Happy 1st Anniversary
Greetings from Austin!
It’s been exactly one year to the day since I paid off my $90k of student loans in seven months. While I’ve stopped making regular updates to this blog, I do plan on providing annual updates for the loyal readers and new visitors who might be interested in a more long-term view of all the goings-ons.
When I paid off my debt and found myself with an extra $1,057 in my pocket every month, I wasn’t completely confident that I’d be able to fight consumerism due to my new-found purchasing power. However, I’m happy to report that I’ve continued to live well below my means and have grown my savings by several thousand percent over the past year. (Edit: To put that in perspective, I started with about $500 in savings after I paid off my student loans, so going from $500 to $10,000 (for example) is a 1900% increase.) Instead of investing these and future savings in securities or buying stuff I don't need, I've decided to enter a personal challenge to pay off my mortgage in three years and capture the guaranteed 5.25% return. But more important than the guaranteed return--which could very well be eclipsed by the bull run we've been on recently--this three-year journey will result in guaranteed freedom. (And unlike the time I paid off $90k in seven months, I'll maintain a 15% contribution to my 401k during this time.)
Most people who stop by this blog are typically on debt pay-down missions of their own, so my aim here is to inspire motivation to stay the course. To that end, let me take a brief moment to talk about the past 12 months of living without the student loan burden.
Life is not about finding happiness; it’s about experiencing richness. How do I define richness? Ever since I started living below my means and paid off my student loans, my life has been approaching the kind of richness that I’m thinking about.
Within the past year, I changed employers when I found a more interesting opportunity at a company that I truly believe in. The role I landed at this company was at a similar pay level to the one I had left (i.e., not a promotion), but the actual content of the job was something I had never done before, so failure was a definite possibility. However, I was living below my means and had paid off my student debt, so I was in a solid financial position to take a risk to try to improve my life. Fortunately, the change turned out to be a very positive one. If I hadn't dedicated myself to cutting back and paying off my student loans, I’d probably still be at the old job with my blinders on, working for a paycheck to support my then-inflated lifestyle.
Within the past year, I’ve joined a competitive rowing team and enjoy exhausting pre-dawn rows three to five days a week. I’ve met a lot of great people in the rowing community and hope to make many long-lasting friendships. It feels unbelievably good to be back in boat and competing again like I did in college.
Practice with the crew
The eight-person boats I rowed in at the Heart of Texas Regatta won two gold medals and a silver, and we’re headed to California in April to race at the San Diego Crew Classic. We're considering racing at the Head of the Charles in Boston later this year. If I were still maniacally focused on my career to fuel my inflated lifestyle and pay my student loans at the regular rate, I don’t think I'd have the energy to wake up at 4 AM to go rowing around the lake or the time to take a couple days off of work to go paddle around the Pacific. These days, however, a 50-hour work week is a bad week and the norm is closer to 45. (I still eat home-packed lunches at my desk to maximize frugality and productivity.)
Within the past year, I met a beautiful woman whose values align almost completely with my own. (If only she didn’t like country music so much…) She’s kind to a fault and enthusiastically committed to the Daymaker Movement. She places a great deal of value on her health like I do and works out every day to stay in shape. In college, she worked two and sometimes three jobs at a time in addition to playing softball on a scholarship to keep her student loans at an expensive private college to a minimum. She has a great job here in Austin, but she still shops at goodwill, has a roommate, and drives a car that’s even older than my own 13-year-old Honda. We do challenge each other on occasion, but we have the best of times together because we’re often on the same page. I don’t think she would have given me the time of day if I had been embracing a free-spending lifestyle when we met, and that would have been my sad loss.
Within the past year, I’ve been able to contribute to society by keeping this highly personal blog online while also self-publishing an inexpensive book about dealing with debt. Just last week, a commanding officer in the US Navy bought the book for all 350 sailors aboard his ship in an effort to educate them about money management. We need more leaders like him--people who care about their team's well-being not only on the job, but in their personal lives, too. If I hadn’t paid off my student loans, that book wouldn’t exist right now.
