Today, we have a guest post from Jessica — a professional researcher and freelance writer. She writes about all things related to personal finance, psychology, and education on her blog, The Financial Graduate.
National student debt has reached an all-time high at nearly $1.5 trillion.
This is crazy.
I attended post-secondary for nearly a decade and, as a result, I’m generally a proponent of furthering your education.
However, if I was in a position where I was going to have to take on five or six figures worth of student loan debt, I don’t know if I would have made the decision to go to school.
If you’re gearing up to head to college, or you’re a parent looking to help your child pay for school, know that it is possible to graduate with little or NO DEBT.
I speak from experience! Here’s an honest look at how I graduated debt free with three degrees after nearly 10 years in post-secondary.
Full Disclosure
There are so many stories about how “easy” it is to avoid student debt.
All you have to do is work hard and live the frugal life….right?
Hard work and frugal living are definitely required. However, they’re not the only ingredients in the debt-free recipe.
Too often people go touting their debt-free journeys and fail to include some of the additional privileges or lucky breaks that helped them to avoid student loans.
Let’s be honest, we all have different starting points.
If we really want to inspire or help others by sharing our stories, then we need to disclose all of the details so others don’t feel defeated if they’re unable to achieve similar results.
The Strategies (and Privileges) I used to graduate debt free from nearly a decade of university.
So, here’s an honest look at what worked for me. Check out this list of strategies (and privileges) that I used to graduate debt free with three degrees (BA Communications, BA Psychology, MSc Experimental Psychology).
1. Give yourself a financial head start.
I landed my first job babysitting at age 12. From this point on I continued to work at various jobs but babysitting was my bread and butter up until the end of high school.
Even though I spent a portion of my hard-earned dollars on clothes and going out (as high school girls do) I was still able to save thousands.
Now, I’ll be honest, only some of this money went towards my education. The majority of it went to fund my first trip to Thailand during my first summer at university.
Yes, I could have used this money to go towards my schooling but this trip was worth every single penny! In my mind, travel is always worth the money.
2. Get a job, or two, or three.
You know what you can’t do when you’re going to school full time and working two or three jobs….go out and spend money!
I worked throughout my entire post-secondary journey.
I worked at a pie shop, a gym, doing door to door sales, I was an admin in a psychology office, worked at an art gallery, continued to babysit, I was a teaching assistant and I worked for six summers at a golf course as a server. I held many of these jobs at the same time.
I hustled and I sacrificed many nights out in order to make money. In my opinion, it was worth it.
One thing I didn’t do, but would if I could go back in time, was try to find a job in the field that I was pursuing in school.
I would highly recommend this because it will give you a good idea of whether or not you really want to stay in a particular field and it will help you to form important connections that may assist you in landing a job when you graduate.
3. Go to a local school and live at home.
This may not be your dream scenario but, if your parents are kind enough to let you live at home, and you can handle it, then this can help you to save A LOT of money.
This is what I did, at least for my first degree.
It wasn’t ideal, my parents lived outside of the city which meant a long commute and not being close to my friends on campus. But, it resulted in thousands of dollars in savings.
I was lucky enough that my parents didn’t charge me anything for rent or food. This meant that nearly all of the money I was making at my various jobs went straight into savings.
My parents’ generosity allowed me to save thousands of dollars that would go towards school and further international travel.
During my near decade in university, I traveled all over South East Asia, Australia, Hong Kong, and Western Europe.
Six Years in a Dungeon
After completing my first degree I moved out of my parents’ house and into a basement suite with my then boyfriend, now husband.
We lived below ground in this dungeon of a basement suite for six years.
It wasn’t dirty or bug ridden but it was small and dark and there was always something wrong…a leaky tap or a broken fridge.
One time we even had a giant tree fall on the house right above our basement entrance. This required us to crawl, literally duck down and crawl, in and out of our house while our landlords were unreachable in Europe for a week.
We also had a series of the most awful upstairs neighbors. Ones that would have blow-out parties until 4 am on a Tuesday or the drug dealers who had their front door kicked in by one of their “customers” while I was alone, studying in the basement completely unaware.
