I’ve Paid Off $10,000 in Debt

I’ve got lots of important posts in line waiting to be written, posts about my budget or how June was my second consecutive month of negative networth change. But not today, today I have to say: I’ve officially paid off $10,000 in debt!

Time for a happy dance!

Credit

How I Paid Off $10,000 in Seven Months

I started aggressively paying down my debt on November 30th, 2011, the day my first ever student loan payment came due.  I’d taken the six months grace period and was prepared to make my first payment. In fact, I was more than prepared. I’d already had my personal finance epiphany and had scraped together an extra $200 a month to add to my regular $300 payment. Eventually that extra payment became $240, and now it’s $325. Add that to my regular $207 monthly car payment and these days I’m sending around $830 to debt every month. That may not sound like a lot to some of you but I’m only one year out of school, I don’t make much cash yet, so it’s a pretty significant amount to me.

It’s been really hard, but below I’ve listed some of the things I’ve done that have helped me pay off my debt faster.

Pay Debt First, Pay Myself Second
These days I map out how much I should be able to put towards debt every month, and divide it by the number  of paycheques I get. Once I get paid and the money hits my account, I immediately make my debt payments (meaning I make four extra student loan payments a month). If I run out of money before my next paycheque, too damn bad. I have an aversion to carrying a credit card balance so this works for me.

Live Somewhere Cheap
As I’m sure you’re tired of hearing, I live in a 400 square foot house in the country. Because of it’s size, it’s cheaper to rent, furnish, heat, cool, clean and electrify. Would I love to live in a two bedroom apartment in town? Sure! But I’d love to be debt free more.

Smaller is better. (Not my actual house)

I Became a Master Budgeteer
The main reason why my monthly extra payments on my student loans kept inching up is because I’m always trying to squeeze an extra $5 out of my budget and into my debt payments. I started out at $50 a week in extra payments, and now I’m squeezing out $81.50 a week in extra payments. The difference may seem small at the time, but $81.50 per week adds up to about $4,238.00 per year, which is significant.

I Was Disciplined with Windfall Money
In case any of you have been doing some quick math in your head, you’ll probably realize that those little payments haven’t added up to $10,000 by themselves. I had some significant help. In March, I got a tax return of $5,442.00. $1,000 of that went into my wedding fund, $442 of it went into my dog fund, and a hefty $4,000 went towards debt. Not one cent of that tax return was spent until a few weeks ago when I finally got a dog (paying in cash felt good). I’ve received other windfall money as well, and I’ve so far been pretty good at resisting the temptation to spend that “found” money, and instead, I’ve funnelled it toward debt. For example:

The Last Few Dollars

This part of the story is just weird. Last week I tweeted this:

But try as I might, I just couldn’t find an extra $138 to throw at my debt and hit that target. It was a little disheartening, even though I knew I would hit it the week after, it would have been nice to force that $10,000 goal a little early and sneak under the seven month mark.

Then I got called into my boss’s office. It seems that I had a little extra vacation pay banked this year. Which meant that I could expect to receive a small bonus this week. How much? $178. It was too perfect. As soon as that paycheque was deposited I logged onto my banking website and sent my usual extra $81.50 payment plus another $140. I then high fived my fiancée and we took the remaining cash and went out to dinner.

The Next Seven Months

Let me make things clear, I do not expect to clear another $10,000 in the next seven months. The tax return thing was a fluke and had a huge influence on how quickly I arrived at this 10k mark. But I do intend to keep throwing as much cash as possible at my student loans, I’d like to see my total debt keep dropping like a stone as it has been. Who knows, maybe I’ll come into some more windfall money and get to make another big payment. In the mean time, I’ve got to get back to my happy dance.

How long did it take you to clear your first $10,000 in debt? Are you still on your way to this goal? I want to know!

  • http://twitter.com/SenseofCents Michelle

    Wow good job!

    • JordannK

      Thanks!

