"Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver."
Recently I posted an article from Daily Worth where I was featured as one of the examples of someone who’s paid off most of their student loans.
A lot of the comments were from people who wanted more than the advice given in the article. I hate to disappoint them, but there is no magic secret to paying off your loans. There is no sexy answer to getting rid of them quickly. You get a job (or two), live in a cheap apartment, find a roommate, and stick to a strict budget.
You’re going to be disappointed if you were expecting advice other than “spend less than you make and put extra toward your loans.”
It’s not easy, but it is that simple.
For 37 million Americans, student loan debt is a financial albatross around their necks, and it continues to grow. Meet five people who made paying off their student loans a priority, and were able to be debt-free in record time.
I know I talk about how I’ve been able to pay so much toward my loans, but if you want to read about some other people’s experiences, this is a great link (and yes, I’m mentioned as well). There’s a guy who paid off $25,000 worth of loans in NINE MONTHS. Boy, I thought I was doing well.
If you want to pay off your loans, you can. You can get a roommate, a second job, a better budget - it’s possible. If you want to live by yourself in a downtown apartment and pay the minimum every month too. These stories are great examples of what people can do when they really put their mind to something.
The other day I had coffee with The Queen of Free, another personal finance blogger. We talked about blogging, wedding registries and how not to give your friends financial advice when they’re not asking for it.
I told her about how I was struggling to balance paying off my loans and paying for everything else. How I felt guilty about going out or leaving my lunch at home. She reminded me that what I’m doing is a sacrifice.
"For everything you say yes to, you say no to something else," she told me. "And when you say yes to something hard, you say no to several things."
Even though I know I’m giving up a lot of things by paying off my loans so quickly, I had never really thought about the opportunity cost of it. Every month, when I pay $950 toward my loans, I’m giving up $950 that could go to something else. Well, only about $652 since if I didn’t pay my $298 minimum, then I would be giving up my life to the Department of Education and its federal penitentiary.
$652. That’s a huge chunk of money. That could pay for a new car, a better apartment, another dog, more clothes, all the nail polish money can buy.
But I don’t. And that’s my choice. So for the next few months I’ll try to remember that every hard decision I make - whether or not to get lunch with my coworkers, whether I can afford a movie tickets - is a choice. And that’s a sacrifice I’m willing to make.
If your goal is to go through the holiday season without going over budget and getting even deeper into debt, read these tips to help you start planning now.
I know it’s hot and humid, but Christmas is not that far away. If you’re one of those people who always stresses about holiday shopping (and spending), then read this article. It’s always worth budgeting your Christmas expenses months before. The last thing you want to do is to be a Scrooge all because you didn’t think ahead.
I’m always writing about the importance of spending money on experiences versus stuff, so here’s another lecture.
A month ago, my parents and I went to a Queen (plus Adam Lambert) concert in Chicago. My dad has been a Queen fan ever since I can remember, and since the band doesn’t tour actively, he’s had few chances to see them in concert.
So when they announced they were reuniting for a tour, my parents decided to get tickets. I was so happy that my dad could finally fulfill his dream of seeing one of his favorite bands perform.
A few years ago Queen went on tour with Paul Rogers, another classic rock singer. They weren’t performing anywhere near us, so the only option was to fly to a show. My parents decided that the trip would be too expensive, so we didn’t go.
That’s why I was so happy when they announced another tour. “My dad has one more chance to see his favorite band,” I thought. And I was reminded of the time that I gave up a concert because I couldn’t afford it.
My freshman year of college, a friend asked if I wanted to join her and a couple other girls on a road trip to see the Spice Girls in concert. The ticket would cost $100 plus gas. I passed it up; it seemed like too much money to spend on one night.
I still regret skipping it. I could’ve found a way to pay for the concert. I probably had enough money in my bank account. If I had skipped going out a few nights, I would have had enough . But I didn’t.
It’s ok to splurge sometimes, especially if you’re like me and spent last Saturday night watching a copy of “ER” that you got from the library. But sometimes, when you’re so used to saving and scrimping, it’s hard to give yourself permission to do so.
I harp on money for a reason: there are only so many chances we get in life and you have to be prepared to spend money so you don’t miss out on the things that matter. I’m so glad my parents were in the position to travel to the Queen concert, and I hope that the next time the Spice Girls tour, I’ll be able to do that as well.
