A lot of experts will tell you to live as poorly as possible to pay off debt as quickly as possible. I’m here to tell you that they are definitely right, but that isn’t the path I took. Sure, I cut out a lot of indulgences and monitor my spending very carefully, but I also want to enjoy life and be in a good mental and emotional place. I definitely could have saved money by living with my parents (or any relatives) after college graduation, but I had been dreaming of moving to North Carolina and honestly the thought of another Boston winter sounded absolutely miserable. I made the choice to follow the path I thought was right for me and am so unbelievably glad I did. Will it take me a bit longer to get out of debt? Yes, but it’s a trade off. As long as you are caught up on minimum debt payments, I think it’s important to listen to expert opinions (after all, there’s a reason they’re the experts), but also to really reflect on your own personal situation and make sure you choose the path that is right for you.
Everything in the world of money is about trade offs and priorities. It isn’t that you can’t have the meal out. It’s just that if you have the meal out maybe you can’t then also go see a movie in the theater. If the meal out and the movie theater are your two options, which do you prioritize more? You need to pick the activity that brings you more happiness. Sometimes it’s the choice between an experience and a purchase. For example, my husband and I typically value experiences more than purchases so for birthdays, instead of giving each other gifts, we go out to dinner. For us, we value a nice meal and the chance to catch up with each other more than we would value a present. You also need to get comfortable with your current money situation because sometimes you will feel sure that you have less money than the people around you, but maybe your choices are just different. I typically bring my lunch with me to work to save money and save the time it takes to go out and get food. A lot of people I work with will buy their lunches and they really enjoy doing that, but for me, I’d rather have a little more money and eat out less than eat out every day and not have the extra money. It’s all about choices and what is most important to you.
For me, my current big picture budget goal is to get out of student loan debt. I prioritize that goal over most purchases and keep that in mind as I decide on shorter term purchases and goals. By focusing on why I am budgeting, it helps me stay motivated and helps me make sure I am only spending money on items that are truly important to me. Have you ever gone to a store and walked past a pair of shoes and suddenly they were in your cart? What about a candy bar or magazine? Now if these are items you planned to purchase or items that will make you truly happy, then sure, buy them. Just make sure to evaluate if it is something you need and if it’s something worth delaying your big picture budget goal. If you spend $50 on shoes or food that you didn’t need, that’s $50 less for the month that you can use to achieve your goal. Small steps matter. Small purchases add up. And if you want your big picture goal badly enough, you might be surprised at what other purchases you are ok waiting to buy so you can more quickly achieve your goal. Notice that you tend to make impulse purchases online? Make a rule with yourself that once you add an item to your shopping cart, you must wait at least 30 days before purchasing. Maybe 30 days later, you will still want the item so badly you go back and pay for it, but chances are, you will either forget about it or realize that you just didn’t need it that badly.
Now you might notice that in the above I used the phrase “my current big picture budget goal”. That was intentional. You see, as your life situation changes and your goals shift, your big picture budget priorities will change. At the time of writing, my husband and I have two fur babies, but no human children. We can put all of our extra money towards student loans right now, but down the line, when we begin thinking about starting a family, we will shift our priorities and will focus some of the our money to a family savings account instead of putting it all towards student loans. Your big picture goals will also change once you achieve the goal. If your current big picture budget goal is to pay off your high interest credit card balance and then 6 months from now it is paid off, you should celebrate and then create your next big picture goal.
I could pay off my debt much more quickly if I lived in a tent in my parents’ backyard, but that just isn’t realistic for me. I wouldn’t be happy. By maintaining a comfortable, but low cost lifestyle, I can focus on my big picture budget goals, but not sacrifice my sanity. Some of you might think that living in a tent in someone’s backyard to achieve your goal more quickly sounds like a great plan! And if that’s you, more power to you–definitely do it. That just isn’t me and I know it. Know yourself and figure out a plan that is realistic for who you are and where you are in your life.
Did you choose the extreme debt payoff method? Or have you altered the course slightly to enjoy life while working your way towards debt freedom? Share this post and your story.