In 2015, money worries nagged at me all day long. I thought about debt during class, I thought about debt during dinner, when friends were over, when I was going for a walk, and when I was trying to fall asleep.
Debt is powerful like that. The uncertainty and fear cram themselves into every area of your life, leaving you feeling stressed, out-of-control, and off-centre.
My debt was all student debt, acquired from undergraduate and graduate degrees from a university in Ontario. But I grew up with an unhealthy attitude towards money. My family loved to spend— loved to have the latest new things, expensive decor, the nicest yard– But my mother also had debt from student loans and car loans. This was debt that she carried around for years and I saw the way it affected her, too. The way it made her feel like she had never quite made it, never had quite enough, or was never on stable ground.
So, when I started university, I promised myself that I would never let debt have that kind of long-term hold on me.
Except that's not quite how it worked out. For quite a few years, I spent above my means, convinced that the best makeup and clothes could make me love myself, and make others love me. I worked a full-time job during my first couple of years to fuel this spending, and saving nothing for when I finished my degree and needed to pay down the debt.
On top of all this, I dropped out of my graduate program with only a few courses left to go (long story, maybe later), to take my online business full time. It was making me money, but not the kind of consistent income that you can depend on.
After all of this, I had more than $30,000 in government student loans that I had to start paying back in just 6 months.
With debt, no degree, and no "real job", we had to make a plan (which, I'll be honest is mostly my husband's plan, because numbers make me queasy).
A caveat: this article isn't intended to function as a budget. There will however be a done-for-you budget included in the upcoming course on Minimalism, so if you're interested in that, hop on my mailing list at the bottom of this page to be notified.
Here's what we did:
1. Made a rock-solid budget and stuck to it
There's a chance this isn't what you want to hear because there is no magic trick to it, but the easiest and fastest way to get yourself out of debt is to create a really great budget, and actually stick to it like your life depends on it.
Just equate debt with a slow painful death and you'll be fine. They even sound similar. Coincidence? I think not.
Joking aside, putting systems in place to help you stick to your budget is what will see you through to success. When you know exactly how much you're making, how much you're spending on household needs like rent and groceries, and how much is coming out of that to go towards debt, you're much more likely to get rid of that debt fast.
Plan your budget based on your lowest-expected income. This is a big one. For my husband and I, this meant budgeting purely based off of his income, because my income from my fledgling business was very come and go. It was harder to stick to a tighter budget, but it meant that any money coming in from my end could go directly on the debt, and that we didn't find ourselves blindsided by a month where we didn't make as much as expected.
When our income increase, we didn't increase the budget— we increased the amount we were putting down on our debt.
As a general guideline, your housing should be 20-25% of your budget, groceries 5-7%, other expenses (such as phone bills, transportation, internet, and casual spending money) 15%, and savings 45-50%, if you make $50,000 a year. However, when you start making more than $50k, your spending should not increase.
I repeat, your spending should not increase. Just because you may now be making $150,000 a year does not mean you should now be spending $37,500 a year on housing costs, because this is absurd.
This will of course vary based on how much money you're making, but will provide you with great results if you can swing it.
2. set ASIDE spending money in cash
When it comes to actually sticking to your budget, portioning out your expenses in cash is a great way to really see what's going on with your money, and to prevent you from spending over what you've budgeted.
If you know you've got a spending addiction, take steps to prevent yourself from getting a hold of credit cards. Cut them up. Cancel them. Stick them in a bucket of water and shove them in your freezer (seriously).
Each month I had $100 of casual spending money, and this included clothing, makeup, fancy face-wash shit from LUSH, the loose-leaf tea I love to drink, and expensive shampoo. You might be shocked at this number, feeling like that's complete deprivation, but I promise you if you manage to kick your spending habit and you're smart with what you buy, it's totally doable.
3. we tracked our progress visually
When we started out, I knew it was going to feel like a long experience, and I knew that it was going to feel like we weren't making any progress— after all, you're just throwing money into a hole, basically.
So I got out a piece of paper, drew a little bit of ground with a big hole in it, labelled the sides in $1000 increments, and called it The Debt Ditch. This paper was tacked above my desk and it was incredibly encouraging to see the progress we were making as we coloured in the ditch every few weeks.
4. create intentional alternatives to SPENDING FOR ENJOYMENT
Maybe you typically go out to the movies every Friday for date-night. Maybe you go to the bar and drink with your friends. Maybe you go out for dinner or order take out a few times a week.
This is going to eat away at your budget like a hungry hungry hippo.
But it doesn't mean you have to give up your social life. Let your friends know what's going on, invite them over for a potluck, have drinks at home, or plan a romantic home-cooked meal instead (to be honest, 99% of your meals should be home-cooked, but that's a soap-box issue for another day).
Get creative with how you add a little bit of magic to your days. Head out for a picnic, or if the weather is less-than-agreeable, picnic on your living room floor, then watch a movie from your blanket fort.
It'll be great, I promise.
5. remove the urge to buy shit
Stop going to the mall.
Stop wandering when you are heading into the grocery store for just a few things.
Bring a list.
Unsubscribe from all those great retail emails you get from Groupon, Anthropologie, Urban Outfitters, etc.
6. meal planning
A lot of impulse buying seems to come from those busy days when you get home, you're exhausted, and you realize that you've not planned anything to eat— so you order a pizza. I know people for whom this happens once a month.
I also know people for whom this happens several times a week, and I can't imagine what their credit cards look like (did you know the average American has 4?! FOUR!).
At the beginning of each week, sit down and figure out what you're going to eat each day, if you can, prep some of it ahead of time. My husband and I like to make a lot of big batch meals, like a huge noodle stir fry, a giant pot of soup, or a big bowl of beans, rice, avocado, and sweet potato, and eat that with a bit of soy sauce for lunches (it's amazing, don't knock it til you try it, friend).
It's also a good idea to have a few really simple meal ideas on hand for when you actually forget, or some life event intrudes. Make a pot of pasta, whip up a quick tomato sauce, and chop up some of whatever left over vegetable you have in the fridge.
7. we made a plan to celebrate
Alright, so this one didn't really help us to pay off our debt, but it certainly felt good when we got there. No, we didn't fly to Monaco or buy something extravagant, but we did order a massive haul of Chinese food, made cake, and watched movies on our pull-out sofa.
Sound totally classless? It was. And it was the best.
When you fill up your own debt ditch, celebrate! You absolutely deserve it.
Just don't do something like buy yourself a car.
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Are you on your own debt journey? What's been working really well to keep you on track? Let us know in the comments!