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Buying freedom (and singing lessons!) by paying off $100K in debt despite starting at $18K in annual income across 3 jobs (E18)
165 Plays8 months ago
If you're barely scraping by and the idea of even spending on something you want to do seems unfathomable, this episode is for you.
Amy came from humble beginnings, raised by parents who had no choice than to be frugal and scrappy in order to provide a great upbringing for Amy and her sister. Amy followed her parents' examples when she finished college and had to work three jobs to earn ~$18K and never miss a payment on her $100K in student loans. Through her hard work and resourceful lifestyle, Amy worked her way to a corporate job that allowed her to aggressively pay off her debt and, with time, get to a point where she's able to spend on things that truly add happiness to her life.
Listen to Amy's story to hear how she developed the habits and scrappiness needed to stay afloat and buy her freedom back. And don't forget to celebrate Amy's "Debt Freedom Day" on November 5!
If you have a story to share and are interested in being on this podcast, reach out to Jeff at wisemoneymentor@gmail.com.
For more information about Jeff and the coaching services he offers, check out his website at www.wisemoneymentor.com.
Create your podcast today! #madeonzencastr
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Transcript
Introduction to Wise Money Mentor Podcast
00:00:04
Speaker
Welcome to the Wise Money Mentor Podcast. I'm Jeff, a personal finance and budget coach, and the host of this podcast. My goal is to help you get the clarity you need to take control of your finances and feel truly confident that you are using your money to build the life you want. Through this podcast, we share stories and principles that help you do exactly that. I'm excited to dive into this episode, so let's go.
Introducing Amy and Her Financial Journey
00:00:44
Speaker
Amy, it's good to see you. How are you? I'm good, Jeff. How are you? I'm good. Thanks for coming on the podcast. I'm excited to ah chat with you and learn more about you and share your story with those who are listening. I first discovered your story on Facebook, as with many others. It's in the YNAB fans Facebook group.
00:01:05
Speaker
But unlike others where i discovered post yours was a comment so you are responding to somebody else who posted in in the group questioning the value essentially of why not been using it and subscribing to it overtime.
00:01:21
Speaker
And your comment jumped out because you basically made the case for you. You acknowledged that, hey, everybody has to make their own decision. But for you, you made the case as to why that software, that methodology has been valuable to you. I'm just going to read um a couple of the comments that I found. And then ah I'd love to pass it to you to just introduce yourself a little bit. And then we'll jump in and and I'll pepper you with a bunch of questions if that works for you.
00:01:48
Speaker
Yeah, that's great. Awesome. So one of the comments you said is, YNAB is the only reason my net worth has increased $215,000 in four years. So I'm not worried about a few extra dollars. As Ramit Sethi says, I'm asking $30,000 questions instead of $3 questions.
00:02:06
Speaker
Another comment was, I used to be terrible with money. I was afraid to even open my bank accounts and I would overdraw constantly. I realized pretty quickly that YNAB immediately paid for itself once I was no longer paying overdraft fees to the bank. And that only took a few weeks of budgeting for me to correct. It's been five years and I've been hooked ever since.
00:02:27
Speaker
I paid off $65,000 of debt in 18 months, started investing, and watched my net worth take off. I saw both of those comments. I thought, well, I want to learn more. like I want to ah hear Amy's story on how she did that because a lot of times we see these comments or posts.
00:02:46
Speaker
And you want to ask more questions. You want to like double click, if you will, into the story. So that's partially why I'm doing this is because it's a chance to do that and to hear from people who have achieved really awesome things in their financial lives, how they did it and what we all, the rest of us can learn from those stories. So anyway, I'm excited to chat with you. Before I pepper you with questions, though, ah how about you go ahead and introduce yourself? Sure.
Amy's Background and Frugal Upbringing
00:03:11
Speaker
All right. So my name is Amy. I am 33 years old.
00:03:16
Speaker
no partner, no kids, no pets, and I live in Rhode Island, and I have been using YNAB for five years, as you mentioned, and I love to talk about money, and I have a few hobbies here and there. I love to sing, I love to dance tango, those are kind of my two big passions, um and I'm really excited to chat with you today.
00:03:40
Speaker
Yeah, one of those hobbies is conducive to a podcast medium, if you want to sing for us, extemporaneously. The other one, Tank, like I don't think that's going to really come through on a podcast. but I don't think so, but maybe some karaoke's in the future. Yeah, maybe. um So I want to start before jumping right into, hey, the last few years, what have you accomplished? Let's set the stage a little bit on, like where did things start for you? like How were you raised?
