Welcome to another edition of Simple Inspiration. This week I am honored to have MJ from Dream Beyond Debt joining me for an interview.
MJ blogs about her personal journey to debt freedom, while also nurturing her dreams. She also writes about how you can nurture your dreams while eliminating your debt. The blog was started to help her keep track of the progress she is making to pay off her student and to keep her on course with her student debt elimination. After only paying down her student debt down by only $1,079.00, She decide it was time for a change.
Here’s what MJ has to say about eliminating her debt:
What event lead you to eliminate your student debt?
I’d been carrying my student loan debt for almost fifteen years and made very little progress with paying it down. The New Year was on the horizon and I kept thinking about how I didn’t want another year like the last few. Something big had to change. I’d been living a very small life, which was refreshing for a little while. I was used to making big changes – cross country moves, jobs on a whim, experiences that would make good stories. But, in the last few years, I’d been referring to myself as “the friend with no news.” When I talked to old friends, I didn’t have much to catch up on. No house, no marriage, no trips, no work victories or promotions. Things were pretty stagnant. I got pretty cozy with Netflix. I didn’t go out. I didn’t meet new people. It was kinda lonely. I felt stuck. I couldn’t have the next year of my life resemble those hard ones.
What did having student prevent you from doing?
My student loan debt kept me from wanting more for myself and in my life. It sounds dramatic, but student loan debt is so oppressive. The longer I carried it, the more I resented my college experience. I kept looking back. I kept thinking, “Why didn’t I major in this or do that internship or make these connections?” I couldn’t shake the idea that my current financial situation could be traced back to bad decisions I made during my undergraduate education. I think student loans do that – they keep you tied to your past, which can breed depression.
Where did you begin to simplify and eliminate your debt?
I’d been reading personal finance blogs and books for years, but late last year, with the New Year approaching, I made a conscious decision to pay off as much as I could in 2015. I’d been paying for fifteen years and in that time, only $1,000 had been applied to the principal. I also had a drastically fluctuating income from the nature of my work – and my own moves throughout the years. It just so happened that I was on an upswing and making progress increasing my income when I made the decision to spend that income on eliminating my student loan debt. I think reading about side hustles helped in that way, as well. I’d also been nurturing an emergency fund for over a year, so I felt like I was in a good place to start throwing money at it. I wouldn’t have been ready before having the emergency fund or the growth of my income. Once those were in place, I had the confidence to give it a go.
What was your biggest challenge or roadblock when it came to eliminating your debt?
My biggest roadblock to eliminating my debt was my mindset. I had this nagging belief that it was too big to pay off in my lifetime. Or, that it wasn’t really my debt, since over half of it was money my parents had borrowed for my education without explaining it to me at the time. I had a lot of resentment around it. I don’t know how much that contributed to years of underearning, but my fluctuating income didn’t help my mindset either. Also, I wanted to be a writer, and I had conflicting beliefs about making money and being an artist and the kind of career you can build. It was all very complicated, and in the last year or so, I’ve started to unpack that baggage, which helped to move me forward in my debt elimination journey.
How did you get over this roadblock?
To get over the roadblock, I started reading personal finance blogs again. I’ve done a lot of priming in the year prior by reading Overcoming Underearning by Barbara Stanny and Money: A Love Story by Kate Northrup. I’d been playing with ideas from The Tightwad Gazette for years, but something clicked last November. I Googled “payoff student loan debt” and came across The Debt Myth blog. The success stories on that blog really inspired me. I found Dear Debt and saw how much debt she was facing and how much progress she’d made and I thought, “Why not me?” I thought I’d at least make one big payment to see what would happen. I gathered as much money as I thought I could gather, and that December, I made a “monster payment.” Seeing the principal go down as much as it did really shifted things for me. I’ve been telling my friends, “It takes one big payment to get motivated.” I think that’s true. It took a lot of priming beforehand, but once I made that first big payment, my mindset shifted drastically. A little action goes a long way.
Is there an app or tool that you used to help you eliminate your debt?
I use Mint. I have the app on my phone and I check it every morning. I look at my balances and practice gratitude. It sounds hokey, but it has made a huge difference. And I’ve seen my net worth go from alarmingly negative to breaking even. I can’t wait to see it as a positive number.
How has reducing your debt changed your life?
Reducing my debt has made me feel empowered. It’s increased my confidence. It’s trickled over into other areas of my life, and I find myself being more assertive and decisive and trying new things. For instance, I’ve been writing more, and pitching more, and sending out more work. There’s definitely a relationship between debt reduction and increasing income. Once I started paying down the debt, then my confidence grew and I was able to ask for more from myself and my work – which has led to more pay in a lot of cases. And a higher profile.
