Hi, my name is George, and I’m $20,000 in debt.
My name isn’t actually George, but the debt part is true. I don’t have any shame in admitting this, as it’s the unfortunate reality of most people my age. Especially those that choose to go to college. Especially private college. Especially a private college where they receive their degree in the Liberal Arts.
After looking at my debt repayment plan, I realized that with my current monthly payments it would take me until age 35 to pay off all of my debt. I don’t know about you, but I can think of a lot of things I would rather be doing at 35 than still paying off the debt I incurred as an ignorant 18-year-old. I noticed that if I was just smarter with my money, I could afford to pay it off five years sooner.
As a result, I’ve decided to enforce a shopping ban on myself for the next six months to put more money towards my student loans. I intend to document my strategy for doing so, and be open and honest about the experience along the way.
Why a shopping ban?
As a society, we’re addicted to buying stuff. It makes us feel nice for a little while, and when the high wears off, we buy different stuff. I know so many people my age that go shopping and say things like, “I really need to stop…” or “I’m addicted” or even joke that they “have a serious problem.” But they still do it. It’s something they get to look forward to doing, and then they’re left wondering where their money went. Capitalism has made it this way (thanks, Marilyn Manson). Our entire economic system runs on our willingness to spend money, whether we need the things we’re buying or not. t takes a lot of self control to drown out the noise telling us we need more. Want can be a constant pang in our side, and we usually satiate it with the wrong things. I am no exception to this, and I want to see what kind of impact I can make by removing myself from this cycle as much as possible.
While personal finance was never something that I imagined having a passion for (my dad would be so proud), I’ve come to realize that it isn’t being discussed nearly enough. No one wants to talk about money, especially the money that they don’t have. A shopping ban isn’t sexy; it conjures images of deprivation and Ramen noodles and good, old-fashioned struggle. But you know what is even less sexy? Not having the financial freedom to live your life the way you want because you’re up to your Michelle-Pfeiffer-drowning-in-a-bathrub scary eyeballs in debt. And I’m not talking about shiny new toys. I’m talking about the experiences, the kind that don’t come with 6.8% interest.
So, here is my current plan:
After paying rent and utilities each month, I am left with about $1,600.00.
I have the following monthly expenses: a car payment of $201, car insurance at $135, and a student loan payment of $335. It’s important for me to pay off my student loan as soon as possible, so I’ve set a goal of a $500/month to pay it off by the time I’m thirty. I could definitely try to double this amount and accelerate my repayment, but saving is important to me as well. I want to contribute $500/month in savings – $250/month in my personal savings account, and $250 in my retirement fund. Once the loan is paid off, this amount will increase, but this is what’s reasonable for me right now. This will add some cushion just in case something happens – my car breaks down, I lose my job, my cat needs medical care, etc.
Additionally, I spend about $50/week for my half of groceries, which adds up to $200/month. At the beginning of each month, I take out this amount in cash. It helps me to keep cash for in-store purchases because it makes it a little more real when I’m running low. It also provides me with a physical reminder not to waste my money.
So looking at the math:
-$201 (car loan)
-$135 (car insurance)
-$500 (student loan)
I’m left with 64 measly, beautiful dollars at the end of each month. I generally only need to fill my gas tank once a month, and that costs about $30. So now I have $34. This leaves me a whopping $8.50 to buy lunch, coffee, or whatever once a week. Gee whiz, what a treat!
The shopping ban excludes the following items:
- Medical expenses
- Gas, oil changes, car maintenance, registrations, etc.
- Emergency purchases: if my only pair of flats for work get a hole in them or if all of my underwear spontaneously combusts I have no intention of forcing myself to suffer just to prove a point.
The goal is to honor the shopping ban for at least six months to evaluate what kind of progress I’ve made. After that, I will continue or readjust accordingly. After my student loan is paid off, I will be saving the same amount of money each month and putting it towards a travel fund instead, at least until I can save up enough for a trip. My reward for paying off the full amount is going on a two month backpacking trip to walk the Camino de Santiago. That gets me a hell of a lot more motivated to pay it off than the idea of going to the mall.
Wish me luck. I will keep you posted on my progress a few months in.