[Note- This post is titled “Pay down debt quickly after graduation” because that’s when I used these tips. But this post is for ANYONE who wants to get a head start on their debt!]
Ah graduation. Such an exciting time! You are done university! Real life is about to start!
Oh crap, real life is about to start!
On my graduation day, I did not think about how much I had accomplished. I didn’t think about how much I was going to miss seeing my friends daily. I thought about how much ‘friggin’ money I owed, and how the debt clock was about to start (debt story here).
I had $8,000 left on my car loan (owning a vehicle may sound like a luxury for a student, but we were expected to do internship placements outside of the city, so a vehicle was necessary. I could have gotten a cheaper car, but I also wanted one reliable for winter driving and trips to the mountains. That part was my choice).
I knew I was going to have variable income for awhile, so I wanted to pay my vehicle off before my 6 month student loan grace period ended. I was terrified if I didn’t, I would not be able to make payments on both debts. I wondered if it would even be possible to pay my vehicle off in 6 months? Turns out yes,because I paid it off in 5 months!
The following ideas are steps I personally took to pay down debt quickly after graduation. I am not as strict about my budget anymore (read my post on paying off debt while still having a life). However, these are great ways to jump start your debt payments.
1. Get a job
This concept is simple, but not always easy. I personally had always dreamed of traveling for a few months right when I graduated. Therefore, accepting that I could not afford it was no easy task.
I had applied for the job I really wanted at the hospital while I was still in internship, and luckily got offered it before I had even graduated. I finished internship on Friday, and they wanted me to start working Monday. I got lucky (although I would argue some of that “luck” was created by working my butt off during university).
I had a backup plan though. If I did not get a job in my field, I would waitress. There are many industries that can be very hard to get into. For example, I know multiple teachers. It took some months or years after graduation to find work.
My advice would be that if you do no find work in your field within two weeks of graduating, take ANY job. Do not think of any kind of work as “beneath you” simply because you have a degree now. Honestly, having a little bit of money coming in is better than none. Obviously you can continue to search for your dream job, but work somewhere while you wait.
2. Don’t upgrade your lifestyle
It can be easy to fall into the trap of thinking you deserve nicer things now that you aren’t a student. My advice? Wait! I actually downgraded my lifestyle for awhile to pay off my vehicle, and it was a monumental factor in achieving my goal. Specifically, things I cut back on included:
I moved in with a university friend right after graduation to save money. And no, it was not a nicer place. We moved into a tiny basement suite that was quite unpleasant actually.
[Note- I’m not speaking poorly of basement suites in general. I still live in a basement suite, but I love my current one. It has bright windows, a large kitchen, and a yard for for my dog. #winningatlife]
My friend Lisa and I would make fun of our living situation constantly. Luckily it was close to work for both of us, but that is all it had going for it. Our washing machine leaked so badly at one point that the drain backed up and our place smelled like sewage. We had a mouse that decided to move in with us, and a landlord that did not believe us about him. The kitchen was so small that if you put a plate down you could no longer cook because the counter was now taken. We did not have a bathtub, only a stand up shower. The shower was SO small that I would often hit my head on the side trying to lean over to shave my legs.
Looking back, it is actually hilarious to think about. We would jokingly call ourselves the “basement people” or “basement dwellers”. We had fun with it. Do I want to live in a place like that again? NO. However, it was very cheap and allowed me to pay off my debt quickly.
Watched everything I ate:
I will admit this one was harder for me than decreasing rent, because I love food. Although I always try to eat affordably-ish (read my post on that here), for a few months after graduation I was very strict. I gave myself a budget of $200 a month (half of my usual).
That meant no meat, cheese, dessert, or basically anything fun. I cooked everything at home, and never went to restaurants. People at work made jokes about me eating the same lunch daily: Peanut butter and banana sandwich, apple, and a yogurt (although that part actually hasn’t changed much). I never had alcohol (wine I missed you!), and bought cheap coffee which I made at home.
Decreasing my food costs was not easy, but having a couple hundred extra dollars available for debt payments was huge.
Cut out everything that was not 100% necessary:
I do mean everything. We did not have Netflix for a few months. I did not buy a pass to the climbing gym. Rather than driving 20 minutes to my favorite off leash dog park, I would walk my dog in the ravine by our house. Does puppy want a bone or a new toy? Too bad!
I did not buy my favorite beauty products when they ran out. I did not shave my legs so I wouldn’t need razors (hey I’m single and it was winter; don’t judge).
I looked at my budget and cut everything that I possibly could. Everything. Do I suggest living this way long term? Absolutely not. It was obsessive and would likely keep single forever (hellllllo sasquatch legs). But as a short term financial boost? Massively effective!
3. Sell things (anything)
I looked around at what I owned. Anything I had that I did not love or need? It was getting sold! (Luckily for my dog she fit both categories. Take that Dave Ramsey). Lisa owned a tv, so mine got sold. So many things went! Jewellery (from that ex I discuss here), clothes, an old camera, kitchen pots, childhood books. It is unbelievable what you can sell! Markets depend on the area you live, but the two apps I used to sell things are:
Personally, I found bigger items like the tv sold better on Kijiji while smaller things worked on Letgo. Play around with both to figure out what works for you. Two tips though: 1) Don’t sell anything you will regret 2) Meet buyers in very public places for safety!
4. Learn to say no (or “not right now”)
Why is “I can’t afford it” such a difficult sentence to say to ourselves and others? Saying “no” somehow feels like a personal failure, but it isn’t. You need to be realistic with yourself, and it actually gives others permission to do the same. I have found saying “not right now” is a bit easier.
The first year I graduated I did not go home for Christmas. I grew up in a different province, and I could not afford the plane ticket. I would get invited to restaurants with friends, and I would have to decline. My favorite bakery would have cake on display and I would have to walk away.
I’m not going to admit which of those three was the hardest.
A quote I love is:
I wish I could remember where I read it. Basically, everything comes down to choices. At that point in my life, my goal was to pay down debt quickly after graduation. Since then, my goals have shifted. Both are fine, but you cannot commit to both sides.
It’s not for forever
If you want to pay down debt, these are excellent ways to do it. They can cut your costs dramatically, which frees up money you can put on your debts. I am not suggesting living this way forever; you would likely burn out (and hate me). If you want to do your own “debt burst” though, try them out!
To graduate with less debt in the first place!: My Best Financial Tips For University Students
For a list of all posts I’ve written, look here