The below advice is based on my past experiences, my age, and my debt but this will obviously be different than your current situation. You may have more debt than I do, or you may want to buy a car instead of travel. In the end the below should help you realize you can absolutely pay off your debt and still do the things that make you happy no matter your income!
Your Income
Everyone seems to think that the only way to succeed is by making a certain amount of money. How can that be possible if everyone has a different measure of success? You don’t need to make over $100K a year to be able to travel, and you don’t need to make that much to pay off your debt.
My current job, which was my first job out of college, has a salary of under $40k. By the time I graduated I had $14K in debt. How can the girl who makes under $40K and has $14k in debt have trips for Costa Rica, Thailand, and Spain all planned for her first year and a half out of college? Read below to find out.
Set Your Goals
Before you even start, you need to set your goals. Whether that is to buy a new car, take a trip, pay off your student loans, or pay off your credit card debt; it all starts with writing it down.
My Goals:
Pay off my student debt within 3 years. (I will have it paid off in less than 1.5 years)
Go on at least 2 trips per year (Met my goal for 2019 already)
Put at least 15% of my income in my 401K (I currently have 21% going in)
Save towards an Emergency Fund of (XXX) amount within 2 years (I am 25% of the way towards my goal)
When setting your goals:
Be sure to have an end date. If you don’t have a deadline to meet, then you will always be able to push your goals off verses forcing yourself to meet them.
Use numbers. Replace “I want to save a good chunk of money by the time I’m 25” with “I want to have $20K of savings by the time I am 25.” This gives you a firm goal to meet verses an abstract one.
Be realistic. If you aim for something too high, then you are more likely to give up on your goal. I know I can’t afford 5 trips a year but based on my budget 2 is reasonable.
Money on the Side
It is very easy to tell yourself that just because you are saving towards your current goals that the rest of your money can be blown any way you want. If you think like that, than before you know It you will be dipping into your Emergency Fund or 401K to pay off something that you should have already had the money set aside for. By putting money aside on top of your goals, you should be able to cover these surprise expenses, such as doctor visits or your car transmission going, but you need to be diligent in saving money on the side for exactly these situations.
Student Loans and Making Sacrifices: Student loans are a trap. My biggest tip of advice I could possibly give you; do not settle for the minimum amount. They want you to take ten years to pay off your debt because they want you to grow 10 years worth of interest!
Instead, I set a personal goal of 3 years, which would bring my monthly payment to about $388 a month. In the end, I still didn’t want to pay 3 years worth of interest! Therefore, a third and final goal was set, with an average monthly payment of about $1k I will have all loans and interest paid off in under 1.5 years.
While that sounds like a lot, I had to make certain sacrifices to be able to stick to this goal.
I chose to move back in with my parents instead of moving into the cities with my friends
I try to eat out as little as possible. Packing lunch for work and avoiding the constant work happy hours is a necessity if planning to stay within my budget.
I would rather spend my money on travel verses shopping, which is good because that money goes towards 1 of my 4 goals
I keep a personal budget tracker.
Budget Tracking
If you want to stay within your budget, you need to keep track of what you are spending. At the end of each month add up how much you have earned, how much went into your savings, and how much you have spent. Break down your spend into categories (shopping, traveling, student loans, groceries, medical, etc.) If you notice you have invested more money into clothes shopping than you did into your student loans that month, than maybe you have some rethinking to do.
When All Is Said And Done
In the end, if you set your goals, and more importantly stick to them, then you will be set up for success. It is important to keep track of your money and where you are spending, but it is also important to still do the things that make you happy. If you keep track of your budget than you can easily still take your dream travel trip or buy your dream car all while paying off your debt and saving for the future.
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