00:04:08
Speaker
relative to money, like how did your parents talk about money, think about money, what was instilled in you? And then how did that evolve over time? Like, as you go to college, how did that work as you started your career? How did that work and how you thought about money? Yeah, so I grew up in a two parent household in New England. And ah my parents both had humble backgrounds when it came to money. I have a mother who was raised by a single mother in a trailer park.
00:04:38
Speaker
and a father who was one of five kids with a housewife mother and a small business owner father. So both of my parents were sort of entrenched in a frugality mindset. And to their credit, they worked very hard at multiple jobs to provide my older sister and I a really comfortable upper middle class upbringing ah with lots of extracurriculars and activities and involvement at school. And education was our big focus. they We had very
00:05:21
Speaker
high expectations placed on us academically, which we were lucky enough to to meet. And college was always a given. We were always told, when you go to college, when you go to school, it was just an expectation that we were going to pursue higher education. And they were very concerned about raising two daughters who were career driven and financially independent, which I still value very highly. I think that was incredibly valuable and I'm thankful for that upbringing. um But I wasn't really taught how to invest or save
00:06:07
Speaker
beyond pinching pennies and trying to be as frugal as possible. And that's not to say that my parents were cheap, but money was always something to worry about, something to fuss over, ah something that kind of loomed overhead menacingly instead of a tool to build a better life or to save for retirement
College Choices and Student Loan Challenges
00:06:34
Speaker
and that kind of thing. so I was really taught to save, save, save, and that sort of it. um I actually, when I was really young, we had an allowance that we would get in quarters and half of the quarters would go in the piggy bank and half of the quarters would go in the offering plate at church. And that was our system that we learned how to save. Notice like nothing about spending.
00:07:04
Speaker
Yeah, there are only two halves. Only two halves. In fact, I don't think I broke into that piggy bank until I was in high school to buy a digital camera for a trip I took in my sophomore year of high school. So that's kind of where I'm sort of coming from. And in terms of college, my sister and I were both high achieving students and we both applied for and were accepted to very expensive private schools. And whereas some of my friends, their family members would say, nope, you're going to the state school because that's what we can afford. That's what you're getting scholarships for. My parents kind of said, you know what, we'll we'll figure it out. We'll build our wings on the way down. We want you guys to go to the colleges you want to.
00:07:58
Speaker
And where I'm thankful for that, it did mean that I was saddled with a hundred thousand dollars of student loans by the end of my undergraduate experience. That's really challenging. You know, you said the phrase you said is we'll figure it out. What's really challenging, and this happens in any aspect of a financial life, whether it be like, oh, can I afford to buy this thing right now?
00:08:25
Speaker
You look at your bank account balance for a lot of people. That's what they do. They're not sure. Oh, what bills do I have coming due before I get paid again? Uh, I'm not sure. Whatever. I'll just use my credit card and figure it out. Or same with college. Let's an investment. We'll figure it out. And my response to that is just, okay, figure it out right now. Like calculate what will need to be true.
00:08:52
Speaker
about the cost of this thing or our ability to pay off this thing for it to be a wise decision. Like do the hard work now before you make the commitment. Because when you make a commitment today, you are binding future you to some sort of obligation. So for you, you just said you graduated from college which with $100,000 in student loans. And what that meant is future you, meaning as you're starting your career,
00:09:21
Speaker
and you're making an income, suddenly a portion of your income is now locked in to paying off a decision by past you. And so you have a little less freedom, a little less autonomy. Anyway, I just think the phrase, oh, we'll figure it out. I know it's well intentioned in most cases, especially with education, but I also wish that more people would invest the time and effort to actually, okay, figure it out now. Like what, what do we need to believe to be true?
00:09:51
Speaker
ah for this to be a wise move. Exactly. And while I don't regret anything about my college experience, if I had to do it again, I would probably do exactly what I did the first time. But a 17-year-old child doesn't really grasp the gravity of what student loans feel like, how they'll impact your quality of life day to day within in four to five years in the future. And that's certainly where I was. I was just like, I don't know, give me the piece of paper, I'll sign it.
00:10:28
Speaker
I don't know what this is about, but I want to go to the school. um Maybe in retrospect, a gap year may have been a good idea, or maybe swallowing my pride a bit and going to a state school on a full ride could have been a great idea.
