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By Elizabeth Chan, as told to Marianne Hayes
This story originally appeared on LearnVest as “Paying Down $112K of Debt Super Fast Made Me Miserable—So Here’s What I Did Instead.’”
In the LearnVest Personal Stories series, everyday people share the details of their money lives, discussing the individual choices they’ve made and how it’s impacted their financial journey.
Today, one woman shares how her drive to be debt-free meant sacrificing a balanced post-grad life. Here’s how she turned it around without losing sight of her ultimate goal.
When I graduated from law school in the spring of 2012, I came out with more than just a degree. Between student loans and credit cards, I also had $112,000 of debt to my name. Not exactly how I’d pictured kicking off my new career.
I was lucky enough to land a job at a great firm in Washington, D.C. shortly after graduating. But as the six-month grace period on my student loans ticked away, my massive loan balance took up more and more space in the back of my mind. So I decided that come repayment time, I’d use the bulk of my $100,000 take-home salary to knock out all my debt within one year.
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The good news is that after just a few months, I’d made a huge dent in my balance. The downside? I was utterly miserable as a result.
While most get-out-of-debt stories tout the benefits of self-discipline and sacrifice—all in the name of debt-free living—they rarely touch on the consequences of being too aggressive with debt repayment. (Yes, there is such a thing.) Here’s exactly how that happened to me—but why, ultimately, I don’t regret it.
Feeling the Debt Pinch
Let’s back up a bit. When I set out on my goal in the winter of 2012 (just after my grace period was up), the thought of paying off that much debt in a year didn’t seem terribly unrealistic at the time. My student loans accounted for $90,000, while credit card bills made up the rest. Fortunately, I was earning enough to easily cover my rent and was already on track to max out my 401(k). After accounting for my basic living expenses like food, cell phone and utilities, I saw no reason why I couldn’t throw all my leftover paychecks at my debt.
My new apartment was yet to be furnished, but that could wait, right? The only potential red flag was that my plan would make it nearly impossible to build up my emergency fund if I focused solely on my debt. This made me a little nervous—I’m a saver at heart. But I’d never been in debt before and coming face to face with my total balance was enough to make me shake off any hesitation.
You have to remember, the economy was only just recovering from a major recession back then. Many of my peers were worried about their futures, which got me thinking: Did I really want this six-figure debt hanging over my head five or 10 years down the road? While I had this great salary coming in, I decided to start eliminating it right then and there. I figured my future self would thank me for it.
With that spirit, I hit the ground running.
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Knocking Out Over $100K of Debt In One Year
I started out super-enthusiastic about my plan. I set up automatic student loan payments for $2,500 a month, which was $1,000 more than my minimum payment. As for my three credit cards, which each had limited-time 0% interest, I began making the largest monthly payments I could afford. I also summoned an incredible amount of self-control when it came to everyday spending, skipping out on lifestyle upgrades I would have loved to have made.
While most new grads splurge on a fresh wardrobe before starting their first jobs, I opted for bargain stores. My 15-year-old car was nothing great to look at, but it ran well enough and was fully paid off, so I was in no rush to finance a new one. As for basic home furnishings, the only major thing I purchased for my new home was a mattress. The rest of my one-bedroom apartment was left relatively bare, aside from some necessities I already had from law school.
I also identified other ways to funnel even more cash toward my debt. I went to the extreme, deliberately not including things like coffee dates or eating out at restaurants in my budget. Instead, I brown-bagged my lunch every day. And on days that I forgot to pack it, I simply skipped eating altogether. Vacation plans, like a “bar trip” (something many law school grads do to celebrate passing the bar), were also put on hold. My sole focus became paying off my debt.
I’ll be the first to admit that I’d entered into obsessive territory. I was basically working around the clock, using every bit of extra income—including bonuses—to make extra payments toward my student loans. I also seriously upped my credit card payments. There were some months where I paid upwards of $6,000 on my loans and 10 times the minimum payment on my credit cards. By the spring of 2013, my debt had dwindled down to about $60,000.
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On the one hand, I was thrilled with what I’d accomplished and could see the finish line not too far in the distance. On the other, I was absolutely exhausted. I also had nothing in my savings account, something that was highlighted during a financial close call I had a few months into my payoff journey. I was just about to make a credit card payment when I realized that if I did, the rent check I had already sent off would bounce. I caught my math error in time, but because of my lack of saving—combined with my stupidly aggressive debt repayment plan—I didn’t have enough cash to cover both bills. I ended up paying my credit card late that month, which wasn’t the end of the world, but definitely not ideal.
It was a major moment of clarity for me. What would I do if faced with a real emergency?
I reevaluated the sacrifices I was making to achieve this monumental goal I’d set for myself. Was it worth it? Gradually, the desire to live a more comfortable lifestyle started winning out. After eight months, I decided to rejigger my plan.
Reconfiguring My Goals: How I Eased Up On My Debt Payments
In July 2013, I switched up my strategy. The big change here was that I eased up on myself. (Skipping meals in order to get out of debt faster just didn’t make sense.) I retooled my plan, adding six months to my original deadline. This meant scaling back on my debt payments and redirecting more money into my emergency fund. I did stick to paying at least $2,500 per month on my student loans, but I was no longer earmarking every dime I had for debt. I did, however, keep up with paying well beyond the minimum payments on my credit cards—the introductory 0% interest rates I had were winding down, and I wanted those balances paid off before that changed.
My entertainment budget got some upgrades, too. I finally granted myself permission to do things like go out to dinner with friends or spend an evening at the movies. I also gave in to the fact that I needed some creature comforts, heading to Craigslist and finally bringing home a couch.
In other words, I budgeted some breathing room into my financial plan. By the time July 2014 rolled around, I was able to make my last debt payment—18 months after I started. The fact that it took me over a year to do it didn’t make me feel any less proud of myself. Plus I had a few thousand dollars in my emergency fund when I hit the milestone.
The first thing I did after getting out of debt? I splurged on a $200 hand mixer for my kitchen, which was something I considered a real treat. Since then, I’ve remained debt-free, building up my rainy day fund to the equivalent of about nine months’ of expenses. I’ve also been able to invest some extra money in the stock market. These days, I definitely live a more comfortable lifestyle, with the big-picture goal of eventually buying a house someday.
Until then, I couldn’t be happier with my choices. The biggest lesson I learned is that when it comes to paying off debt, it’s all about striking a healthy balance.