How I paid off $45K of Student Debt Fast (in 1.5 years!)
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how to pay off student debt fast
I paid off $45k in student debt in exactly 1 year and 8 months.
To explain how I did it and my tips if you're trying to do the same, you need a little context.
After graduating college, I moved to Germany to be with a German guy and I started a freelance web design business. 📸 👇
Not that I had any clue how to do that!
Web design was not what I studied, I literally taught myself how to build websites and get clients and run a web design studio from Google and a few online courses.
In this time I was paying off my debt while freelancing as a web designer I made an average take home of $4,386 CAD per month.
As a freelancer, my income varied greatly from month to month
At the very very beginning weeks of my business I made a lot less than this per month and towards the end of this debt-paying-off-spree, my income really increased big time, but to make the numbers easy to explain, I’m sharing the average take home I had in that time!
I paid my loan off in full over 1 year and 8 months, starting right after I graduated, so my total take-home over that 1 year and 8 months was $4,386 CAD a month or $87,720 total.
I then paid off my $45,000 from that, meaning I lived off of slightly less than half of what I made, I lived off $42,720 for those 1 year and 8 months.
Which brings up important point number 1 of how I did this.
💰 Step one to pay off student debt fast
I didn’t increase my lifestyle until I paid off the debt
When you live as a university student for 6 years, you get good at living a pretty modest lifestyle.
I decided consciously that I wasn’t going to suddenly start living large now I was making money and working. I knew it would be hard to increase my lifestyle and then save at the same time, or that it would be really depressing to increase my lifestyle and then decrease it again later if I pushed off getting serious about the debt to down the road.
So I decided to keep living my modest university-lifestyle ways until the debt was gone.
I didn’t eliminate every luxury from my life, but I also didn’t go crazy. I still travelled, I was in Europe fresh out of college after all, so obviously I wanted to do weekend trips to other countries, but I booked flights wayyy in advance to get the best price, purposefully picked flight dates based on price, stayed in hostels and went to cheaper countries. (There was no visiting Switzerland or Denmark or Sweden for me back in the day, though I’ve been many times now!)
I shopped at H&M, not Nordstrom and even as my income started increasing, we stayed put in our very basic, non-spectacular apartment which cost us each $350 a month!
Friends moved to nicer places and started upgrading their furniture and on the one hand I wanted that, on the other I truly wanted to be debt free so we stayed put in that very basic apartment for a longgg time!
I also started a mindset game when I walked into stores too, I knew the stats, 45% of Americans have credit card debt. Meaning when I was shopping in a store I knew that almost half of the people in there spending money they didn’t have the money to be spending really!
That for me created a mindset shift, previously when I walked into a store I felt like I wanted what everyone else seemed to be able to afford and buy.
Why did they get to buy something they wanted and I didn’t?
Instead I flipped that and saw the buying frenzy for what it really was. Half of the people in that store spending money on stuff they likely didn’t need with money they didn’t have to fill some void and feeling of not-enoughness inside.
With that mindset trick, when I went into a store I no longer felt jealous and like I was missing out and i knew my greater goal was to pay off my debt.
The only thing I was missing out on was increasing my debt, and THAT was a good feeling 🥰!
When I walked into a store I reminded myself, did I really need another pair of socks 🧦?
A new purse 👛 to replace the old one with which is perfectly fine?
A new pair of running shoes 👟 because the old ones were going out of trend?
No!
With my little mindset game, if I passed a store and felt the impulse to buy something, I no longer felt like the one who COULDN’T have something, but instead the financially savvy one who was working towards a goal and being responsible.
I turned a negative feeling “I want to be able to buy what they can” into a positive one.
Now this strategy, NOT increasing your lifestyle after school is one I would definitely recommend to others.
I have absolutely upgraded little and big luxuries in my life now, I have a car, get a weekly meal delivery kit, have a cleaner, go horseback riding, a notoriously expensive sport, often, and stay in 4 and 5 star hotels, not hostels anymore.
And I’m so so so glad I did it the way I did.
Going backward financially is a lot more difficult than going forwards, so I’m glad I kept lifestyle creep firmly in check until after I was done paying off my debt.
Been thinking about a side hustle to help you clear your student debt? Web design is an awesome option - check out this free training to help you get started finding clients as a new web designer!
💰 Step two to pay off student debt fast
The next thing I did was I decided that paying off the debt was my priority and then I made conscious efforts to keep myself motivated. This might sound like really random advice, but I think it’s so powerful.
At first, I didn’t really have a game plan when it came to paying back my debt, I figured I’d pay the minimum every month until it was gone.
The average time to pay back a student loan in Canada is 10 years, I just assumed that’d be me.