Early Career Struggles and Budgeting Beginnings
00:10:44
Speaker
Or starting at the state school and transferring for the last half or something like that.
00:10:48
Speaker
Exactly. Or even community college classes. These are all things I understand now as a person in my 30s, but I did not even really understand that those options were open to me. Can I ask another question about your parents? Because you mentioned, hey, they were raised in humble circumstances. They were very frugal as adults. They tried to teach you and your sister saving and frugality.
00:11:15
Speaker
But then with college, they're like, oh, we'll figure it out. We want you to have the experience of college at a good school where you want to go, etc., which is admirable in a lot of ways for sure. But I'm curious, during your college experience, did you sense any sort of stress on your parents' part that ah you were incurring these ah costs or these accruing these loans?
00:11:37
Speaker
and then the prospect of paying those off. Did that come into play at all? Did that impact your college experience or did they truly say, we'll figure it out and not really vocalize anything during college itself? It was pretty apparent from day one that the loans were stressful to my parents. I was sort of reminded constantly of how expensive this particular school was Um, and probably not actively made to feel guilty, but perhaps a bit passive aggressively reminded. That's a great, that's a pretty expensive school and we didn't get much financial aid and I worry about these loans and that kind of thing. And they, they would still be happy to hear about
00:12:26
Speaker
the fun classes I was taking, the friends I was making, the experiences I was having, which were overwhelmingly positive. And they'd be happy for that. But in the background, there was always that little chirp of, well, this is a very expensive school. and And money was just not really something talked about in my family. So I'm not even sure what kind of strings had to be pulled behind the scenes in order ah for my parents to accomplish the payments or just getting us through college, my sister and I. As you approach the end of college, you obviously had chosen a major
00:13:10
Speaker
Did the prospect of needing to pay off these loans, the comments from your parents about the the expense, et cetera, how did that come into play in terms of your search for a job, your decision of of profession, um the like mindset you took into your working life upon graduation, how did it come into play there?
00:13:33
Speaker
It's sort of interesting because I majored in communication studies, which is the broadest possible ah topic of study a person can choose. So it wasn't even terribly ah specialized.
00:13:49
Speaker
um I sort of figured it would apply to anything that I could possibly do as a career but I was sort of interested in tech and web and marketing so it seemed like it would be useful no matter what. But finding a job after graduation was very difficult and of course now I felt even more pressure from my family because payments were looming and I was not finding a job and I was living with multiple roommates, working multiple jobs. I worked part-time in an office and part-time on a food truck trying to just make ends meet and my savings were rapidly
00:14:34
Speaker
ah running out but about a year after graduation I was offered a job in a tiny web startup for a blog and I was able to find that job through some networking which thankfully I had done some work for the Career Development Office of my university and I had sort of learned how to network which has been the most valuable skill I've learned so far honestly So I moved to North Carolina for that job knowing that I would be wildly underpaid, but I was willing to take the risk because I needed to get out of my expensive college town ah where my savings were running out. So I took a chance on this this very risky job and only lasted a year
00:15:24
Speaker
And during that year, I had to take on multiple side gigs just to stay afloat. I was lucky to have a roommate, very cheap rent because the house was falling apart. um And I worked in a grocery store part time.
00:15:43
Speaker
And I mentioned previously that I'm a singer. I found a singing gig at a church part time. So between three jobs, I was able to keep my head above water, but I certainly was not thriving financially at that time. What was it what was it about? Because I think when you and graduate college, you're starting a career. You are scrappy, like you um cobbled together the resources you would need to live. ah For a lot of people, they may not be as scrappy and they may may just think, oh i'm you know I'm new to the career, I'm underpaid now, but you know with time. So maybe they'd be more comfortable assuming more debt.
00:16:28
Speaker
right um so Why do you think you were scrappy in that regard in in cobbling together the income instead of entertaining incrementally new debt day to day? Right. So I think I was scrappy because i I saw my parents be scrappy when I was growing up. They both worked multiple jobs, part time. I think at one point my mother was working three jobs to pay for
00:17:01
Speaker
a trip for to France for me to be able to go to France for 10 days as a student, which is incredible that she did that. That is incredible. Yeah, very very lucky to have the parents I have. And my dad, he's an artisan and he was doing some like woodwork on the side, furniture repair, in addition to his full-time job.
