $300 on Kijiji. In my post, Frugal Living Tips to Start Right Now, I briefly talk about how I always start with the position that I MUST buy it used. Only if I can’t find it used, can I look at buying it new (and preferably on sale, obviously)!
Naturally, I went car shopping and ended up taking out a bank loan for $30,000 at a 5%+ interest rate.
Note to younger self: This is CRAZY! If I had actually taken a moment to think about it and do the math. My salary for the year at that time was in the $40,000 range and I still had about $60,000 in student loan debt.
When I was car shopping, the Honda that I saw was only $4,000 less than the used luxury vehicle, so it was a “no brainer” (sarcasm) that I buy it – wait, no, pay the bank to buy a vehicle I could not afford on my salary. I bought the luxury vehicle, and the expensive oil changes and parts that came with it. Buying this car though was a big deal for me. I had never bought or had such a vehicle growing up and had always wanted one. For whatever reason (maybe society’s expectations), it was a way of showing to my friends, family, ex-boyfriends and the world that I had “made it” (Note to reader: I no longer hold this view).
I LOVED that vehicle though. I don’t regret buying it for the experiences I had, but I do regret buying it for all the dollar bills I literally threw out the window every time I drove it. What hurt the most was selling it a couple years later for less than half of what I had bought it for – ouch!
Those were the 2 big loans that I had, and I was determined to pay them off as fast as I could. All I wanted was to pay off my debt as fast as I could so I would have $1 to my name. If you want to read more about me (Ms. OYP) and Mr. OYP, click here.
I have briefly shared my story to give some context to what I did to pay off $98,500 in 3.5 years. Let’s get into what I did and many things that I continue to do accumulate wealth. At the end of this post, I share what I continue to do and how much I have saved since paying off all my debt.
1. Lived below my means. I lived in a bachelor apartment.
Throughout law school, I lived with a roommate in a 2 bedroom apartment and paid $600.00/month in rent. Although my roommate experiences were not horrible, I wanted to live alone when I started my career. I did a lot of research and came across a bachelor suite that I could rent for $725/month. It wasn’t anything fancy but it came with a gym (bonus!), and it allowed me to pay more towards my debt than my rent. It was also a 15 minute walk to work, so I didn’t have to drive to work and was therefore able to save money on gas and car maintenance.
2. Watched a debt show once a week to motivate myself.
My go to show was Princess or Til Debt Do Us Part with Gail Vaz-Oxlad as the host. One of my weekly to-do’s was to watch one episode a week. Watching an episode every week kept my mind focused on paying off my debt and gave me some actionable tips that I could implement on my debt repayment journey.
I vividly remember on one of the Princess episodes, a princess had to carry kettle bells around the mall weighing the amount of debt that she had, which was about $60,000. I visualized me carrying around kettle bells in the amount of my debt whenever I wanted to buy a “want” or spend money.
It worked for me, and best of all you can watch these episodes for FREE!
3. Went on a no clothes buying challenge.
I made a commitment to myself that I would not buy myself any new clothes for a full year. This worked really well for me because there was no pressure on me to find or shop for new clothes. Best of all, it was FREE to window shop, if I really wanted to.
However, in order to get at least a couple of new pieces of clothing for work, I got creative and did #6 below.
Actionable Tip: For your staple pieces (i.e. jackets, blazers, sweaters), take good care of them and repair them when necessary. E.g. sewing buttons back on or repairing small holes yourself.
4. Do you have any gold or silver (maybe a ring or necklace from an ex)? I sold mine for cash.
A gold and silver buying company comes through town about twice a year. I got the flyers in the mail a couple times, and eventually decided to go and check it out with my jewelry in hand. I ended up selling some gold and silver that I had not worn ever or would never wear again that sitting collecting dust in a jewelry box. I made $600 cash and threw it at my debt.
I considered it “cashing in on my exes”.
5. Created monthly budgets for my debt repayment period.
I created a monthly budget in Excel for the entire debt repayment period. This way, I had planned out all of my fixed and variable expenses for every month and debt repayment amounts for each month, so I knew how much longer I would have the debt for and when I was planning to pay it off. It allowed me to see in one place where all my money was going and would be going.
Note to reader: If you decide to do this, break it down if your debt repayment journey will be longer than 6 months. This is a tedious task that can feel very soul-sucking with little reward. But, I assure you that you will thank yourself when you’re on budget and you just have to edit your budget monthly rather than create a new one.
I think that having a plan for your money (a budget), even though you will likely have to revise your budgets monthly, is key to success – because a plan is better than no plan. I used, and still use, Gail Vaz-Oxlad’s Excel budget spreadsheets. Check them out here. At the bottom of the site, you can download the Excel spreadsheet. Customize it and make it your own!