I’m not recommending that you live in a dirty, dilapidated or unsafe home with sketchy neighbors. Truly, we lived in a very sought after neighborhood, we just got a bit unlucky with the upstairs tenants.
I do recommend living within your means or living with a roommate…or two, or three, in order to keep your costs low.
It’s all about making a few sacrifices while you’re young and resilient and physically able to sleep on a mattress on the floor so you can set yourself up with a bright financial future.
Barter services to save even more.
Truth be told, even though I didn’t like living downstairs, we were getting a steal of a deal on our suite. We only paid $600.00 a month for a place that could easily have rented for $1200.00 because my husband knew the owners.
To further reduce our costs we told our landlord that we were available to do handiwork around the house in exchange for money off of rent. One summer we painted the entire exterior of the house in exchange for two months of free rent.
When I graduated and got my first job my husband and I moved out of that basement suite and I’ve truly never felt so happy or lucky to be above ground again!
4. Become financially literate.
I didn’t wake up one morning in university and say to myself, “I’m going to improve my financial literacy today.”
No, I wasn’t even aware of what financial literacy was or that it was something I should be interested in.
However, I had a boyfriend (now husband) who was pretty bad with money and so this kind of forced me into learning more about personal finance.
Financial literacy is when you have the knowledge and skills necessary to make well-informed decisions about your personal finances. And let me tell you, being financially literate is liberating.
I think a lot of people look at their personal finances and find them confusing or overwhelming. And, the financial industry doesn’t always help with this.
Sometimes I think there are financial advisors that purposely overcomplicate things to make people feel like they need a professional to help them manage their money.
I’m here to tell you that you don’t. No one will care about your money more than you, so it’s important to learn some basics.
Learn how to create a simple budget.
It’s amazing how empowered you will feel when you know exactly where every penny of your money is going.
It will feel like you’ve gotten a raise!
Learn about credit cards and how they work.
It’s extremely easy to get a credit card as a student and I saw several friends and acquaintances rack up thousands of dollars in credit card debt by the end of the first semester because they simply didn’t understand how credit worked.
News flash, credit cards do not equal free money.
Learn about investing.
There’s so much value in learning about investing and the magic of compound interest (this is basically when your interest earns interest), especially when you’re young and have decades ahead of you to let this all play out.
And, if you need to take out student loans, do your research.
- Who should you borrow from?
- What is the interest rate?
- When do you have to start paying them back?
- What will your payments be?
The specific reason I started to dig into everything related to personal finance is that I got an unexpected call from a collection agency asking for my husband. At this time I didn’t know what a collection agency was or why they would be calling.
Turns out my husband, who did take out some student loans, wasn’t paying them back. Instead, he was racking up penalty payments and destroying his credit.
I was annoyed. So, I took over.
We started putting any extra money we had towards paying off his debt (this is while I was still in school). By the time I graduated, all of his debt was paid off.
It’s truly never been easier to learn about personal finance. You have access to amazing resources (blogs, podcasts, library books) and many of them are free!
5. Take a gap year, or gap semester(s)
I personally didn’t take a gap year between high school and university, mainly because I didn’t know this was an option. However, once I entered post-secondary and became aware of the concept I decided to take a few gap semesters in order to save money for school and fund some of my international gallivantings.
The concept of taking a gap year/semester is only effective if you use this time to work and save.
If you take a year off to work and then you spend all of your money partying this isn’t going to help you achieve your goals (assuming your goal is to actually go to school and graduate debt free!)
So, if you decide a gap year/semester is right for you then go into it with a plan.
Ensure you have a good job lined up, decide how long of a gap you’re going to take, outline your goals in terms of how much money you want to save and how you will spend this money (tuition, rent, car payments, etc.)
To supercharge your gap year savings apply some of the other strategies…live at home, get two or even three jobs, spend some of your free time becoming financially literate!
6. Take advantage of your student status.
Being a student is expensive. However, if you use your student status to your advantage, you can reduce your expenses and save in a lot of ways.
When you become a student you get access to free (well…not free, you paid for it in your tuition) things like a gym membership, bus/train pass, equipment rentals and so on.