00:17:25
Speaker
And so I had good role models to see like, you gotta to just push through, do what you have to do. And the idea of the student loans, at that point I was paying the student loans. um It was about $500 a month that I was coughing up, working three jobs for minimum wage or less at that time.
00:17:49
Speaker
And I figured I just don't have any other options except to be scrappy. That was just my option, yeah. Did your parents, and maybe you don't know, because a lot of parents don't disclose financial stuff to their kids, but
Financial Mindset Shift and Discovering YNAB
00:18:03
Speaker
do you know when your parents were scrappy, did they avoid debt? like did they um Were they successful in avoiding ah like credit card debt or personal loans that just basically were used for cost of living type of stuff?
00:18:19
Speaker
I would say I don't know the specifics and they certainly never discussed it, but we definitely didn't buy things we didn't need. They probably incurred debt for car payments. We would buy new cars, but drive them forever.
00:18:36
Speaker
yeah my car that I currently drive is a 2004 Honda that my parents were very generous and in letting me have when I moved to North Carolina. And that's obviously been a great investment. um But they certainly were not spend thrifts. My sister and I wore hand-me-down clothing from our cousins. Everything was bought on sale. So we were certainly not trying to keep up with the Joneses, but they did care about having a veneer of having everything we needed and a little comfort here and there. That makes sense. So when you're in Charlotte, you mentioned that you you took the startup job. You had a few other gigs that you use to help make ends meet. You are paying 500 bucks a month for student loans.
00:19:31
Speaker
How did that feel and what was it that triggered after a year? Like, hey, something's got to give. I got to do something different. Like, tell me about that decision.
00:19:43
Speaker
Well, it was really it was the really just a survival instinct. So that web startup job ended after a year and suddenly I was unemployed and I had to just make something happen.
00:19:58
Speaker
and After about two months of unemployment, I found a post in a local jobs Facebook group looking for a marketing and digital marketing person. And I reached out and interviewed at this digital marketing and web design firm and thankfully got the job at, I think, 30,000, which is, of course, not a lot. ah But it was more than I was making, working three jobs.
00:20:29
Speaker
So it was a foothold toward the next step. And at that point I was still, I had quit the grocery store job, but I was still working the the church job as a singer, which was enough to cover my rent because my rent was so cheap.
00:20:51
Speaker
um But I could feel like I could breathe a little bit more. And at that point I was starting to think about money more than I had before. Like I mentioned in my,
00:21:03
Speaker
Facebook comment. I had originally been afraid to open my bank account. I would overdraw all the time. But with this new job, I could at least try to think about what to do with the next step. And that's sort of when I discovered the fire movement, particularly the blogger Mr. Money Mustache.
00:21:25
Speaker
He was very influential in my thinking for quite a long time. And for anyone who's not familiar with him, he advocates for what's called fire or financial independence, retire early. And he's a particularly frugal person, advocates for frugality, minimalism, basically how to live as comfortably on as little as possible. And that was where I was in terms of mindset at that point in my life. um I was almost comically frugal. People would kind of joke about how little money I spent on things. And that was sort of a point of pride for me at that point in my life.
00:22:05
Speaker
um But I worked at that marketing job for about two and a half years. I got a moderate raise during that time. But really, i and the big turning point in my financial journey was getting my first big kid, quote unquote, corporate job for a national retailer. And that was a $65,000 a year job.
00:22:32
Speaker
And that was when I was like, oh my gosh, I can make money. I can make actual money and I can dream bigger and I can think about living a life that's bigger than just being frugal all the time. Wow. You know, for a lot of people,
00:22:53
Speaker
When you're growing up or you're starting your career, you don't realize how well various professions are paid. Like you don't know what you don't know. Exactly. But they do, you know? Yeah. And ah so when you're at 30,000,
00:23:08
Speaker
Maybe you did have the like the awareness of, hey, a corporate job and this type of ah company could be meaningfully more, like the 65,000 job you landed. Or maybe it was like, whoa, like I was capable of getting a 65 and then there's another jump at some point. And you're like, whoa, I was capable of getting to 90 or you know whatever the numbers are.
00:23:35
Speaker
And oftentimes we underestimate the value of our skills because they fill they feel more intuitive to us. And so the value is marginalized because you don't think it's anything special int until you realize there are a lot of other people who don't have the same skills you do and find themselves needing those skills. And so it's just an interesting interplay between like, what am I worth? What are my skills worth?