This is a long post, so you NEED TO pin this for later:
6. Use Christmas (or other holidays) and birthdays to get things you need or very important wants.
When people asked me what I wanted for a birthday gift or Christmas gift, I would ask for gift cards to the places I frequented most often or items I that used all the time (also known to me as very important wants).
- Gift cards: to Hudson’s Bay, a gas station, a grocery store, Cineplex Movie Theatre, Sephora (Sephora wasn’t open when I started by repayment journey, but it’s on my go-to list now).
- Kiehl’s facial and body products – I don’t believe in cheaping out on facial products or make up.
- Clothes: socks (everyone needs socks), pajamas, slippers, clothes for work. (For close family, I would send them a picture or the link to exactly what I wanted, so I would get exactly that. This way, I was happy and their money was not wasted on something I didn’t want).
Actionable Tip: Can you re-gift any of the gifts you received? I did. One time I got a gift card to the Bay for my birthday, but instead of spending it on myself (which I would have LOVED to do), I used it to buy my dad 2 t-shirts for Christmas.
7. Cancelled my gym membership and found a way to exercise for FREE or for much less than a gym membership.
TI cancelled my gym membership not only because of the cost but because I wasn’t using it as much as I should have been. When i got home from work, I found it SO HARD to leave my apartment and drive to the gym.
So, I decided to challenge myself to get outside more in the spring and summer months, whether that was biking, walking or running.
I would also often check Groupon for discount passes for rock climbing, yoga classes and drop-in dance classes, etc – anything active really. Groupon is a website with local deals on almost anything you can think of: restaurants (local restaurants), beauty (e.g. hair and nails), things to do in and around where you live (e.g. pottery classes, yoga classes), travel (e.g. cheap airport parking – I’ve gotten 5 days of airport parking for $18 and we went with another couple, so it only cost us $9), cheap concert tickets (e.g. I went to Mariah Carey for $30) and much more! I LOVE Groupon because the site is all about deals and discounts BUT THEN THEY HAVE EXTRA COUPON CODES daily that you can use to get an even lower deal.
Groupon helped me maintain my sanity during my 3.5 year debt repayment journey because it gave me deals on local things to do and cheap deals, so we could still travel and have fun.
I continue to use Groupon today!
Actionable Tip: For the winter months, I searched YouTube extensively to find the best workout videos. It took a lot of trial and error, and some days I felt I had wasted workouts, but here are my go-to, all-time favourite fitness experts that are guaranteed to make you sore the next day and have you sweating:
If you love working out at your gym and it has everything you want and need, don’t cancel your gym membership. Instead, find a way to cut out something else from your budget to pay for the gym membership.
8. Bought my haircuts off Groupon.
For the reasons I LOVE Groupon that I wrote above, I also bought my hair cuts off Groupon.
I did this because I was paying about half price for the haircut, got salon hairdressers and service (not always, but most times) and got to search for my “forever” salon, the one that would have my repeat business.
9. Sold clothing items at a consignment store for cash. Sold clothing and other items on Kijiji for cash.
When I was younger, I went through a phase where I believed that the higher the cost of the clothing item, the better the quality. Note to my younger self: That’s not true!
As I got older, this meant that I had a collection of gently used, name brand clothing that I was no longer wearing. I also had a couple of Lululemon items that were just not me anymore. So, when I heard an ad on the radio about a second hand clothing store paying cash for gently used, name brand clothing, I knew I had to go.
I ended up taking a box full of clothing and accessories (jewelry, purses and shoes) and was paid $150 in cash for the box. This was $150 more than I had when the clothes were hanging in the closet.
I also sold items separately on Kijiji that I knew I could sell for more money than the consignment store. From my experience, Lululemon and Michael Kors items have great resale value, so they sold fast (which is what I wanted) and I often had multiple purchasers, so I was guaranteed to get my asking price.
In my post, Frugal Living Tips to Start Right Now, I briefly talk about Kijiji and how I always start with the position that I MUST buy it used. This way, I buy it at a discount and pay NO TAX.
10. Stopped getting my nails done, unless it was a special occasion and even then I thought hard about it.
I thought that because I was a lawyer and I worked with my hands every day, that it was part of the job to have my nails done at a salon. I thought that having my hands look professional would show to the world that I was well “put together”. Maybe you’re like me and have had similar thoughts.
If you have, I’d agree that having your nails done gives you slightly more confidence, but I don’t think it’s worth the cost. At the cheapest end, it was costing me $45 every 3 weeks to get my nails done and 1 hour+ of my time. So, I stopped getting my nails done and started painting them myself.
