In this series, NerdWallet interviews people who have triumphed over debt. Answers have been edited for length and clarity.
When Sarah McGowan was 23, she already had a master’s degree and was working in her first job as a speech-language pathologist. She also lived with four roommates, drove an old car, took advantage of any babysitting opportunities she could find in her schedule, and borrowed dresses if she needed to attend a wedding or another. formal event.
She says she didn’t feel deprived. His secret weapon? Acknowledgement. She remembered that she had everything she needed, including the energy and income to immediately get rid of her college debt.
His goal: to no longer get into debt at the age of 25. She had obtained her undergraduate degree in three years to save money and had completed her graduate studies with student debt totaling $ 36,262. It made her uncomfortable. “I don’t feel like I deserve it until I pay it off,” she explains.
Sarah was well acquainted with frugality. She was raised near Chicago by a millwright father and mother who stayed home with the kids until Sarah was in fifth grade, then became a real estate agent. Sarah was the first in her family to go to college. Student loans were essential and she was grateful for it, but she didn’t want to keep them longer than necessary.
After graduating with her master’s degree in May 2016, Sarah landed a job in her field and worked 24 hours a week, earning $ 28.23 per hour. She worked extra shifts at a satellite hospital and nursing home – those paid close to $ 40 an hour – and continued to babysit at $ 15 an hour. She said she generally tried to work at least 16 hours a week at her side jobs. Her total income was around $ 65,000, she recalls. The following year, when she finished paying off her loans, she said she made about $ 72,000.
While her income was high, she kept her expenses low. She was used to having multiple roommates, working almost all the time, and driving an old car, so she wasn’t giving up on something, just waiting to have it.
She recently logged into NerdWallet to share her story, which may inspire your own journey to pay off the debt.
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What was your debt when you started?
Just over $ 36,000 in student loans, for undergraduate and graduate studies. I graduated with around $ 200 in my name.
What triggered your decision to give up your debt?
I wanted to get out of debt almost as soon as I got into debt. I knew that being in debt limited choices and that it was temporary. I also thought that I would like to stay home with kids someday and could save more once the debt was gone.
What steps have you taken?
I was careful not to get used to having money, and just pretended I didn’t have any money. I just kept paying whatever I could for the loans. I didn’t have a formal budget, but saved about $ 1,000 per month and then used the “extra” money to pay more on the loans.
My first student loan payment was not due until November (after a graduation in May). But I started my job in July, so I started repaying the loan in August, when I had a salary.
[Sarah checked her debt balance about once a month, watching the incremental drops until she owed about $10,000. Because she had also been putting money in savings, she realized she could make a final lump payment and be done, while still having just under $10,000 in savings.]
How did you avoid feeling helpless?
I really tried to keep a grateful state of mind and focus on what I had instead of what I didn’t have. I wanted to get rid of the debt.
I told my boyfriend about my goals and asked him, “Can you agree with that? If anything, talking about it was a relief. He also had student loan debt to repay. We had a lot of dates that involved canoeing and picnics, or hiking and hot chocolate.
I went on vacation anyway. I love to travel, but I did it as cheaply as possible. I had saved some money for babysitting and went to Spain and Italy. I also used a $ 500 voucher when I was intentionally banned from a flight to help pay for my ticket.
How is it different to be debt free?
I feel much freer. Now I can say no to a babysitting job if I want to. When I was in debt, I said yes to everything.
I feel more generous, because I have more.
I bought a Subaru. I saved a down payment first and got a loan, but it’s 0% interest and the payments are affordable. I also bought a violin and plan to start taking lessons.
How to deal with your own debt
If Sarah’s story inspired you to take a look at your own student debt, she has a few tips:
If you’re paying off student loans, use direct debit – it saves a bit of interest.
Start paying off your loans as soon as you have income. Don’t get used to having this money in your checking account.
Continue to live as if you haven’t graduated yet. Even a year can help make serious progress. “Now I could never have four roommates,” Sarah says. But continuing to live with roommates allowed her to give up her debts much sooner.
It is better to have a written budget. It doesn’t have to be elaborate, but you want to track your spending and make sure your money is going where you want it.
If your company offers a 401 (k) match, contribute enough to benefit. It’s free money.
As you pay off your debts, also put money in an emergency fund. Even $ 400 can be enough to prevent an unexpected expense from adding to your debt load.
Photo courtesy of Sarah McGowan