00:24:05
Speaker
And you, I think it's human nature to underestimate the value that the market has for those skills. And then if you're scrappy and ah proactive, you find an opportunity that opens your eyes a little more as to what the world, how it works and what you could make.
Debt Payoff Strategy During the Pandemic
00:24:23
Speaker
So when you, when you jumped to the $65,000 corporate job, what changed for you?
00:24:31
Speaker
pretty much everything changed. So my at first my mindset was I better save, save, save as much of my salary as I possibly can. So for probably the first six to nine months of my corporate job, I just sucked away money in my savings account. I didn't really have a strategy for it, and I was still operating in that hyperfrugal mindset. So it was kind of the next level up, but it wasn't a very sophisticated way of thinking about money yet. But what really changed was
00:25:13
Speaker
um I had a $1,200 car repair bill that was coming due and I wasn't sure where that money was going to come from. And I remembered I had a friend who raved about a budgeting software called You Need a Budget and I looked at the website and I saw that there was a free trial and I said, I better give this a try. Just to figure out this car bill and if I like it, who knows where it'll go.
00:25:44
Speaker
So I did the free trial, and thankfully I loved the program right off the bat. It just clicked immediately, which was amazing. And it changed my money attitude overnight, basically. I had never tried budgeting before. I think I had mint for a day, and I hated it so much that I never used it beyond a single day.
00:26:10
Speaker
But you need a budget really worked for my brain and my way of thinking and my mindset. So once I got the hang of it, covered that car repair bill, and I thought, okay, maybe maybe I can do more with my money than just sock it away. um And that really came to another big turning point once the pandemic hit.
00:26:38
Speaker
and federal student loans were on pause. And that prompted me to think, okay, you know my parents have sort of been the guardian of my student loans for the past, at that point, six years or so since graduating college.
00:26:57
Speaker
And I was more and more interested in money. I was less and less scared of it. I realized I was kind of actually interested in learning about it, and that almost scared me, but was a different approach that I had never really thought before. So once the pandemic hit, I thought, let me look at all of my accounts, take stock of where I am, and just see what the lay of the land is. So I logged into all of the accounts, some were federal, some were private, and it was a big number still. I had paid her off at that point about $34,000 in six years, but there was still a long way to go.
00:27:45
Speaker
And I saw some of the end dates for the payments as 2027, 2028. And I thought to myself, that is unacceptable to me. and what What was unacceptable about it? The idea of dragging on this stress and this pain and this burden for that much longer,
00:28:13
Speaker
especially because I saw that my parents were still stressed by the loans that we had. They didn't really like talking about them. They tried to avoid the conversation unless something was necessary to talk about. and But it was always stressful and heavy. And I thought, okay, in my corporate job now, I've been hoarding savings like dragon gold.
00:28:42
Speaker
and it's not really doing anything. But here's an opportunity for me to take this once in a lifetime pause, wherein we were going nowhere, doing nothing, not traveling, student loans were on pause for like for for federal loans. I said, I have to do something now.
00:29:07
Speaker
And there were 15 accounts, and some of them were bigger, some were smaller, some were a couple hundred dollars. And I said, I could pay that one off today. What about the next smallest one? And I learned about what they call the snowball effect, wherein regardless of your interest rates, you can pay off the smallest to the largest, get your quick wins, and get that psychological bump to help you continue paying. And that's the approach I took. I knew it wasn't mathematically the smartest one, but that's okay with me. um And I just started on a roll toward paying off all of these loans. And it was one of the most empowering things I've ever done. When we first ah when you and I first met and you were telling me about your story, you mentioned, hey, other people during the pandemic, they ah baked bread or
00:30:04
Speaker
a garden or whatever hobbies that people had during the pandemic and your hobby was to pay off student loans. Yes, that's exactly right. yeah ah Fascinating. um and I think it's another example of not that like you regret the decision of previous you to go to college to get a degree, have the experiences, e etc. But you're probably seeing 2027, 2028, and you just couldn't cope with the feeling of present and future you being held back with what decisions you could make financially because you still owed something to previous you, to past you. And so it's like, let me just knock this out. It's gonna be hard, it's gonna be painful. I'm not gonna be able to do other things for a finite period of time. But then when it's done, I'll be able to breathe that much more deeply financially, if you will.
