I used to think that everyone had student loans so I wasn’t too concerned about it. But after getting into my dream school, NYU, I tripled my debt load and uprooted my life. I had borrowed $23,000 for my B.A. and $58,000 for my M.A. Spoiler alert: I paid off all of my debt. But it wasn’t easy. Here’s my story.

Dealing with the five stages of grief

When I graduated with my master’s degree, I felt hopeful and like things would work out. I’d be able to pay off my debt and move on with my life. 

A month after graduation, I knew I had to get serious and start paying attention to my debt. I signed up for the budgeting software, Mint. I connected all of my accounts and loans. Then I saw how much debt I was really in. I hadn’t realized just how low my income was nor did I realize how much debt I owed. Even after paying the minimum on my loans for five years and working throughout school, I still had $68,000 in student loan debt. It felt like someone punched me. I felt sick and wasn’t ready to accept the truth. I was in denial and deleted my Mint account shortly thereafter. 

By the end of that year, the truth hit me and I couldn’t hide any longer. I couldn’t afford to live in New York and pay rent while also paying my student loans. I felt forced to leave. I moved to Portland, Oregon for personal and financial reasons but it didn’t feel like my choice. It felt like debt made the choice for me. 

I was angry. I was angry at my school, angry at the government, and angry at myself. After a year of struggling in Portland, I felt deeply depressed and hopeless about my debt. I didn’t see a way out. 

It wasn’t until later that I realized my debt payoff journey was similar to the stages of grief. It wasn’t until I reached acceptance and knew that I had to make a change that I spurred into action. 

Moving into action 

After spending a year feeling like I was going nowhere and being eaten alive by my depression and anxiety around debt, I realized I had to do something differently. I thought that if I could harness the negative energy I had around debt and turn it into something positive, maybe I could actually pay off debt. 

That’s when I discovered personal finance blogs. I fell down a rabbit hole and was hooked. Then I thought I should start my own blog and share my journey out of debt while addressing the emotional impact of debt. I started DearDebt.com in January 2013. By writing and sharing my story, and posting updates each month, I turned my energy into action. Starting my blog changed my debt payoff journey and the trajectory of my life. 

Earning more money

As I was blogging, I knew I had to figure out how to pay off debt. I started with being super frugal but hit a plateau early on. I am a minimalist and didn’t have high-end things to sell. I was sharing a studio apartment and had no car as well. On top of that, I went without health insurance and hardly even went out. 

Once you hit the limits of frugality, your only other option is to earn more. So I became obsessed with side hustling. I scoured Craigslist and Taskrabbit. 

I ended up getting gigs as a brand ambassador, pet sitter, event organizer, mover, and more. I did any gig I could find. Earning more money helped me pay down debt faster and boosted my momentum. 

Staying motivated

For several years, I worked seven days a week. It was exhausting and there were many times I wanted to give up. I stayed motivated by setting benchmarks and creating a rewards system. For example, after $1,000 paid, I could go to happy hour. After $5,000 I’d go out and get a massage at the local massage school which was super affordable. Creating mini rewards along the way helped me keep going. 

I also created a “debt-free dream list” which included everything I wanted that I would get once I was debt-free. On the list was moving back to LA, getting cats, and taking my mom to Italy. 

Becoming self-employed 

During my blogging journey, I realized other bloggers were making money as a freelance writer for other bloggers. I was intrigued. I was doing these very public and active side hustles that left me exhausted. 

I had been writing my own blog for some time and had a master’s degree. So I thought if they can do it, why can’t I? So I started cold pitching and got my first writing gig. Shortly after, a friend of mine referred me to her clients as she took on a full-time job. I then had four clients and began to start making the same amount I did from my 9 to 5 from my writing. 

I was making $31,000 as an events and communications coordinator at the time. After just one year, I quit that job to be self-employed. I had made the same amount on the side so I figured that I could earn even more if I freed up my daytime hours. 

I was right. I doubled my income to $60,000 that first year and didn’t succumb to lifestyle inflation. Boosting my income so much while keeping my expenses low had the greatest impact on paying off debt. 

Paying off debt 

When I doubled my income, I started throwing thousands of dollars per month at my debt. It was exciting but also felt crazy. But it was so motivating to see my numbers go down. By December 2015, I made the very last payment on my student loans. 

I remember seeing the balance at zero hardly believing my eyes. I had been in debt my entire adult life and suddenly I was free. I began to cry and scream and dance in my living room. 

Over the next six months, I moved back to LA and took my mom to Italy just like I had put on my debt-free dream list. I got my two cats a few years later. 

