I know I do. So when my mother sent me this article via Yahoo news (a.k.a. the Wild West for this Googlite…) on how an American couple paid off almost $118,000 in student loan debt within four years, it actually made me sit up and think about how their strategy could work for me.
In the article by Kimberly Palmer, she talks about Amy Kroezen, a trained interior designer, who in 2008 was finding door after door getting shut in her face when she graduated and started looking for work in her field, even having one design firm advise her to wait tables until the economy improved.
Then when her student loan payments came due, coupled with her husband – a dance instructor’s – loans, as well as their $2000 car payment, the two of them made a committed decision to use one half of their combined income to pay off their debts within four years, and live entirely off one person’s income. And it worked.
At the time, the article says, they were both earning between $32,000-$35,000 a year, so in order to minimize costs, they implemented a number of cost-saving strategies.
They downsized by moving into a cheaper apartment which, fortunately for them, was also minutes from both their jobs, which meant saving on gas money. Then they implemented an “envelope system”, turning each paycheque into cash and physically divvying up the money between the rent and various bills and expenses.
A third thing was becoming super frugal, cutting out things like eating at restaurants and buying coffee at coffeeshops, and making their own instead, to eliminating spending on clothes, and growing some of their own food, as well as learning to build furniture, rather than buying it!
As the article notes, “She (Amy) even built her own furniture when her family moved into a new house, and asked family members for power tools as gifts for Christmas. She’s since built a king-size bed, dining table and toy box.”
Now, I don’t know how handy I am with a power drill, but I can definitely see how certain things I spend money on make it damn near impossible for me to see an end in sight to debt repayment.
Personally, I like the idea of the envelope system, so I am definitely going to look at implementing that for myself.
I also plan to make an honest-to-goodness student budget (*gasp!*) and actually follow it (*double gasp!*). I came across something I’d bookmarked aeons ago – i.e. last year, hehe – about how to budget for an irregular income. I will be revisiting that because while the income may be irregular, the bills sure are not. Ah, the life of a freelancer.
I also need to start saving again. I have saved before, don’t get me wrong, but something always comes up unexpectedly which drains it all over again. Fair enough – emergencies are what savings are there for, after all. But this time, I’m going to look at doing it more regularly, and in greater amounts, so that the next emergency doesn’t wipe it out completely.
But what I also plan to do this year, once I have a somewhat regularized income again, is something like what the Kroezens, above, did. I’ll divide my income in half and use one half to start making a dent in my debts, and live off the other half.
I plan to use my weekends to make lunches and snacks for the week, so that I’m not tempted to spend on food while I’m at school. Doing it this way, packing meals in advance, also means not worrying about it during the week. If I don’t have time to make a meal any given day, I don’t have to relapse if I’ve already got a packed lunch waiting in the fridge every day!
I’m fortunate to have an amazing support system in my family, for which I am ever grateful (and Amy Kroezen does note the importance of this, as well) but I am determined to do all in my power, too, to make this year count financially like never before.
And I know I’m not the only one.
What do you plan to do to get a handle on your finances this year? Let me know in the comments. I’d love to get some more tips, and I’m sure other readers will too!
Till next time, have a great weekend!