In June 2011, I found myself completely maxed out. I had $100 to my name, plus $100 of wiggle room on my credit card, and it had to last me six weeks. It had finally happened. After years of swiping my credit card for anything I dreamed of owning or doing, my bad spending habits finally caught up with me and I was left with $28,000 of debt. I was 26, just a year away from graduating with a B.A. But it was also the year I moved back in with Mom and Dad. It had been a long time coming.
How did I get here? I earned a two-year college diploma in communications in 2007, then landed a desktop publishing job with the B.C. public service. I earned $50,000 a year but in 2010 decided to complete a bachelor’s degree as well. I spent two years doing that online.
Initially I moved out of my parents’ place at 22, right after getting my diploma. I was so excited but also carelessly started accumulating debt. I bought new furniture, but never searched for used items. If I got an invitation from anyone, I always said yes, whether for brunch, the movies, dinner and drinks, or a weekend in Seattle.
When I ran the numbers three years ago, I got the bad news. So I moved back in with my parents but didn’t tell them the true extent of my debt. I felt so ashamed, in large part because my parents had always tried to help me understand money. My dad would clip articles from newspapers about TFSAs and leave them on my bed for me to read. He’d talk about saving and spending at the dinner table. When I got my first credit card, he pulled me aside and told me to pay it off each month—no matter what. But I wasn’t listening. At the time, I owed my parents $4,400 for tuition fees, so my first goal was to pay them back first. I had hardly saved a penny but was still able to hand over huge payments to the Bank of Mom and Dad. I started saying ‘No’ to everything and lived a pretty boring life. But after three months, I had paid back what I owed them.
That inspired me to do even more. I lived only on cash and gave myself $110 a week for food, fun and some small necessities. Little things worked the best—such as going out for a coffee instead of shopping sprees with my girlfriends on weekends, fewer costly trips to the hair stylist, avoiding impulse buys at convenience stores, no eating out and a brown-bag lunch to work.
Bigger things helped too, like eliminating holidays, selling a few items I didn’t really need and taking my $2,000 tax refund and putting it right to the debt. I also got a roommate when I moved out of my parents’ place in 2012, which saved me $600 a month in rent. I made my last debt payment last spring.
Now I’m paying myself first. I’m building an emergency fund through my TFSA and also contributing to an RRSP. About $1,000 a month goes directly into those two accounts. You don’t have to be as extreme as I was—putting 50% of net pay towards debt—to make debt repayment work for you. Tracking every penny you spend keeps you honest and it helps simply to monitor everyday expenses.
The best news is that paying off my debt has empowered me to set new goals. I turn 30 next year and a few months ago decided I want to celebrate that birthday 30 pounds lighter and a lot healthier. Now I set small weight goals for myself and go to the gym five mornings a week at 5:30 am. It was just what I needed. I can’t believe how far I’ve come. I’m debt-free, eat better and am a whole lot healthier. One thing’s for sure, I’m going into my 30s the best I could possibly be, which makes me very, very happy.—As told to Julie Cazzin
Tell MoneySense how you accomplished your financial goal. Email email@example.com