There are those who might believe that once they pay off their debt, they’ll have extra money to burn and blow on all kinds of things that will make them happy. My experience was markedly different. We’re not here for happiness, we’re here for richness, and in my mind, a rich life is achieved by having purpose (my career), having passion (rowing), having someone to care for (my girlfriend), and giving back (my blog and book). It’s not about the money. In fact, it was only once I stopped spending money like a complete jackass and paid off my loans that doors started to open up for me. I have no doubt that paying off my house will open even more doors, and I’m excited about what the future holds. I hope you’re excited about what your future holds once you pay off your loans, too.
Other People's Work
While I have your attention, here are a few of my favorite reads from the past year. They're all all completely applicable to anybody who's currently engaging their debt in a battle or considering taking on debt.The list is book-ended by a couple of solid, existential articles while the middle articles deal with the usual suspects: student loans, retirement, and the cost of living.
6 Harsh Truths That Will Make You a Better Person
#6 The world only cares about what it can get from you
#5 The hippies were wrong
#4 What you produce does not have to make money, but it does have to benefit people
#3 You hate yourself because you don’t do anything
#2 What you are inside only matters because of what it makes you do
#1 Everything inside you will fight improvement
NMHD: If you read only one article from this stack, let it be this one. Strong.
"We have a more informed class of college consumers," said Bonnie Snyder, founder of Kerrigan College Planning in Lancaster, Pa. "Everyone today knows someone who went to college and ended up with a career that didn't justify the cost. They see college as a more risky investment."
NMHD: Helllllllllllllllllllllll yeah!!!!!!!!!!! Go high schoolers!!!
Millennials Are Paying Off Debt — but That’s Not Necessarily Good News
Last week, Pew Research released a new study showing adults younger than 35 reducing their debt levels faster than older generations. Millennials cut their overall levels of debt by 29% from 2007 to 2010 (from $21,912 to $15,473) while Americans 35 and older only cut theirs by 8% ($32,543 to $30,070). In fact, according to Pew, the share of younger households with debt of any kind fell to 78%, the lowest level since the federal government started collecting that data in 1983.
NMHD: If you read it, this turns out to be a real fear-mongering article, but let's focus on the positive: Millenials are seeking FREEDOM!
Workers Saving Too Little to Retire
[Joe LaCascia, a 75-year-old retired insurance broker in Polk City, Fla,] estimates he only has enough to last until [his wife and he] are 85. He said he is more concerned about what the future holds for his children, a 51-year-old art director-turned-roadie and a 49-year-old third-grade teacher. "They're never going to be able to create wealth, other than what our generation leaves them and what they do with it," he said. "They have more uncertainty than we have."
Your Credentials Are Holding You Back
We make career moves based on ever-increasing sunk costs. As any microeconomist will tell you, there is no surer path to bad outcomes than incorporating retrospective expenses that cannot be recovered into your decision making. But as the cost of accreditation rises, the temptation to "use" our degrees and certificates to land high-paying (but ultimately dissatisfying) jobs has never been greater.
NMHD: At the end of the day, this is probably a better articulated reason for why I chose to get rid of my debt so quickly. The author is simply using a lot of big words to eloquently describe the pursuit of one thing: freedom.
A Minimum Wage Job in Austin Gets You a Two-Bedroom Apt. – And a 111-Hour Work Week
Austin has the highest average rent in the state of Texas. And Austinites trying to afford housing on minimum wage need to work close to three full-time jobs.
NMHD: If you still have student loans, find roommates!
10 Things Your Commencement Speaker Won't Tell You
Your time in fraternity basements was well spent.
Some of your worst days lie ahead.
Don't make the world worse.
Marry someone smarter than you are.
Help stop the Little League arms race.
Read obituaries.
Your parents don't want what is best for you.
Don't model your life after a circus animal.
It's all borrowed time.
Don't try to be great.