November was a little slow compared to recent months, and I’ve been mentally preparing myself for that. After a major win in October when I paid off $4,800, it was tough to be back to normal – or slightly lower than normal. It’s all part […]
I’m a fan of experiments, particularly ones that test boundaries and challenge complacency. In the past I’ve hit step targets and weight loss milestones (decent), skipped eating meals out for 100 days (manageable), and waited to purchase a new cell phone for a week after […]
Facing a desperate situation – a six figure student loan debt with no six figure income – I did what many graduates do at first.. I ignored it. I decreased my spending enough to make slightly more than the minimum payments. In some months I relied on the credit card float and then paid it off in others with tax returns or bonuses. I never felt like I had enough money to get through the month. I tried to budget and almost always failed to stay on track. I felt like I was waiting for this ten year sentence to end so that I could finally just start from zero again.
I want my life back. Please tell me … how much is enough? How big does this pile have to be?
I spent the first year of my debt repayment journey tracking my spending and pretending to budget. I made $15,000 in payments to my debt that year, and at the time I felt proud of that accomplishment. I’d paid about $800 more than the minimum payments, which seemed like great progress.
At the end of the year, I had to calculate the interest I’d paid on my student loans for a deduction on my tax return. Out of $15,000 in payments, the interest totaled almost $5,000. FIVE THOUSAND DOLLARS. Just in interest. To this day, I have a vivid mental image of throwing stacks of bills on the ground and setting them on fire.
It all hit me then, harder than ever before – I was staring down another ten years of payments, and another $20,000 in interest. I was making an average salary for my city, but I was struggling somehow.
At the beginning of my second year of payments, I knew I had to make some major changes. I was ready, but I wasn’t prepared.
I’m a relatively privileged person – I’m white, educated, and I was always encouraged to be productive. When it came to money, I started out well behind the curve. Money was never something positive during my childhood – it was something you needed, something you fought about, and something that you earned somehow but that disappeared somehow. Our house was always ringing with the noise of money fights – I’d lock myself in my room with headphones in for hours to find some quiet. My parents always made sure we had enough, and I’m grateful for the way they provided for me and pushed me to succeed. I was just missing the money framework that seemed to come so naturally to others.
I knew generally that frugality was beneficial, that you should live within your means, that you shouldn’t take on debt, that you should save for retirement. I knew the theory, but I didn’t have the practical skills. I didn’t know how to budget properly, or what you should do if your numbers weren’t working out. I didn’t know how much more prepared food cost, or how to cook inexpensive meals at home. I saw how others were spending their money, and I emulated it. I thought I just needed a higher income.
The moral of the story is: I chose a half measure, when I should have gone all the way. I’ll never make that mistake again.
There was one thing I did know – my plan wasn’t working. I needed to find other plans. When I searched for resources, there was one name I kept running into over and over: Dave Ramsey. At first I was skeptical, particularly about taking advice from a person who was so opposed to some of my major values, but I decided to be an adult and listen to the plan – even if I didn’t fully agree with the personality behind it. I started listening to his podcast on my commute, and I listened for the full three hours every single day. I haven’t missed one episode in an entire year.
Every month another lightbulb went on as I listened to all of the debt free screams and the millionaire calls. I started doing the math on how much my debt was costing me every month. I compared prices on groceries. I used habit trackers to mark days where I spent $0. I did challenges and experiments. I went 100 days without any meals out. I stopped buying clothing for a year.
Every month I felt a little more confident. I went from making $40 in extra payments every month to $280, to $700, and now to $1,200+. This wasn’t a switch I turned on that suddenly gave me the skills and habits I needed. This was a constant daily struggle to overcome more than a decade of ignorance.
Dave Ramsey gets a lot of love, and a lot of hate. I’ll just say this – if you’re privileged or lucky or educated enough not to need his help or understand why others do.. just be grateful for that and shut the fuck up, okay?
It is not easy to budget and follow through on that budget if you’ve never been shown how to do it correctly.
It is not easy to meal plan and buy groceries with a list if you’ve never been shown how to do it correctly.
It is not easy to defer your desires and save for things instead of paying with credit if you’ve never been shown how to do it correctly.
For some reason we treat managing money like an innate human ability and if someone isn’t successful at it right away it must be because they’re lacking in intelligence or willpower or strength of character. We should be treating managing money as a necessary skill that some of us were just fortunate to have mastered early on.
If someone’s trying to learn how to swim, you don’t just show them a chart and tell them how obviously easy it is. You wade in. You instruct them to float. You teach them how to tread water. You demonstrate different techniques. You get in the water with them and show them how to splash around for fun. If they’re drowning, you don’t shout physics equations or insults or misplaced words of encouragement from the deep end like a total sociopath. You jump in the water and help them, or you stand quietly to the side while the lifeguard helps them.
You clearly don’t know who you’re talking to, so let me clue you in. I am not in danger. I am the danger. A guy opens his door and gets shot, and you think that of me? No! I am the one who knocks!
Coming up on two years of this journey, I’m not the same person I was before. I’m not at the mercy of a bank. I don’t nervously log in to my accounts after avoiding them for weeks. I’m not afraid to check the mail. I don’t panic at the thought of an emergency. I’m the one who knocks now. I say when I’ll be paying this debt off. I say how much I’ll be earning. I say how much I’ll be paying in interest.