00:31:00
Speaker
Exactly and um I previously mentioned Mr. Money Mustache. He has a fantastic blog article called Debt is an Emergency and that had always stuck in my mind and I saved it and I reread it over and over again where he said like this is something that's like your hair's on fire and you have to put it out and um like we can use debt for all kinds of things in society sometimes it's good debt sometimes it's bad debt but depending on the situation you're in, you have to be honest with the emergency that you are in. And I was in an emergency. And i I took my savings that I had stockpiled, and I do not recommend that everyone do this, but I put all my savings toward the debt. It was about $16,000. And I did the math and I said, that's at least three years gone.
00:31:59
Speaker
of payments. And my reasoning was my job was secure. I was working remotely. There was no danger of me losing my job or losing hours. I was working for an essential retailer, which as we know, those companies did very well during the pandemic. um So that was my reasoning. Again, I would not suggest that to people, but that was a risk I was willing to take.
00:32:27
Speaker
And then for the next year and a half, I pretty much only spent on food and bills. I didn't even spend on gas. I didn't drive anywhere for like a year. And um my roommate at the time had a layoff at her job, and thanks to YNAB, I was able to cover all of our bills.
00:32:50
Speaker
until she was able to get another gig. So can't recommend YNAB enough to people. um But every COVID relief check, every bonus at work,
00:33:05
Speaker
every cent of birthday money or Christmas money I put toward the debt.
Achieving Debt Freedom and Emotional Impact
00:33:11
Speaker
And some months I was able to pay more, some less, but probably on average I was putting $2,000 to $2,500 toward debt. Amazing. Yeah. So when you were in Charlotte, you were you mentioned a few minutes ago that you'd pay about $500 a month.
00:33:29
Speaker
yeah And then fast forward to COVID and you started paying $2,000 to $2,500 a month in addition to the $16,000 one time payment you made with your savings. And so tell me about as you like kept going, you stuck with it. One was it hard to stick with it or were you just in, you were in the zone and you were motivated to get to zero or were there like challenges, questions along the way of potentially pivoting and ratcheting back on the payments. How did that work? It was a little of both. um Once I found the momentum, it was so empowering that I really had blinders on and I was so keyed in and so in the zone. Like like I said, I really didn't have any other pandemic projects. This was it.
00:34:21
Speaker
um At some points, I would wonder if I should dial it up or dial it back, but what really helped me was taking very detailed records of how much I had paid, what the balances were. I didn't really do any complicated math. I just sort of kept track bullet points. And watching that number go down by leaps and bounds was so motivating. That was definitely the biggest part was just keeping track of where I was. um In fact, I would like get excited for the next month to come so that I could put more money toward it. And I think I had underestimated how quickly it could go when I was really dialed in and like little chipping away in little chunks or big chunks.
00:35:13
Speaker
always makes a difference. And it's always empowering to know that once you make a decision to pay debt off, it can go a lot faster than you think it might. How did it feel when you paid it off? When you made the last payment and it got to zero, what was that moment like? It was amazing. Was it anti-climatic at all? Because it was just like a regular Tuesday or whatever? or Yeah, it was just like a regular day. um It was November 5.
00:35:41
Speaker
2021. And I personally declared that to be my debt freedom day. So for the rest of my life, it will be a personal holiday. good for you Either celebrate by treating myself to something nice or having a dinner with a friend or, or just acknowledging the day and say, I've come a really long way.
00:36:04
Speaker
And I took responsibility for my education, I helped my family, and that can never be underestimated in terms of the gravity of how important that was. Yeah. As soon as it was paid off and you find yourself with $2,500 extra each month as a result, how did you think about which job or jobs that effective increase in discretionary income would
Post-Debt Financial Goals and Influences
00:36:32
Speaker
have. Like, what'd you do with that money? Yeah, that time is actually kind of a blur. it's It's hard to remember back. I think I had i had really tightened my YNAB budget, and so I think my initial goal was to get a month ahead once again.
00:36:51
Speaker
um Things were quite tight at that time. And the world had opened up a little bit. um We were still in COVID, but people were traveling a little bit. I was starting to pick up some activities again, getting out into the world. um But my initial goal was to get a month ahead with my my budgeting so that my current month's money was going toward my next month's bills.
00:37:17
Speaker
And then once I sort of got my feet back under me, I said, OK, now it's time to get some savings back because that felt insecure to have very few savings after I put everything toward the debt. So building up emergency fund is still ongoing. It's a bit thinner currently than I would like, but that's my initial goal.
