Often times we celebrate the rewards of paying off debt, but there isn't a lot of backstory of how I got into this situation to begin with.
I believe after all of the interest and fees were totaled into my debt amount, I was in around $85,000 worth of debt.
I graduated college in December of 2007 and moved to Austin in 2008 with a couple of grand to my name. I was born and raised in Arkansas and I knew that I wanted to get out, so I took a big chance moving to Austin without a job and with just a little amount of money in my account.
I wasn't quite ready for what I was about to get into.
In 2007 and 2008, it was the beginning of the housing crisis, when the economy started to go downhill. I could not have predicted this and now that I look back on it, it probably was not the best time to pack up, move states and be in a new city, with little money, no work experience, and no job.
I had several phone interviews before moving to Austin and a few more once I had actually moved to the city, but I didn't take any of them. I didn't know any better. I was told go to college, get an education, and you can get a good paying job right out of school. The issue was, my idea of a good-paying job was $50,000 and above, but all of the job offers I received were around $24-$30,000. I had a degree in digital filmmaking and mass communication, so it wasn't really a highly-skilled degree I had, so it wasn't like I was a good catch on paper. I was a good worker, I am smart, I can pick up on stuff rather quickly, but I declined all of the job offers I received.
Once you graduate college, you get a six-month grace period for all of your student loans before you have to start paying on them, so it didn't really sink into me that I had to start paying student loans at the time. There was no sense of urgency for me to get a job, even though I did have bills to pay.
There was really never a discussion around money growing up other than you go to work, you get money, you pay your bills and you live a life of paycheck to paycheck. I had no understanding about budgeting and how to save money.
I was doing just enough to afford my rent and pay my car note each month. In order to make this money, I began to sell things and I went to temp-jobs that I had strategically picked that allowed four-to-six-week training. I would go in, doing the training and after then after the training time was completed, I'd just leave. I did this for a few months and I got by.
Fast-forward to month five and month six, when it's actually time to begin to pay off my student loans, I had no clue how much I was going to actually have to pay towards these loans. Little did I know that two of my bigger loans were variable interest loans. I was shocked to see the amount I was going to have to pay. For those two loans alone, I think I was on a 10-year plan, so my loan payment was between $600 to $700 a month. At that time and still to this day, that is a lot of money to be paying towards student loans. On top of this high amount, I had two other loans which were ranging between $300-$400 a month.
Six months out of college, no career, no job, $1,000 in student loans and on top of all of this, Arkansas had lower living expenses, but Austin, it was a lot higher.
In 2008, despite the market crashing and the housing crisis, rent kept increasing in Austin. Thankfully, I had a roommate and we found an apartment that wasn't in the best area, but it was what we could afford. I was able to pay my monthly rent at this time.
I never was really good about cars and I was on my third or fourth car since I graduated college. My car note was around $500 which I can look back on now and know I made some terrible decisions regarding continuing to need the next best car. For what? To impress people?
I began to panic. The student loan payment came, and I didn't know how I was going to pay them with no money coming in. I took a job at Best Buy making $10-$11/hr and I still to this day remember sitting in my car holding my first paycheck with them after a full week's worth of work. I remember sitting there thinking all of this work for $200 and I couldn't believe that I was making more in college while working part-time than I was full-time at Best Buy.
I kept telling myself, “it cannot get any worse than this right here.” I knew I had two choices, I could keep working at Best Buy and have some money or I could not work at all and have no money. I refused to go backward at this point, some income is better than no income.
I was able to get my student loans deferred so that I didn't have to make any payments at that time and this went on for about a year. Yet, deep down I knew that I would never be able to pay these student loans off making $14-$15,000 a year.
A friend of mine went and interviewed for a job with a smaller company and he began to tell me about it. They were seeking customer service people and I figured I could at least interview. It ended up being a group interview of around 25 people applying for various positions throughout this company. I had no idea how I did during this interview, but I was offered a job and I took it. Though this one wasn't a high paying job either, $21-$22k a year with profit sharing after 90 days on with the company.
The new company allowed me to work 9-5 Monday through Friday and I could then work at Best Buy during the nights and on the weekends. I did this for the next 90 days and into the summer. I began to cut back on Best Buy some because I just wanted a day or two to recover.
I knew that if I kept this job with my foot in the door that other opportunities would come through within this company. Five months later, I was promoted and then five months after that, I was promoted to supervisor. Yet, still not enough to tackle the amount of debt that I had.
At this time, I was around $100,000 in debt, car and everything included. I put my loans on an income-based repayment system and then some I just did where I paid interest only because again, I couldn't pay the loan fees and live where the cost of living was rapidly increasing.
I'm sure you are wondering why I didn't pack up and move back to Arkansas, but that wasn't going to benefit me. I knew that I could get a job there in Arkansas, but the room for growth wasn't as available to me as it was in Austin. I felt Austin had a lot more opportunity for me, so I stuck with it.
I continued working with this company and I did, in fact, have more and more opportunities to scale with it. I was being paid to learn and truthfully, I was actually learning more than I ever did in college. I was finally able to make a decent income and I felt as if I could really breathe again!
It was here where I was introduced to the concept of paying off debt and I began to save money instead of paying off debt. At the same time, I was not investing this money anywhere either. These times had been an all-time low for me and I didn't want to go back there.
Fast-forward, I had been paying on these loans for a few years by this point, but my loan balances hadn't gone down. I kept wondering why it wasn't moving and I finally started really looking at it. Each month I was primarily paying towards the interest of the account versus the principal.
Once I saw this, my motivation to get rid of it went higher and that started my process of getting myself free of the chains of debt. If you too are in this situation, do not become discouraged, it's frightening to see the amounts and it's difficult sometimes to gather your thoughts on how you are going to get out of it, but I assure you, there is light!
As long as you hang in there, put good intentions and good energy into it, you will find yourself like me, debt free!
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