How I Paid off $12,000 of Debt in 6 Months While Enjoying Guilt-Free Spending

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On a chilly December morning in 2016, on the cusp of turning 29-years-old, I woke up with a panicked realization that I was about to become a full-on adult and I knew absolutely nothing about money. 

I had a Bachelor of Arts in Professional Writing, and a Master of Science in College Student Affairs, and despite being fairly well educated, my financial education was pitiful. My parents never talked about money, they never shared how much they made or how they budgeted, and the subject seems taboo around most friends so I was very much in the dark. 

To cope with this lack of information, I had developed a fool-proof plan for my financially ignorant self. I called it, “Spend as little as possible so I don’t run out of money to buy food and die of starvation”. Though physiologically safe, this plan did not provide a lot in the way of an enjoyable lifestyle.


How I Got into Debt

Finishing grad school in July of 2014, I owed my bank and the government a combined total of $45,000. I was unemployed for about 5 months because I desperately wanted to stay in the U.S. but, as a Canadian, that meant I needed to find a university that was willing to hire an entry-level administrator on a work visa that they were saving for distinguished international research professors. My determination to prove I was worth the investment had me basically living in my University Career Center (which eventually sparked my interest in starting my resume writing business, so in hindsight, I can’t complain about that).  


A Brief Look at My Dark Days

Because I was unable to find a job in the U.S. but I was too stubborn to move back to Canada, times got tough. My girlfriend of the time was paying for most of our expenses and my dad had to wire me money a couple times, though he refused to call it a loan because he didn’t want to burden either of us with any pressure for me to pay him back (really sweet, but also an example of how money wasn’t a subject we wanted to hover on for too long). 

Without a clear sense of direction or any kind of financial stability, I essentially melted into a shell of my former self. I lacked my normal confidence and I lost my drive to do much of anything aside from play NBA 2K14. It was a whole ordeal and I plan to blog about that in more detail in the near future, but for now, let me just tell you, it sucked.


Okay, Happy Time Again!

In November 2014, I made the big decision to move back to Canada. Luckily for me, I had worked so hard on developing my resume writing and interviewing skills in my attempt to earn a U.S. work visa that I was immediately hired to the first job I applied to back home!

The job was at my undergraduate institution, York University, planning the new student transition programs and the salary started in the low $60K range with an annual step progression. 

The First Plan is Not Always the Best Plan

I spent the next two years paying off debt using a new financial plan I called “Spend as little as possible so I can give all my money to the bank and the government so they don’t yell at me for owing them money” plan. 

The plan worked. I was paying off about $850 per month and then whenever I had a substantial chunk of cash in my account, I’d ship it off to either the bank or the government to lower the principal on the loans. 

By December of 2016, in just 2 years of working, I had paid off $33,000, which is about $1,300 per month. I remember feeling proud that I was able to do that with only my fear-based system to drive me. 

Beware of the “Fear-Based Savings Plan”

The problem with the fear-based system is that it causes a lot of discomfort. I hadn’t been on a vacation in years. I only owned three pairs of pants. I rarely went out for dinner or even lived the luxury of buying myself blueberries. It also caused a lot of arguments with my girlfriend, which you know if you’ve experienced any money-centric agruements, is the worst. 

So, on that frosty December morning, I woke up and made a decision. I was going to learn about money and take control of my money. Here’s how I did it!

The Second Plan… The Much Better Plan

Within that month I read about 8 personal finance books and one, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, by Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D. stressed the importance of creating a personal budget to guide your spending. 

Now, I’ll admit, I’m a bit of an Excel nerd, so it didn’t take much convincing for me to build a spreadsheet to track all my monthly expenses versus my income. By doing this, I was able to not only track and adjust my spending, but I was also, for the first time in my life, able to identify money I could spend on myself, guilt-free!

I built the budget by making a row for every recurring monthly expense: food, rent, phone bill, metropass, toiletries, gym membership, haircuts, etc. Then I added categories for things I’d have to save up for monthly that I wouldn’t be buying every month like clothes (pants) and gifts (oh yeah, I was also a terrible gift giver during this era. Just ask my mom and her bag of Starbucks coffee beans).

Then, after looking at all the money I was obligated to spend each month to keep my life moving, I could see how much was left over to put into student loans. By budgeting, I was able to see that I could comfortably up my loan repayment from $1,300 per month to $1,600.



The Best Part: Guilt-Free Spending and Logical Discussions about Money

After calculating all the monthly expenses, and upping my loan repayment rate, I still had a few hundred dollars left over. So I then created a “Dating” budget line, and an “Entertainment” budget line and even a… “Vacation Fund” budget line where I started putting money aside for my first trip in years! 

Adding these pieces to my personal budget meant so much to me. It significantly reduced my financial anxiety while allowing me to spend money on myself and my loved ones without stress for the first time in my life. 

As things got more serious with my girlfriend, Ariana, it got easier to talk about spending together. Instead of saying “those cherries are too expensive”, I was able to say, “I only have $45 in the grocery budget for this weekend so if we want those cherries, we can’t have the watermelon”. I find it so much easier to talk about money with literal numbers than in the abstract. 


Paying Off the Loan

Paying off $1,600 a month from January to May allowed me to whittle down the final $12,000 pretty quickly and then in June of 2017, I submitted one final lump sum of nearly $4,000. I was done! Debt-free for the first time in 8 years with a fully paid-for education. 

It felt great!



Staying Debt-Free

I continued to use the budget for months after I paid off my loans in order to start saving for my investment portfolio and keep tabs on my spending. After a while, when I got a good handle on my expenses, I stopped keeping track and set up automation with my bank so portions of my paycheck each month would go into investment and savings accounts for things like retirement saving, personal development, and food. And I still know roughly how much I can spend each month on myself, just for fun :)

If you’re interested in budgeting your personal life, sign up for my mailing list and I’ll send you my personal budget template for free along with other similar stories and tips, and tidbits!