- with a base coat and top coat, the nail polish would stay on and last for 5 business days (rather than other brands I’ve tried that peel off or get damaged after you’ve let them dry for an hour);
- fast drying compared to other brands;
- streak-free and I only needed one coat; and
- it’s reasonably priced – under $10/nail polish.
- Just one – the colour selection is not as vast as other brands.
11. Used reward programs for groceries and other purchases.
I tried some grocery apps that would pay me (cash back) money for buying certain items at the grocery store that I purchased.
The app I like the best and recommend is the FREE Checkout app. Since I downloaded the app on my phone, we’ve made $96.85 from the FREE Checkout app buying groceries and things for the house we ordinarily buy – even from Costco. This is FREE money that you get back on items that you purchase anyway from the grocery store. It’s not time consuming and it’s super easy to do, unlike some other apps I’ve tried.
Briefly, the way it works is every Thursday there is a list of items that if you purchase and upload your receipt to the app, you will get a set dollar amount back on your purchase. Sometimes, you can even earn $0.10 for watching an ad. Once you hit $20.00, Checkout will send you a cheque for that amount.
Generally, I don’t look at what the special items are for the week that will qualify for a rebate. Part of the reason is so that I don’t just buy the item because I know I will get a rebate but don’t actually need it.
12. Meal Planned and made some staple snacks weekly.
I meal plan every weekend for the upcoming week. I review the weekly grocery store flyer (now, with the FREE Flipp app and do an inventory of what I have in the fridge and pantry and come up with the lunch and dinner meals for the week. With the Flipp app, you can price match between different grocery stores and find coupons. Get the FREE Flipp app today!
I try to pick meals around items that are on sale or that I already have in the house. I also make muffins weekly and sometimes make granola bars from scratch.
13. Tried to reduce some utility costs and cut cable (if you still have it)
Be conscious about the utilities you use at your place. You can make easy changes, for example:
- Turn off lights that are not being used or open a blind where sunlight can give you sufficient light.
- Unplug radios and lamps that are not being used on a daily basis or when you go on extended vacations.
- Start by decrease the heat by 1 degree in your place and wear warmer clothes.
- Cut cable. Instead, share or use a Netflix password with a family member or friend. There can be up to 4 users to an account. (I have always used Mr. OYP’s.)
To decrease water use in the bathroom:
- Don’t flush the toilet: “if it’s yellow, let it mellow. If it’s brown, flush it down.” I implement this rule, but not for guests and not when we have guests over (obviously!). My dad hates that we do this.
- Don’t run the shower until you are ready to get in.
14. Read and learned from budgeting and finance resources (books and blogs).
To keep myself on track and moving towards my goal to be debt free, I challenged myself to find new ways of reducing my debt or ways to save money and implementing them into my life. I subscribed to 3 blogs around debt repayment, budgeting and frugal living.
Here are the 3 blogs I followed back then and continue to follow today:
Kalyn Brooke: (previously Creative Savings): simple solutions to manage everyday life. She’s had gift ideas that I’ve used throughout the years, organization and productivity tips as well as printables to simply my life.
For books, I am a huge fan of Gail Vaz-Oxlad because she had a huge influence on my debt repayment journey and “whips people into shape” (finance wise).
On your debt repayment journey, I highly recommend that you read her book Debt-Free Forever: Take Control Of Your Money And Your Life.
Gail’s book taught me to get serious about my debt (because it was no one else’s but mine). It motivated me to work hard on my debt, so I could have $1 to my name. it taught me how to make a budget that balanced (and that that was important). It also gave me tips about cutting my debt I didn’t even know were an option e.g. calling the bank, bank and credit card companies to see if I could get a lower interest rate. This book gave me a plan and helped me pay off almost $100,000 of debt in 3.5 years.
15. Got some personal finance and investing apps.
Our favourite app to track your personal finances:
The personal finance app that I recommend and love is the FREE Mint app.
It allows you to create budgets and monitor your purchases and bank accounts all in one place. Even if you have different bank accounts and students loans or RRSPs with another institution, you can link them all and view them in one place on the app.
For my American users, I’ve heard that the Personal Capital app is great at tracking your finances and your net worth. I haven’t personally tried it.
Our favourite app to micro-invest
Mr. OYP uses the Mylo app. It is a micro-investing app that you can download for FREE and in 3 easy steps, you’ll be investing your spare change.
The app links to your bank accounts / credit cards and rounds up each purchase you make to the nearest dollar and invests the difference. It’s a great way to get introduced to investing on a small scale.
One caveat, however, is that they charge a $1.00 monthly fee for their service. So, for the first little while, you’ll be paying them more than you’ll make in interest per month, but that should balance out the more you save. With this app, Mr. OYP saves (and in turn invests) about $500 a year without even thinking about it.