  • http://www.uniquegifter.com/ Anne @ Unique Gifter

    Well done.  That’s super-fantastical that you got the vacay payout!!

    • JordannK

      I know it seems so random that I would get that the same day I needed it!

  • http://twitter.com/frugalportland Frugal Portland

    Congratulations! I’m working on my LAST 10K and could use a tax return like that. :)

    • JordannK

      It was definitely helpful, I don’t expect to ever get that kind of payout again.

  • http://www.nomorespending.net/ Laura @ no more spending

    Congratulations!

    • JordannK

      Hey thanks!

  • http://twitter.com/blondeonabudget Cait Flanders

    Congrats, Jordann! I paid off $10K in 6 months and another $7K in the 6 months after that. You’re a great inspiration to those who don’t think they can do it. One decision to make a change leads to a number of behavioural changes required to make it happy. You’re proof of that. So happy for you!

    • JordannK

      Thanks! You’re so right, all it takes is one behavioural change at a time.

  • http://anexactinglife.wordpress.com/ anexactinglife

    Waiting for a post about your new pup!

    • JordannK

      Coming right up!

  • http://www.modestmoney.com/ Modest Money

    That’s an impressive feat Jordann.  Congrats!  It’s funny that your vacation payout came just when you wanted the extra cash to reach this milestone.  You’ve definitely worked hard at squeezing every last dollar from your budget to make this happen.  To think that you’ve also been able to save for a wedding and a dog at the same time is even more awesome.  Nice work!

    • JordannK

      Thanks! I only hope I can keep up this enthusiasm for the next few years until I’m entirely debt free!

  • bogofdebt

    Great job! I haven’t paid off near that much yet but I’m working on it.   I’m about $2k into that goal and will reach it eventually!  So I won’t make the 6 month mark but I know that I have one student loan finally out of default and that makes me happy!  Congrats again!

    • JordannK

      It’s all about the small goals, I celebrated a bunch before I got to this big one! One step at a time, and eventually those steps are going to add up to one really big celebration.

  • http://carefulcents.com/ Carrie Smith

    Congrats Jordann! What a great accomplishment and you should be super proud of yourself. Can’t wait to hear about the rest of your progress. Good luck!

    • JordannK

      Thanks!

  • http://twitter.com/seedebtrun See Debt Run

    Nice, Jordann!  Keep it up!  We’re in a similar situation with having dropped down so much at first because of a nice tax return, but definitely not expecting the next half of the year to be as kind..  
    -M

    • JordannK

      I’m definitely not expecting to make that much progress in the next few months, but I just need to keep working away at it and eventually we’ll both hit our goals of becoming debt free.

  • http://www.momoneymohouses.com/ Mo’ Money Mo’ Houses

    That’s so awesome, congrats! And I love that little house even if it’s not yours. I would totally live there and pretend like it was Little House on the Prairie.

    • JordannK

      Hmm…My actual house could totally be a little house on the prairie…it’s right next to a hay field!

  • JordannK

    Thanks!

  • JordannK

    Thanks! It’s been an amazing couple of months, I only hope the next few can be just as good.

  • http://belowhermeans.wordpress.com/ B. (Below Her Means)

    This is super awesome. I’m seeing a few of these posts around the personal finance blog universe – progress over the past few months broken down. Perhaps I’ll write my own too.

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  • Sandra Smith

    Hi…I have about $14,000 in school loan debt. My loan term is up in a year and I have no idea on how I am going to pay this off. I really need help on this, as I don’t make enough to just pay it out right. any ideas? Sincerely, Sandra Smith from Auburn, WA.
    Paperdaul@hotmail.com

    • http://my-alternate-life.com/ Jordann

      Hi Sandra,
      I sent you an email to respond to your comment, let me know if you don’t get it!

  • syed, singapore

    great discipline, well done.

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  • Melissa

    I realize you posted this years ago, but I’ve recently come across your blog and I am really enjoying it. It’s giving me that bit of motivation. So Thank you.