00:37:44
Speaker
um But after the debt was paid off, the next big urgent thing was investing. Because I had not invested before, investing was never a topic of conversation in my family as an option. It was never...
00:38:00
Speaker
ah pressed as, hey, you better invest for your retirement. It was always just save your money, put it in savings, and just keep it there for no reason, just have it. But I had read during this debt payoff journey Ramit Sethi's book, I Will Teach You To Be Rich, which I love. I recommend it to everyone. I really like Ramit's content. I don't agree with 100% of the things he says, but probably 90%. And he helped me dream a bit bigger for what my future could be. I was sort of coming out of this
00:38:37
Speaker
hyper frugality, fire, Mr. Money Mustache mindset, which served me very well for the season of life that I was in. But Rameet's viewpoint helped me think, okay, my debt's gone. It is gone.
00:38:54
Speaker
Now I have money going straight in my pocket and what should I do with it? And I didn't do anything immediately, but I did start to think and dream. And one of my dreams was to move back to New England because I was very homesick after the pandemic and I wanted to be near my my family again. So in 2022, I moved to Rhode Island.
00:39:20
Speaker
I have my own apartment for the very first time with no roommates. And I was in a brand new city with a really cool intellectual vibe. And I was excited to sort of dive in to the culture of this city. So um so since that time, I've really just been experimenting. Sometimes I'll overspend on something and say, that was a mistake. I don't need to do that again. And I'll pivot.
00:39:51
Speaker
and every month I sort of look at my budget and say, what did I spend money on this month that I really liked? What was maybe something I could forego next time? So it's a continuing experiment and it's always a learning process, but I feel so free. And one of the big things that helped me pay off my debt was was ah thinking about it as buying freedom. I wasn't lowering my debt budget, but I was buying freedom and I was buying thousands of dollars worth of freedom every month. And I think I even made ah my debt payoff budget category in YNAW, I think I called it freedom exclamation point.
00:40:40
Speaker
I actually think that's really insightful because the way I've been talking about debt in this context conversation is, oh, you're paying for past use decisions. And I think your way of framing it is different in a good way in that um it's because my way suggests the past decision was bad.
00:41:02
Speaker
Your way is no, the past decision was good. Like college was a good experience and you received the degree that helped you get employed, that helped you get more gainfully employed, et cetera, et cetera. And so your attitude of like, no, when I pay off, when I make a payment to this debt, I'm buying more and more freedom.
00:41:21
Speaker
Um, because people go on this journey where they start out defensive with their money, whether that be in paying off debt or just trying to like be scrappy and survive. And then with time at some point it pivots to where they're saving, they're going on offense with their money.
00:41:38
Speaker
And then with time, it gets to a point where they crave building wealth, which is what you alluded to with, hey, I paid off the debt. i'm So i'm and then I started to save for emergencies and getting ahead. That was still somewhat of a defensive move, but it was a offensive in terms of bringing more peace of mind.
00:41:58
Speaker
And then you got to, I want to invest because I want my money to work for me instead of kind of just sit there. But I love the prospect of when I make a payment to debt, I'm buying my freedom back.
00:42:14
Speaker
And then you got to it November 5th. You said November 5th, 2021. That's exactly right. Well, now in my mind, it will be Amy's debt freedom day, November 5th. There we go. And often election day too. So enjoy. Yes, the spirit with both. Nice. Yeah. So one question I want to ask is what's something in your budget that is in Ramit's words, guilt-free spending? Like what's the thing in your budget that is most representative of ah that passion area of your life that maybe you don't technically need to spend money on it, but you're choosing to because it brings that fulfillment. Yeah, so I i actually use Ramit's conscious savings plan or conscious spending plan.
00:43:00
Speaker
in conjunction with YNAB and I carefully track everything that I consider to be guilt-free spending and I even do a hashtag richlife in the description so I can just search the hashtag and see everything that I've spent money on that has brought me joy or exploration or anything like that. So probably for the first couple first couple years of my ah of living in my current city, I just sort of tried stuff. I just went to weird classes and did strange activities and
00:43:37
Speaker
join things and quit them. But I've definitely honed in on the spending that brings me the most joy, which is the stuff that I was already doing, but now I've i've decided to spend more money on. So the two big things are tango. I love to dance tango. That's something I've been doing for a while. ah It went on pause because of the pandemic, but I've been picking it back up with classes, lessons, events,
00:44:05
Speaker
and that feels really exciting and that's money I love to spend. The other really big one is I am finally at age 33 taking voice lessons. I've been singing for most of my life, and even at times I've sung professionally, I've been paid money to do it, but I had never ever had a formal voice lesson in my life. I was lucky to have very good music directors and choir directors, but I sort of hit a ceiling, and now that I'm debt free, I'm settled into my new city, I found a great voice instructor.
