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The story of my student loan debt

Recently, a few people have asked me how the heck I’ve been able to decrease my student loan debt in such a short period of time … so I figure I’d blog about it instead. :)

My goal from the moment I first took out a student loan was to pay everything back one year after graduating. I heard stories of people taking 15 or 20 years to pay it all off, and I did not want that weight on my shoulders, even though I knew it was “good debt.”

I didn’t actually start paying off my student loans until July 2006, when I got my first pay cheque from my first job after graduating.

My full-time job paid me approximately $2,100 monthly after tax. But from Sept-April every year, I have a part-time job which yields probably about $200-250/month. Not a lot, but every little bit counts. I decided to put at least $1,200 of my income towards my debt every single month, sometimes more. After rent, groceries, RRSP contribution, putting money into savings, and other miscellaneous things, that didn’t leave me with too much left over, but I was okay with that.

In October, I decide my full-time job needed a huge upgrade, so I started applying for other positions. Miraculously, I landed a job I really didn’t have the educational qualifications for (I had the skill-set they were looking for, at least), and at a much higher salary. So now, I was making over $3,000 after tax each month (crappy higher tax bracket!) … since November, I’ve been putting $2,000 or more towards my debt every month ($1,000 bi-weekly).

When I’ve told my story to other people, they seem to think I’m some crazy budgeting queen who must have to sacrifice every last penny in order to make it work. But I haven’t. I enjoy Quicken as much as the next person, but I’m not psycho about it. Since I was a student for so long, and working a part-time job that only gave me $200/month, it’s not like it was a huge life change I had to make. I went from going to school full-time and having a part-time job, to going to work full-time and having a part-time job. I guess I just never got out of poor-student mode, which is good for me, because once I finish paying off my debt, I’ll have an extra $2,000 worth of income every month I can stash away for a down payment for my condo. And that’s income I never really utilized to begin with, so it’s not like I’ll be missing it.

I didn’t receive any monetary “gifts” or anything like that, and it’s not like I’m making a ridiculous amount of money either. It was good ol’ fashion budgeting, and the determination to meet the deadline I had set for myself. So there you have it! The story of my student loan debt. I only have a little ways more before it’s out of my life forever! Let the countdown begin!

A wake-up call

I just found out that a good friend of mine got fired yesterday from basically her dream job. I don’t really know the details, but we both graduated from the same program together last year, and she’s an amazing graphic designer (a million times better than me).

Anyway, it got me to thinking: if I lost my job right now, today, I’d be fvcked. Royally. I have less than $400 in my emergency fund, and debts still looming over my head. I need to pick it up, because I know I’ve been slacking at work the past month or so. It’s not that I’m being lazy about it, it’s just that I think I’m still in a little over my head, know what I mean? I’ve found it really overwhelming to be SO busy all the time, with 5 or 6 coordinators pulling at me, all wanting different things, managing a huge budget … I got hired because of my graphic design skill, and nothing else (even though my design skills are mediocre at best) … and to try and learn all these new skills on the job, well, it’s been an eye-opening experience to say the least! But I’m so grateful to have gotten this opportunity, and I’m going to take the most out of these next 8 months.

Also, this morning I checked my mutual funds online, and because of the lovely Chinese stock market, my porfolio fell over 2%! I checked the TSX this morning when I got to work, and to my horror, it was already down 300 points! But I just checked it now, and it’s still down, but only by 45 points. What sucks is I have both my registered RSP and non-registered MF accounts in the same fund. They’re still higher than they were at the beginning of 2007, but it’s still a huge jolt to have them drop so much in one day.

One step forward, two steps back

Well, not quite. Yesterday, an hour before I launched this website I dropped just over $3,000 on a new 24″ iMac computer. Let me be the first to admit that 1) I did not need to get an iMac, and 2) I did not need to load it up with a ton of add-ons. That being said, I’m considering it an investment in my graphic design business. Let’s face it, working on a crappy Seanix PC laptop just wasn’t cutting it anymore. Plus, if it’s any consoloation, it’s tax deductible. I know I shouldn’t have to justify splurging a little lot. What’s done is done, and I’m very happy with my purchase. I should get it in the next week or so, and I’l be sure to post pictures. :)

Let me start off by saying that I am by no means a financial expert. In fact, I hardly know anything about investing. Up until a year ago, I was living paycheque to paycheque, up to my eyeballs in debt. Some months, I could barely make ends meet. It was horrifying and embarrassing. I made some dumb mistakes when I was younger (including lending money to a significant other, who obviously never paid me back), and I am determined to make up for lost time. Just thinking about all the money I’ve wasted over the years makes me sick to my stomach. I think a lot of my friends think I’m “money-obsessed” these days, and think I’m too wound up in it all. Maybe I am, but maybe I’m okay with that. I want to have the financial freedom to do anything I want to do, and that is my ultimate goal.

My job. I currently have one full-time job @ 35hrs/week, and one part-time job that gives me approximately 20-35 hrs/month. Combined, I gross about $4000/month, and actually net around $3000/month. That’s a decent salary for someone my age, and with my education. That’s also not including any graphic design contract work I receive.

After fixed expenses such as my cell phone bill, rent, groceries, RRSP contributions, and Mutual Fund contributions, I am able to put $2000 towards my debt. Any money left over at the end of the month gets put into my emergency fund. As I write this, I’m carrying about $6,500 worth of debt. Because March is a 3-paycheque month, I’ll be able to put away a little more. Hopefully.

March 2007 Goals:

  • Sit down with a potential client for my graphic design business, and get a contract signed
  • Take on a 3rd job that will yield 10-15 hrs/month or less
  • $2,000 towards my line of credit
  • $1,000 towards my student loans
  • $150 towards RRSP
  • $75 towards Condo Down Payment
  • $300 into my Emergency Fund
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