On your blog you mentioned several dreams you to accomplish how is your progress coming to accomplish these dreams?
Progress on the dreams I have listed is slow, but I’m just nurturing those now. The empowerment from debt reduction is contagious. It has a ripple effect. But, I can’t immediately do a few of those dreams AND pay down debt. I am looking at neighborhoods and researching house prices and trying to determine exactly where I want to establish my “home base.” I’m reading books about thru-hikes. My reading list is almost entirely fiction by women that has an anthropological setting or theme and memoirs/travel narratives from female adventurers. I joined a Meetup group that does local hikes. I’ve taken a quick, inexpensive class to learn about something that I think a character from my possible novel would know about. So, there’s progress, but it’s slow, inexpensive progress. I’m nurturing those dreams, and actively pursuing them, without putting pressure on myself to do everything right now. And it’s oddly very freeing.
How will you feel once you are debt free and what will you do to celebrate?
I imagine that once I’m debt free, I’ll feel incredible. I’ll pat myself on the back. And then I’ll start socking money away in a savings account. I’m gonna need money to feed that list of dreams.
Honestly, I can’t imagine what I’ll do to celebrate. I thought about this question for a long time. I thought of a necklace that I’ve had my eye on for several months. I thought of throwing a costume party. I thought of a spa day. But, honestly, I’m not sure yet. I’m going to sit with that question for a while until the right answer comes to me.
Besides eliminating debt what other areas of your finances do your need to simplify?
I desperately need to simplify my income streams. I don’t work at one place and get one paycheck. Right now, I’m managing three more extensive contract jobs with two smaller contract jobs, plus freelance work. I need to do better with both time management and streamlining the process. I’ve also got several bank accounts, and I could audit which ones would work best for the work I do. I also need to really look at what’s sustainable. I’m so focused on earning to pay off the debt, that I can’t take a step back and look at the body of work or see the pattern to see what makes the most sense. Maybe that’s how I’ll celebrate paying off the debt: taking a step back and seeing how much I need to make to fund my ideal life, then structuring my work and income streams to serve that life.
What advice or tips would you give to others who want to eliminate student debt?
Consolidate your loans if you can. That was a wise choice made early one. I’ve got one service to pay and everything is in one place with one interest rate. Then, make one big payment – as big as you can. Once you see a little bit of progress, it feeds on itself. Also, start a blog or a journal or some way to track your progress. I suggest a blog because your immediate peer group might think you’re nuts, but the personal finance community online will be your cheering section. Remember, too: once student loan debt is gone, it’s gone. You deserve to be rid of it.
Even though you are still trying to eliminate debt, do you have an emergency fund established, if so how did you determine the amount needed to fund it?
I do have an emergency fund. I keep $5,000 in it. I drive a 12-year-old car and I’m a freelancer, so having more in my emergency fund makes sense to me. With my current monthly expenses, I could live off of my emergency fund for four months. In that time, I should certainly be able to make some kind of income to help support myself. Once I eliminate the debt, I’d like to pump it up by $10,000.
What book, blog, or podcast would you suggest to someone who is looking to improve their finances?
Several years ago, a friend gave me “The Tightwad Gazette,” for Christmas. It made a huge impact. I realized that you could make a part-time job out of working for yourself to save yourself money by growing your own food and taking your own lunch to work. Then a year ago, I decided I wanted to grow my emergency fund. I’d read “Overcoming Underearning” by Barbara Stanny a few years before, but I wanted to really dive in this time. I asked a friend to read it with me, and we met weekly to talk about the exercises. I keep a copy on my bedside table and read something from it every morning.
I also like to read Wise Bread, Dear Debt, Budgets Are Sexy…and the debt-free stories from The Debt Myth were incredibly inspiring. They made a huge difference when I was just considering attacking my debt. I think they were the tipping point for me.
Any other thoughts you would like to share with others who are looking to simplify?
Educate yourself! Read personal finance blogs. Join Twitter – I discovered so many blogs that I wouldn’t have found otherwise. It’s also a very supportive community, and you can’t do this alone. You don’t have to do it alone. The PF community is so helpful. Join in the conversation.
Thanks MJ for time sometime to share with us your journey to debt your student debt as well as some of the roadblocks you have faced to eliminate this debt. If you would like to follow MJ on her journey visit her blog at dreambeyonddebt.com and you can follow her on Twitter @dreambeyonddebt.
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If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.
Enjoy the rest of your week. Til next time, take one step at a time to simplify.