On Borrowed Dime

There’s a four-letter word that is guaranteed to make any twentysomething sweat: debt.

There are all sorts of articles about how student loans are Millennials greatest financial concern, how loans are delaying life milestones and even how 30% of Millennials would sell an organ for debt relief.

Non-millennials seem to love talking about and studying our financial issues. We’re like little indebted lab rats – everyone thinks they know what’s best for us from an outsider’s perspective. But what is it like to be an actual millennial with student loans?

It’s…life.

It’s what I know.

Image courtesy of minimography.com

Our student loan debt story

My husband and I started dating in our first years of college. We were pretty typical: fresh out of high school, exploring the rest of our lives and excited to be 3 hours from home in a new city with new people. We also had no idea what loans would ultimately mean for us because all we saw was checks deposited to our bank accounts each semester.

Tens of thousands of dollars is much easier to spend than it is to pay off (plus interest). Someone may have told us that along the way, but it got very real once we graduated.

Now here we are, living in an expensive city (by choice!) with an ambitious goal of being debt-free by 2018. We’re making more than we were in Indiana, but we’re also both working jobs that don’t truly require a college degree, which is the story of so many millennials’ lives.

The interest rates we’re facing are costing us somewhere around $160 a month. Imagine buying a fancy coffee every day of the week – that’s what our interest is doing, and we don’t even get to drink the coffee.

Minimalism and debt

When I first started this journey a few years ago, I began from a place of having too many clothes and too much debt. I discovered Mr. Money Moustache and have since been on a mission to be debt-free.

I played around with the idea of early retirement, but my husband and I love where we’re at and the rent here makes financial independence a little…eh, a little more difficult.

But just like minimalism, we can choose how much it touches our lives – extreme minimalism and extreme frugality are not my thing, although I do strive every day for less stuff and less debt.

Minimalism and debt do go hand in hand – the less financially obligated you are to people and things, the less you have to worry about working long hours or a job you hate to pay off the things you don’t need. Being debt-free someday will allow my husband and I to be more flexible in where and how we live, and it will allow us to live more authentically as ourselves.

My advice about student loans

I am not a financial advisor. But, I am a young person living in a big city and dealing with an average helping of student loan debt so I have a few words of advice to share.

First of all, take as little as you can. I’m not saying to skip out on your dream college for an inexpensive community college – follow your values. Work as much as your schedule and life allows for while you’re in school, but don’t let a food court job get in the way of good internships (find paid internships if you can).

Go to parties, go to bars, but don’t spend all your time and money there.

Second, know your worth. Understand what level of pay your education can get you, shop around for jobs if you can and negotiate your salary. Ladies, especially you – women are known for not negotiating salaries.

I made a five-minute phone call before accepting a job offer and snagged an extra thousand dollars on my salary. It still kept me under the average salary for a college grad, but it was better than nothing.

You need to find what works best for you when it comes to actually paying off your loans. The debt snowball works for some, while my husband and I are adopting a highest-interest first method.

And again, be clear about your values while you’re in debt. Is your priority to be debt-free as soon as possible? Ours actually isn’t. If it were, we would not live in Los Angeles and I would have kicked the bunnies out years ago. Our priorities are to live well in a place we love.

Smooth sailing to all of you in similar boats!

You’re Not Saving Money, You’re Making It

I’ve been very interested in the concept of financial independence lately, and I’m infatuated with Mr. Money Mustache’s blog. He and his wife retired around the age of 30 and proceeded to have their first child. I think it’s important to be reasonable about my own situation and know that I’ll unlikely be that fortunate (he had no college debt, and scored some high-paying engineering jobs), but his story and insights are very inspiring. I’m hoping to retire (or be “financially independent”) well before the traditional retirement age.

One of the most interesting concepts I’ve picked up as I’ve read this blog is to start valuing my time differently. I’ve started looking at everything as a transaction. If I walk to the store instead of driving, I’m actually making money rather than spending it. If I drive to work, I’ve estimated my cost at about $1-2 a day. If I ride my bike, I consider that money made (rather than saying saved, which has a different connotation).

This is how I view it: money made can then be invested, but money saved can then be spent. For me, the words I use are essential in shaping how I think.

I believe that once we start valuing our time differently and redefining how we make/spend/save money, we’ll enjoy seeking out profitable alternatives. By avoiding costs, we’re actually increasing our take-home pay and our net worth. AND not to mention all the health benefits of riding bikes and walking instead of driving around in ridiculous “clown cars” as MMM likes to call them.

Just a little tidbit on how changing how you think about something can change how you act. 

Happy Tuesday!