I didn’t start with this confidence – it grew as I learned how to manage money, month by month. I’ve cut my spending by thousands of dollars per year. I’ve received raises and bonuses, and directed most of that to my debt too. I started a side hustle to shorten my timeline even more. Instead of $15,000 in payments, I’ve doubled that to more than $30,0000 this year.
I plan to pay off my debt in 2019 instead of 2026. That’s more than SIX YEARS of my life that I’ll get back because I started to pay off this debt faster. If you saw my spending from last year to this year, you would swear they belonged to two entirely different people.
The best part? It wasn’t a sacrifice.
I did it for me. I liked it. I was good at it. And I was really — I was alive.
It’s amazing how much we can adapt. When I started to make changes, the first few days and weeks were tough. I wanted to quit. I relapsed occasionally. I made mistakes. I overspent. I caved. I stumbled.
It was all worth it.
The truth is that I feel happier and more content now than I ever have in my life.
Now say my name.
My emotions surrounding my career are all over the place. Sometimes, I’m proud of my accomplishments and excited for the future. Sometimes, I want to curl up in a ball under my desk and sob until I pass out. Sometimes, I swing between these two […]
I’ve been looking forward to October for a few months, because some major funds were coming my way. I got a raise last year which was finally added to my salary so I had about a year of retroactive pay on my paycheque. Even after […]
Starting on the path to financial independence (FI) was hard. I had to come face to face with the consequences of my past decisions, including six figures of student loan debt. At the beginning, it was all overwhelming. When I first read about FI, I panic closed the browser and dismissed it as something that only debt free or wealthy or obsessively frugal people could achieve. I was stuck in the ‘must be nice’ mindset and I couldn’t open my mind enough to set aside my excuses.
Despite my best efforts to ignore it, the seed had been planted and it grew in the back of my mind over several months. When I revisited the concept of financial independence, I was still overwhelmed but ready to sit down and make sense of it all. I listened to hours of podcasts, read blogs from start to finish, and tested every early retirement calculator I could find.
After a few days, I started to understand the concept. After a few weeks, I started to understand the process. After a few months, I started to understand the math. By the end of 2016, I estimated that I would be debt free in 2023 and financially independent in 2047 (age 59). I had already cut 6 years off of my working life just from making minor changes, when I barely understood what I was doing.
In August 2017, I added a Find Freedom page to this blog, where I wrote an introductory note about finding financial independence and my progress so far.
I stumbled across the Financial Independence / Retire Early (FIRE) world in 2016, entirely by accident.
I had been making minimum payments on $130,400 of student loan debt and gaining no traction.
Searching for articles about debt repayment and spending reduction, I discovered the infamous pair of Mr. Money Mustache articles The Shockingly Simple Math Behind Early Retirement and News Flash: Your Debt Is An Emergency!!. Wakeup call is an understatement..
A year later, my spending is down, my principal payments are up, and my debt free date has shortened from 2026 to 2020.
As a complete – but welcome! – side effect, I’ve also projected that I can slash my working career in HALF from 40 years to 18 and quit my 9-5 by 2035 at age 47..
I’m still learning, and I fully expect my plans to change over the next two decades, but even if I fall short of this goal.. I’m still doing better than most of the population! Let’s figure this all out together!
Just three short months after this note, I’ve projected that I can be debt free by 2019 instead of 2020 and financially independent by 2031 (age 43) instead of 2035 (age 47). At this point I’ve cut my retirement age from 65 to 43 – that’s 22 more YEARS of financial freedom, just by being slightly more intentional with my money.
I fully expect my timeline to change over the years, and so should you. I feel fortunate that I wasted less than 6 months by keeping my blinders on. My one takeaway from my financial independence journey so far is that the worst thing you can do is let intimidation paralyze you. Even buying yourself one year of freedom is an amazing feat! You don’t have to retire with a million dollars by age 30 to benefit from financial independence. You’re also probably not going to reach FI at exactly the time you currently estimate – you may increase your income over time, or decrease your expenses, or earn more in investments. You may decide to leave your job earlier than full financial independence and lower your spending for a few years to bridge the gap.
For now, you don’t have to understand the concept or the process or the math. JUST START. Do one thing to improve your financial situation. Aim to spend slightly less this week than usual. Cancel one monthly subscription. Increase your retirement contributions by 1%. Trade one meal out per month to a meal you make at home. You don’t need to understand the big picture, and you don’t need to make drastic changes to reap the benefits. Sometimes you have to see this process start to work in your own life before you can crank up the intensity. You never know where it will take you, but for now just start.
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Did September even happen this year? I think I missed it.
The only thing I remember about last month is that the Bank of Canada raised interest rates again. It’s always stressful when the amount of interest on your debt increases. It feels like you’re climbing up a hill of sand and suddenly you slide back as it shifts under your feet.
I’m fortunate to have room in my budget to cover the increasing debt servicing costs, but I know there are so many Canadians out there who are stretched thin and bridging the gap with more credit. Let’s treat these interest rate hikes as extra motivation to collectively crush our debt, shall we?
Including interest, I’ve paid $2,444.42 to my debt this month.
I’m under six figures! I’ve been processing my emotions around that milestone for the past few weeks, and I’m still not sure how I feel about it. In a way, reaching that goal felt like the end of something. Really, it’s just the 24% mark. I can feel the momentum taking over as I pay off larger amounts, but I’m impatient for a finish line that’s still far off in the distance.
What’s up in October?
With a raise and retroactive pay, October will be my best month yet. Also, Super Mario Odyssey!