Until my first payment came out which Canada had decided would be $500/month. When I looked at the statement I quickly realized that I paid $500, but slightly less than $300 of that came off my actual loan. Over $200 went to interest!
Upon realizing that only slightly more than half of what I was paying was going to the principal of the loan itself, I decided
1. Canada is clearly making great money off giving students a terrible interest rate and
2. I was going to get rid of that loan as fast as I possibly could, so I could avoid literally taking $200 a month and throwing it out the closest window 💸, which is what it felt like to pay that much in interest.
That decision honestly was a major catalyst of this whole thing. I DECIDED I was going to get rid of the loan as fast as possible and I focused everything towards that goal.
Making that decision is honestly what got the ball rolling!
I had always assumed that right once I finished college I’d start saving for retirement, but after reading a few finance books, I realized that I’d be unlikely to make $200/month on anything I’d invest in for retirement, so it was more financially savvy to pay off the loan quickly, and save that $200/month interest payment!
Now the other part of this is staying motivated and keepin your eyes on the prize.
It’s one thing to make a decision, it’s another to stick with that decision month in and month out.
To do that I needed motivation. I read finance books weekly, there’s thankfully no end of them, so I always had a new one on hand to read!
Reading them kept me focused on the task at hand, debt repayment, and made me feel this sense of responsibility which I liked and which kept me at it.
I also listened to financial podcasts and stories like this video of how others paid off debt too.
And finally, and most practically, I created a debt repayment thermostat which I got to color in!
You know at charity events when they’re asking for donations, they have a thermostat that gets filled in with every donation as you get closer to the goal.
I took out 2 pieces of paper and made my own debt repayment thermostat and got so much joy from coloring it in every time I made a payment, and especially extra joy when I was able to make an extra payment!
💰 Step three to pay off student debt fast
And the third step to paying off this debt so quickly was I increased my income!
As a new freelance web designer, what I made from month to month was never exactly the same but within the same ball park of $4,400 a month. I set my expenses accordingly and lived off of that.
But what REALLY helped me make the lump sum payments on the loan, $5,000 or $10,000 at a time at the very end which finished off the loan, was increasing my income.
Now I’ll be honest, I think this, focusing your efforts on increasing your income, should be part of anyones debt repayment strategy.
I think most people who have only ever worked for someone and been an employee often just feel like it’s out of their hands, this is what I get paid and that is what it is, I can’t do anything about it.
So people focus all their efforts on cutting spending.
But having now run my own business for a while, I’ve learned there’s another way which is MUCH more enjoyable, and that’s by making more 💰!
Even as a business owner however, this wasn’t simple, I was already working a ton designing websites for people so it’s not like I had a ton of time on my hands, which was exactly the problem I realized I needed to solve.
I decided to try my hand at separating my income from my hours by not just building sites for people, but teaching them how to build their own website!
I created a course (Square Secrets™) and sold it for $500 per student.
On my first launch of that course I made just shy of $19,000.
Gotta course idea yourself? See whether it has 6 figure potential with this quiz 👇
Of course there were expenses and taxes to pay on that $19,000 but I did get to take home more after that course launch.
I did book myself a massage for $100 as a reward, but all the rest of the extra money went straight onto the loan! I didn’t spend anything on clothes or a car or a big night out.
Sure I wanted all those things, but even more I wanted to be debt free and I knew that was the decision I made and the priority I had set.
I then continued plugging away designing websites for people for the next few months until my next course launch, I kept trying to keep my spending low to make any extra payment on top of the regular $500 I could. I was most of the way through my student loan by this point, I think maybe $35,000 of $45,000 and so the finish line was in sight as I had maybe about $10k left.
I crossed my fingers and toes for my next course launch to do as much if not more than the last one.
THAT launch as the sales rolled in, I was on the edge of my seat counting and doing calculations to see how much of that I got to put on my student loan.
Lo and behold it was enough, the launch did $30,000 and as soon as the money went from my Stripe account and then was auto-transferred to my business bank account, I sent it to my personal account and right onto the loan account.
I filled in the rest of the little debt thermometer all the way up to the top and felt so much pride as I did it!
I knew what I had done was pretty unusual and it had taken a lot of conscious decisions over the past year and a half to not spend or to find a cheaper option AND it took getting savvy about making more too to make it happen so fast.
A few weeks later, my Mom sent me a photo, I was living in Germany so my student loan mail went to her place in Canada and the photo was of the confirmation and congratulations letter from the government on paying off my loan.
I had had my little debt thermometer stuck to the wall beside my desk and now I replaced it with the congratulations letter #proud!
Now if you wanna learn how to be a web designer with no professional degree or experience (just like I did!) watch this video next to see exactly how it’s done!👇
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