I’ve been debt-free ever since and the feeling of freedom from not owing someone money is wonderful. Given everything that is going on, it gives me a different peace of mind. Things are hard right now and I can focus on maintaining and building wealth and not paying for something from the past. 

Paying off debt was so hard but worth it in the long run. It’s allowed me to go after my dreams, have more choices, and more peace of mind. 

Melissa Lockert is a freelance writer, public speaker, event organizer, and founder of the blog “Dear Debt” — where she shared how she paid off a total of $81,000 in student loan debt. Her work has appeared in Allure, Business Insider, Huffington Post and more.

The post Stuck in Student Loan Debt: How I Paid Off $81,000 appeared first on Blogging Away Debt.

Original Source: bloggingawaydebt.com

Ok, I am not buying a car. But I have been keeping my eyes on the prices and check the classifieds weekly. I plan on sticking to the one car plan for Princess, Beauty and I for the fall. However, if Gymnast moves back, that plan may have to change…maybe. As a result, I’m keeping my eyes open and ears to the ground.

I’ve now got $5,000 saved, tentatively ear marked car, just in case. But I truly do not want to buy another car. Not only because my insurance will go up. But more because the logistics of parking at our house with anything more than 2 cars is a PITA especially with 5 people with varying schedules. And when Sea Cadet gets back, we will have 3 cars until he moves out. So adding another car would…oh, I just don’t want to think about it.

Cars and the Pandemic

But I did hear something today that I had not considered…

While a client was here this weekend as I fixed his computer, we got to talking about kids and driving and so on. It has dawned on me recently that we will double drivers in the next 12 months. Princess just got her license. Gymnast just got his permit. Beauty can get her license in December. So all 6 of us will be driving. That was quick!

Anyways, I was telling him my thoughts on adding another car. And Gymnast was chiming in because he is frustrated that I let Princess take the car when she works and to volleyball, etc. so he doesn’t get to drive as often as he wants. And this client called up a local used dealer he knows just to test the waters.

Limited Cars, Higher Cost

He got the owner on the phone with over 20 years experience in the used car business and what he had to say surprised me. It makes sense but I hadn’t thought of it…the pandemic has caused two types of crisis in the auto industry (I’m sure there are more, but these are the ones he brought up.)

Auto manufacturers have pretty much shut down. Between the quarantines and the loss of income to American workers, there’s just not the demand for car.
Banks suspended repossessions, at least until June or July 1st here in Georgia, which I suppose the used car business relies on.

Between those two factors, the cost of a used car is now that of retail car. Not sure those are the right words…the example he gave is what used to be a $2,000 used car would now sell for $4,900. And for a decent used car, the dealer would now have to pay $10,000 but the bank would come back with a too high if they sold it for $11,500, so no financing available.

I’m not sure I explained that right, but the point of the matter is there is 1) a scarcity of cars to be had (not like the toilet paper issue) and 2) the price of those cars is higher than it should be.

Not a Need

I am so grateful that another car is a want and not a need for us. And I’m doubly grateful that for the first time EVER in my life, I have the money to pay cash for a decent used car. Well, it would have been a decent budget until the virus showed up.

For those that have followed me for a while, yes, the little’s dad has consistent said he was going to provide a car for Princess. And I have called him twice over the summer just seeing if he was still doing that or if he had made any headway. Needless to say, nothing there. This is why I have prepared…just in case.

The post Buying a Car during a Pandemic appeared first on Blogging Away Debt.

Original Source: bloggingawaydebt.com

Russell Boyce/Reuters

The Department of Education has not renewed contracts with student loan servicer Great Lakes and Nelnet, with plans to change the way student loans are serviced and repaid. 
The Department of Education wants to change to a model where loans are paid directly through studentaid.gov for more consistency and accountability. 
If the Department of Education doesn’t change plans, 12.3 million Great Lakes and Nelnet customers will have their loans changed to another servicer in December.
In the meantime, borrowers should continue making regular payments to their current servicer.
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As of December 2020, Great Lakes and parent company Nelnet will no longer service federal student loans. 

According to a press release by the Department of Education released July 24, the two companies haven’t made the list of the five companies with contracts to service federal student loans. The release states that five companies — EdFinancial Services, F.H. Cann & Associates, Maximus, MOHELA, and Trellis Company — will hold contracts from the Department of Education. See the rest of the story at Business Insider

See Also:

‘Let’s just see what happens’: Suze Orman advises Americans hold off buying homes during the pandemicIf our kids ever get our life insurance money, I hope they’ll spend it in 2 ways: on debt and index fundsIf your company has stopped matching 401(k) contributions, you can still save for retirement — you just might want to change how you do it

Original Source: feedproxy.google.com