16. Would your landlord hold your rent in abeyance for a period of time so you can make larger payments on your high interest debt?
A totally out of the box idea is to consider whether your landlord would hold your rent in abeyance for a limited time period so you could make larger payments on your high interest debt.
I did this for 8 months. When I moved out of my bachelor suite, my new landlord (a family member) was agreeable to me not paying rent for 8 months. This was so I could make larger payments on my higher interest debt.
The deal was that I would make lump sum payments of ALL rent in months 9 and 10 to pay for the months that I was given the “temporary free ride”.
17. Rented books, DVDs, magazines, etc. from the local library.
Depending on where you live, libraries can have a wide selection of books, DVDs, magazines and CDs (even). Library memberships are generally free, and I find they have many new release books, DVDs and current magazines.
Despite me starting out going to the library because it was free, I continue to go to the library today. I truly enjoy the library experience and find it somewhat therapeutic. Weird, maybe, but we all have our things!
18. Used less, where I could.
Be intentional in how much you use of something.
For example, do you need to use that much shampoo? Do you actually need to use tin foil or could the fries bake straight on the pan?
In my post, Frugal Living Tips to Start Right Now, I have a longer list of what you can use less of – see #10 on the list. That post also has 20 ways you can start saving money TODAY!
Actionable tip: Ask yourself, could I use less?
19. Limit your caffeine purchases.
I allowed myself to buy tea out once a week, and the rest of the time I had to make it while I was at home or at work.
This one was really hard for me because I had to fight the voices in my head saying “you’ve earned it after working so hard” or “you’re going to need it to get through this afternoon”. There were days when I did listen to the voice in my head, but instead of buying a tea or coffee daily, I was buying it much less often and when I did buy one. It was a treat rather than a daily expectation.
Actionable tip: Consider drinking the free tea or coffee supplied at your office (if available). Buy a package of tea from the store that you like, it will cost less on average to make your own at work than buying one.
How I've saved over $200,000 since paying off my debt:
I’ve managed to save over $200,000 since paying off my debt in 2016. I’m currently working on building up my emergency fund, so it has 6 months worth of living expenses. If you don’t have an emergency fund, I strongly suggest you start one today!
I earn a high income, so obviously that’s a big factor. But, many of the ways that I paid off my debt, have become habits that I continue to do today. For example, I continue to:
- live below my means. In other words, I spend less than I earn.
- only buy new clothes when they are on sale (usually at the end of a season or on Boxing Day).
- create and maintain a monthly budget.
- use Christmas and my birthday to ask for gift cards to places I frequent often.
- not have a gym membership. I buy classes at a discount on Groupon.
- buy my haircuts on Groupon.
- paint my own nails with my favourite Orly nail polish.
- Use the FREE Checkout app to get cash back on my grocery purchases, including Costco deals.
- Meal plan and bake muffins weekly.
- not have cable and try to use less utilities in the house.
- read about and listen to podcasts on personal finance. Right now, I’m reading Simple Path to Wealth by JL Collins. If you want to see my list of my favourite podcasts, check out this post.
- use the FREE Mint app to track my expenses and net worth.
- rent books, magazines and DVDs from the local library.
- use less of everything.
- Live below your means.
- Watch a debt show once a week.
- Go on a no clothes buying challenge.
- Do you have any gold or silver (maybe a ring or necklace from an ex)? Sell it for cash.
- Create monthly budgets for your debt repayment period.
- Use Christmas (or other holiday) and your birthday to get things you need or very important wants.
- Cancel your gym membership and find a way to get exercise for free or for much less than a gym membership. Check out Groupon for deals of physical activity classes and workouts in your area.
- Buy your haircuts off Groupon.
- Sell clothing items at a consignment store. Sell clothing and other items on Kijiji for cash.
- Stop getting your nails done, unless it’s a special occasion and, even then, think hard. Paint your own nails with my favourite nail polish brand: Orly where each nail polish costs under $10.
- Use reward programs for groceries and other purchases. Download the Use the FREE Checkout app to get cash back on your grocery purchasestoday.
- Meal Plan and make some staple snacks weekly.
- Try to reduce some utility costs and cut cable (if you still have it).
- Read and learn from budgeting and finance resources (books and blogs). The personal finance book that helped me plan and pay off almost $100,000 in 3.5 years was Debt-Free Forever: Take Control Of Your Money And Your Life.
- Get yourself some personal finance / investing apps. If you’re looking for an easy way to “trick” yourself into investing, get the FREE Mylo app here.
- Would your landlord hold your rent in abeyance for a time period so you could make larger payments on your high interest debt?
- Rent books, DVDs, magazines, etc. from your local library.
- Use less, if you can.
- Limit your caffeine purchases.
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