Friday, June 19, 2015

Departure From Blog Topic:Graduating Debt Free

Though this is off topic, I felt like it is valuable. My husband and I have both now finished school for the time being. We are striking out into the real world. He has a masters and I have a bachelors. We have two young boys. We have no debt. Money is a tiny bit tight at the moment as we pay for all the costs of beginning life more than half a country away, but we have no debts. In full disclosure, we have charges on the credit card, but no balance that will be carried unless something unexpected happens.

I am not saying that graduating debt free is possible for everyone or that you should or can do exactly what we did. I just want people to know that there are people who do it. Not everyone takes out student loans.

I am not going to say we did this all by ourselves; I received a lot of assistance from my parents before we got married (they paid my rent) and Patrick got a lot from the government (Pell grant) and just being awesome (scholarships). After we were married we still got money from the government (Pell grants and tax returns), scholarships, and, where my medical bills for my first baby were concerned, my parents. We were not perfect at managing money. Just after my first son was born we were extremely broke. I am talking I-counted-up-all-the-change-I-could-find-in-the-house, I-washed-clothes-in-the-bathtub-to-avoid-paying-for-laundry, we-looked-for-things-we-could-sell-online-to-buy-a-space-heater kind of broke, and we were helped out by friends and family with gifts and jobs that kept us afloat.

We had $55 to our names at one point, but we also never carried a balance over a statement period on our credit cards and never took out a loan. We have worked multiple jobs (often at once) of varying degrees of glamour and pay (from grocery store checker to rental manager, from handy man to part-time engineer, with fast food and janitor thrown in too).

We also got plenty of things we wanted at certain times. Patrick got a computer for Christmas one year and I was able to buy my Kregg jig after saving up for a while. We were able to pay for plane tickets several times and eat out occasionally. We went on a train ride one Christmas and bought a lot of wood at Home Depot. And now, best of all, we are starting our new lives free of financial burdens from our past, and I don't regret the things I couldn't buy one bit.

How would I sum up our secrets?

  • Determine that you are going to not take out a loan. There was always the worst case scenario for which a loan was our backup plan, but it was way down on the list. For us it was pretty much on the same level as dropping out and Patrick getting a job as a code monkey.
  • Don't think you are entitled to anything. You might not get actual new clothes the entire time you are in college (thrift stores were good friends), and you might find your furniture on the side of the road. Your apartment might not be that amazing. You will have to decide what is a need (and this is a much smaller category than many people seem to think), what is a want you can squeeze into the budget, and what will have to remain a far-off dream until you graduate (and maybe forever).
  • Don't think you are above any job (within safety and legal limits). I cleaned up after teenagers in the dorms for over 3 and a half years. My husband cleaned blinds for 2 weeks. I sold pizza for a summer. We both fixed toilets. Unless you can afford to live without taking the job or going into debt, you are not better than the job (and you are never better than the person doing the job).
  • Treat credit cards (if you have them) like debit cards that you have to do an extra step of transferring the money on. Your credit limit is not a number that should be important to you, just the amount in your bank account. If you know you might struggle with this, pay off the card every night.
  • Keep your budgets low and in check. Our grocery budget at the end was $200 a month (for 2 adults and 2 children). That isn't possible everywhere (I was shocked by how much more milk costs where we live now) and I don't think everyone should keep this budget as low as I do, but it is possible to feed yourself perfectly nutritious food on a lot less than people think. For about the last year and a half we have been using You Need a Budget*. We had been trying different software, but this was exactly what we had been looking for (something similar to the envelopes method that allowed you to work electronically). They now also offer it free to students.
  • Skimp where you can even if it sounds ridiculous. I put rice and beans on the menu twice every week.  I cut the hair of everyone in my family (myself included). We had a baby sleep in the same room as us for almost a year and a half. We pulled our dirty clothes across town to the laundry mat in roller suitcases before we got a car. And we were happy. We really, really were.
*I don't have any affiliation with YNAB. I just use it and like it.


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