How much debt have you paid off?: $85,351.15
What was it for?: Student loans for two degrees earned over seven years.
From deciding to become debt free to making the last payment, how long did it take you?: Two years and seven months.
What age did you take on your first debt, and how old are you now?: I was 17 when I started university and first took on a student loan. I am 28 years old now.
Did you do it alone or as a family?: Alone.
Did you pay off debt from your regular income, take on extra work, or change jobs to speed it up?: My regular income from my only job.
Did you sell anything or receive cash gifts to contribute towards your debt payoff?: No.
What people, books, websites, podcasts, budgeting tools, debt trackers and resources helped you?: Ruth from The Happy Saver. *Ruth here: And I was delighted to do so 🥰
Did you keep an emergency fund while you paid off debt? If so, how much?: Yes - $5,000
Did you have any setbacks along the way, and how did you overcome them?: I had my boyfriend at the time and a close friend/flatmate telling me that I'd be better off investing the money instead of paying my interest-free student loan off aggressively because, in theory, I'd make more than the amount of my loan eventually, so could pay off my loan but also have money left over to spend. The math potentially could make sense (although only in time, given the state of the share market at the moment), but it didn't really take into consideration the psychology of money and of debt to the individual person. I wasn't convinced for very long because I soon got the opportunity to take a massive chunk off my loan in one go due to over-saving for tax (I am self-employed and have to set tax aside), and it had such a huge effect on my mood and my motivation to keep paying the loan off aggressively.
What tips/hacks could you share?: Use strategies that work for you and your brain. For example, initially, I had a weekly automatic payment of $20 going onto my student loan. But when I looked at it on the IRD website, the amount just looked so pathetic to me. What was $20 against an $85,000 loan? So instead, I started over-saving by putting aside more of my income for tax than what would be needed. When the time came to pay my tax bills, I'd have a big chunk of money left over and I put that on my loan to see it go down in one big go. I also had a piece of paper (debt tracker) up on my wall that was divided into each $1,000 payment, and as I went, I'd highlight the amount I'd paid off so I could see how far I'd come and how much I had to go.
Was there a structure to your debt payoff? i.e. paying smallest to largest, or highest interest rate to lowest?: I only had one kind of debt to pay off so I just focused on paying that off in big chunks.
How did you stay motivated, and what was the most challenging part of paying off your debt?: I stayed motivated by thinking of the reward - I knew I'd get a 12% pay rise as soon as my student loan was gone. I also got a bit of a buzz of people's reaction to me paying it off so fast, especially because most people just do the minimum payment that comes out of their pay cheques and it's a bit unheard of to do voluntary payments. The most challenging part was being patient and waiting for the end of the financial year tax returns to come through so I knew how much I could put on my loan. I also found it challenging when people disregarded me. I had a close friend say to me when I told her I'd paid off $15,000 on my loan "Why? It's free money". That was a bit disheartening.
How did you celebrate making your final payment?: I drove home and told my boyfriend. We celebrated by making some sparkling water with lime and drinking it from wine glasses. Then we went for an ocean dip! And I called Ruth to let her know ;) *Ruth here: best phone call ever!
Was getting out of debt worth it, and what have you learned about yourself?: Yes, it was worth it. I've recently had to change jobs and my new one is much lower paying. If I also had a 12% deduction coming out of my pay cheque, it would feel like I wasn't getting much money in hand. I learned that I can achieve a goal if I really set my mind to it, which is very empowering, especially because it can be so easy to feel disempowered by money.
Will you ever go back into debt again?: I will probably get a mortgage to buy a house in the future (not ideal but I really want that stability for my future kids). But no other debt!
*Ruth here. I had the great pleasure of interviewing Bella twice, you can listen to more of her debt payoff journey on these two episodes:
52. I don’t want a student debt hangover!
61. Revisit with Bella: I don’t want a student debt hangover!