    2013 the hardest year of my life.

    I graduated in December 2012, at 22 with 23,540.00 in student loans. I then
    moved across the world with my boyfriend, Jon, (also Canadian) so he could
    pursue his goal of becoming a doctor. I had $1300 in my account when we landed
    in Australia on January 1st 2013. Jon helped support me for the first months
    until I found work. We keep our finances separate and split everything down the
    middle. I am a teacher, but it took three months for my credentials to transfer
    to Australia and I couldn’t apply without my approval of graduation from my
    university. Meaning I wouldn’t be teaching until late July/August. I started
    working at a coffee shop for $100/day five-days-a-week. I hated it.

    June: I made a trip back to Canada for my graduation/well-being (I had sunk into a bit of a depression). Honestly the best thing I could have done, I have an amazing support group. It really set my head straight. My parents gave me a loan to insure that I could pay my monthly minimum payments for the year. I cried, I was so happy. I had this huge goal to pay off my loan in two years and by the time of my holidays (end of grace period), I had only paid off 1587.00 off the principal and ~$850 in interest.

    The weekend before I was to fly back I had gotten an e-mail from the local Australian high school that asked me to teach French for the 1st two weeks upon my return and that they were going to streamline my teaching application. Things were picking up, working in my career was extremely uplifting and more financially beneficial. But, the year wasn’t over.

    Excuses/Setbacks(~$8,000)
    · Needing to return home for my graduation/well-being. Necessary but $$$$
    · Needing to switch my 1 year working holiday to Jon’s student visa. $$$
    · Having to pay for 3 years of health insurance up front. Mandatory $$$$
    · We went on a mini 5 day holiday to the great barrier reef. Hind sight is 20/20
    · Return trip to Canada for Christmas. $$$$ I paid for some of this by working in Canada

    By the end of December my loan was at 19,753.00. Which means I paid off $3,787.00 on the principal of my loan in a year and ~1,965.82 in interest. Nearly $6,000 in one year.

    2014 the calm after the storm

    At the beginning of the year I decided to strive for my goal of paying off my
    debt in two years. Meaning I had 12 months to pay 19,753.00, I realized this
    goal wasn’t really realistic. But gradually it became realistic. On July 31 my
    loan will be at $9,462.54. Which means I’ve paid off 10,290.46 off my principle
    and $580 in interest in 7 months. Not bad, but I narrowly missed my goal of
    down to 10,000 by the end of June.

    I started to lose track of my goal recently, I think it’s because I don’t find my interest payments so crippling. Or maybe I thought I did good enough for the year. I’ve seen so many post about people only putting 15% of their income to their loan. I had myself
    convinced that I was going to put more money towards fun and also to build up
    my emergency fund a bit (not optional). I’m at 1700 and it needs to go to $2500
    at least. A flight back to Canada alone is $1500. I started looking at what
    other people have done to try and decide what’s right for me. Your blog has
    helped me to stay focused. You’ve paid off 38,000 in two years meaning 19,000 a
    year. Roughly the same as my ‘unrealistic goal’. Not to mention your post “Debt Should not be a part of your budget”.

    To make my goal:

    1. I need to pay my monthly minimum. This comes out of my Canadian account, it’s money I pretend I don’t have (help from parents and some work I did over the Christmas
    holidays).
    2. I should be getting a $2000 tax return, which will go directly on my loan.
    3. I then need to put $650 a paycheque (I get paid every two weeks) towards the loan. Earlier in the year when I had permanent work I was putting down $860 a paycheque. But I am a teacher-on-call so some weeks I’ll put on more and some weeks will be
    less. I should still be able to build up my emergency fund a bit.

    Thank you for reminding me my goal is possible,

    Debt free in December 2014.

    • http://my-alternate-life.com/ Jordann

      Wow this is awesome. You should really be proud of the accomplishments you’ve achieved over the past year! I have every confidence that you’ll hit your goal by the end of 2014. Make sure to send me an email when you are debt free!