00:44:47
Speaker
And within fewer than 10 lessons, I've learned so much that I had no idea about myself. And that to me is money very well spent. And I'm excited to keep spending that money because I feel like a whole other world has opened up and a whole mindset shift has has happened the same way that conquering my debt opened up a new world for me. So those are my two big guilt-free spending, but to the little stuff is books. I love to collect books. I love to go to bookstores, independent shops if I can support those. I love to go to restaurants. I love to travel with friends and family. I'm not a big travel bug. I'm not trying to fly overseas all the time. um I'm not a car person. I drive a 20-year-old car that I love.
00:45:42
Speaker
um My apartment is extremely small. I live in a micro apartment that's 250 square feet. So I save money on that, but it sort of forces me out into the world because it's a very small space. So I really love Rameet's take where he says, ah increase your spending on the things you really love, as long as you cut spending on the stuff you don't care about as much. So that's something I think about daily.
00:46:09
Speaker
I'm always adjusting and it's really brought my quality of life to a new level and my happiness to a new level. And I couldn't have gotten to this point if I hadn't really buckled down and paid off the debt. I could tell while you were describing, you you have dialed in the things you care about and the things you don't.
00:46:29
Speaker
So like the size of your apartment, not as big of a priority for you. The type of car, not a priority. So those are areas where you're like, I'm going to save there so that you can spend the money on these other areas of your life. That's awesome. Amy, congratulations on the progress that you've made in, uh, you know, relatively speaking, such a short period of time and paying off that debt, buying the freedom back.
00:46:54
Speaker
And I'm just grateful that you were willing to chat with me today and share your
Advice on Leveraging Financial Opportunities
00:46:59
Speaker
story. Do you have any, if like if you were talking to past Amy who is ah starting her career, has the student loan debt, is trying to find her footing ah financially, what advice would you share?
00:47:16
Speaker
It's interesting because I don't know if I would do anything differently or give myself advice. I think I've always been the kind of person that would try to optimize opportunities when they came up. So I would say the advice I would give to other people who are maybe in a similar situation. And this is advice I never hear. Like I listen to a lot of financial podcasters, a lot of content creators, but advice I never hear is use your good luck.
00:47:54
Speaker
And I think that most people who are hardworking will have good financial fortune happen at some points. And maybe it's big, maybe it's small. But I think if you come into a bonus, if you come into an inheritance, um or even just something like a COVID check or um a gift, even if it's $100, try to think, okay, how can I use this to leverage my situation for the better. And I think because money is so emotional, we often feel really negative feelings of guilt. And if people come into money, they sometimes don't know what to do with it because there's so much psychology around it and they they sort of freeze.
00:48:42
Speaker
Um, but if you were lost in the desert and you came upon a spring and you're dying of thirst, you should probably drink that water. Or if you're on a hike in the woods and it starts to rain and you find a dry cave, you should probably take advantage and saying like, well, I don't need it that much. Somebody could really use this more than me, but you have to put on your own oxygen mask first. So if that's something you're grappling with,
00:49:12
Speaker
like maybe talk to a financial advisor or a therapist to kind of work on your psychology and think, okay, like when good things happen, I deserve them. And I should use them to improve my family's situation, my personal situation, and not feel bad about it because that's part of the journey. So that's probably my biggest piece of advice I would give to people.
00:49:38
Speaker
That's awesome. Thank you so much, Amy. It was great to chat with you and congrats again on all the progress. Thank you so much. I appreciate it.
00:49:57
Speaker
Thank you for listening to this episode. If you enjoyed it, be sure to subscribe to this podcast so you don't miss future episodes and please leave a rating and review. If you have a story to tell about your own financial journey and you're interested in doing so on this podcast, please email me at wisemoneymentor at gmail dot.com. For more information about me and the coaching services I offer, check out my website, www.wisemoneymentor.com. Thank you.