Two incredible things happened when I started tracking transactions. While I thought I would end up spending the exact same amount of money (or more) by simply reducing transactions, I actually spent considerably less. I figured that I would simply “stock-up” on things, thus increasing the cost of each transaction, but the “stock-up” costs were minimal. - See more at: http://blog.petetheplanner.com/track-your-transactions-not-your-money#sthash.6EMdJV5n.dpuf
Every time I make more than a couple stops at the grocery store in a week, I think about Pete’s advice. Any time you go into a place to spend money, your test your self-control. Let me tell you, it’s a lot easier to convince yourself not to buy Nutella and Oreos once than it is to do it three times a week.
I’d love to be one of those people who can go to the grocery 1-2 times a week and be done. That’s why for the most part I like Target - I can get dog treats, groceries and body lotion there. And if I make it past the makeup/nail polish aisles, then I’m home free.
Take Pete’s advice - try reducing your transactions instead of the amounts. It’s a lot easier to recount how many times you went to the store instead of how much you spent there.
Every year, I try to keep a Google Doc where I put down things I want. Birthday presents, Christmas presents, “treat yo self” presents, etc. My current list includes “Frozen” AND “Enchanted” on DVD (so I can really make people think that I’m 16), “A World of Ice and Fire” (when it comes out), and a red cardigan.
I keep a list of stuff I want not because I’ll forget, but so I can reevaluate when the time comes. Sometimes I’ll convince myself that I need all seasons of “The Golden Girls,” but then I remember that I haven’t even watched the ones I own. The list takes emotions out - instead of forcing yourself to come up with stuff you like when your parents ask what to get you for your birthday, you can work on a list throughout the year and have a better idea of what you’ll really want.
Christmas is more than 4 months away, but start keeping a list of stuff you want now. That way when you start thinking about what Santa should get you, your list will be just right.
* I also try to keep a list of what to get other people - which cuts down any panic that may ensue when it’s December 23 and I still need gifts for everyone.
I’m not sure who created this infographic, but whoever you are, thank you. Every time someone asks me, “What should I do with my money?” I give them the same spiel - $1,000 emergency fund, pay off debt, contribute 10% (or more) to retirement account), 3-6 month emergency fund, etc.
So if you’re having questions on what you should do after you pay off your debt, or if you should start an IRA before contributing to your company’s 401k, check out this graph.
Lately I’ve been a little stressed about money. My dog had her physical, a dental exam and an allergic result to antibiotics all in the last month. If you’ve ever paid a vet bill, you know that it’s more than a $25 copay you’d spend at your own doctor’s.
I’ve also been giving myself an incredibly small entertainment budget - $15 a month. I know very well that I can’t follow that, but that’s what it has to be for the numbers to add up every month and so I can pay my loans off in November.
When people ask how I’ve been able to save so much, I usually tell them I have low living expenses (which is true). But I leave out the part where I spend money I don’t have and figure out later how to earn it.
Today I dropped about $25 for a bimonthly club meeting. I don’t regret the money I spent - just that I spent the dinner eating an appetizer because I didn’t want to spend more than $35 on dinner itself.
When I came home I put on Netflix and rewatched "The Queen of Versailles," a documentary about David Siegel, who owned the largest timeshare company in America and how he lost it all.
Sometimes I think that once I make a certain amount, I won’t need for anything. I’ll be able to afford my gym membership, dinners with friends, travel abroad and all the vet bills my dog could have.
But watching this movie I realized that my problem is not my income or my expenses - it’s my attitude. I always want more. That won’t be fixed by making more money or taking more trips or having a less rigid budget.
So how do I learn to be happy with what I have? Well, creating a budget that I can actually follow would probably be a good start. And maybe finding neat things to do for free, where I can still explore but not worry about how much I’m spending. I could work on my crafts, practice riding my bike and play with my dog.
The thing is - I like a simple life. I love running errands with my friend Jess, watching “Dr. Who” for the first time and checking out books from the library. I think I just don’t allow any breathing room in my budget, which makes me so stressed that I can’t even enjoy the things that I am choosing to spend money on.
This post has all been one big rant and vent session, but I genuinely believe that the more people talk about money, the more open we’ll feel in saying, “Hey can we do something at home tonight? I’m on a budget” or, “Do you have any tips on saving money on groceries?”
I want all of us to have an open conversation about money, and I want to start.