Educate yourself on what you have access to with your student status.
Free gym access
For me, working out became a great “free” hobby. I would go to the gym at the end of each school day and run off any pre/post exam stress.
This was so great for my mental and physical health and I didn’t have to purchase any exercise equipment or pay for an expensive membership at a different gym.
Free bus transportation
During my first few years of university, I had a long commute from my parents’ house. I decided to use my “free” bus pass and would park at the park and ride outside of the city and take the bus to campus.
This saved me money on gas and parking. As an added bonus, I had an extra half hour every morning to read or finish an assignment while I was sitting on the bus.
Free tax prep!
Another benefit, having my taxes done for free!
At our school as long as your taxes were straightforward (no capital gains etc.) then you could have the accounting students do your taxes for you at no cost.
Free career development tools
I also took advantage of other free services that my school offered such as resume help and even career counseling.
There are student perks outside of the school environment as well. Most banks offer “student accounts” which eliminate any account fees. So, if you’re a student make sure you call your bank to see if they offer a student account.
Free entertainment
Additionally, most museums, zoos, even some theaters, offer discounted rates for students.
So, make sure you take full advantage of your student status!
7. Apply for scholarships.
Just as you can never win the lottery if you don’t buy a ticket, there’s no chance of you winning any scholarships if you don’t apply.
So many students refrain from applying for scholarships because they think they don’t have a chance of winning. If everyone thinks this way it really reduces the number of people throwing their name into the pot. This means more chances that you will win if you just apply.
Untapped opportunities
Last year $2.6 billion in financial aid went unclaimed because students didn’t apply. There are so many opportunities to apply for scholarships before, and during, your post-secondary journey.
Dedicate some time to explore the scholarship options available. Speak with your high school guidance counselor and/or visit the awards office at your college. Then tailor your applications for each scholarship opportunity.
I didn’t start applying for scholarships until I was in graduate school…this is one of my regrets. However, once I started to apply I received every single scholarship I applied for.
Catching up quickly
How? I spent hours crafting well-written applications and proposals. And, I did have really good grades…which I worked my ass off for.
If you don’t have a 4.0 GPA, don’t be discouraged. Not all scholarships are based on GPA some look at community involvement, athletics or extracurricular involvement.
For tips on how to start your scholarship search and how to maximize your chances of winning check out this scholarship guide.
8. Live the frugal life.
Ever heard of the saying, “champagne life on a beer budget?”
Stay away from this mentality. I know it looks like everyone is living the sweet-life on Instagram but don’t fall into the “keeping up with the Joneses trap.”
When you’re a broke student, you need to live like a broke student.
I’m not saying you should sit inside your dingy basement suite, with your three roommates, reading about personal finance every Friday night. You still need to get out and have fun but, there are some ways to keep costs down.
Don’t spend tons of money on clothing/shoes/hair etc.
I literally didn’t buy an article of clothing that wasn’t on sale while I was in school. Granted, I spent most of my time in yoga pants or a work uniform, so I didn’t need a large clothing budget.
When it comes to hair, visit a local cosmetology school where student hairdressers offer rates that are super low, or sometimes even free.
Drink at home.
There’s no faster way to waste your money than going out to a bar and spending $13.00 on a cocktail.
I mean, it’s going to happen every once in a while but doesn’t make it a habit. Instead, host your friends at your place. Have a BYOB potluck.
Eat at home.
Not only will you save tons of money but this will force you to learn to cook.
In my opinion, there’s no quality more attractive in a partner than when someone knows how to cook! This one is good for your wallet and your love life!
Conclusion:
There it is, an honest look at how I was able to graduate debt free after nearly a decade in post-secondary. I worked really hard, both at my jobs and in school, and it paid off.
The feeling of graduating from school is amazing. The feeling of graduating from school with DEBT FREE…even better!
Remember, we all have different starting points. We all have different privileges and challenges.
If you simply aren’t able to avoid all student loans, don’t be discouraged. You can still use these strategies to avoid going into further debt.
I wish you the best of luck on your debt free journey!