Melanie: You know, pretty much before, I was putting $10,000 a year roughly, after taxes, towards my debt. Then this year, I was able to put 30 in one year, and it really helped expedite my debt repayment, which was just phenomenal because I finally felt like I found what I needed to really get those loans off my back.
Hahna: That is awesome. Let's dive a little bit deeper into what was your inspiration for getting out of debt because usually when you graduate from college you're just paying the minimum, you probably have a 20-year loan term, so what was your motivation and inspiration to get out of debt earlier?
Melanie: Yeah, I just really kept thinking about how much money I was wasting on interest and also just coming to terms with the fact that my money was never really mine as long as I was in debt. That was a huge realization for me because I realized a lot of my colleagues and peers wanted to just get their loans forgiven or take 20-25 years to pay it off and all that kind of stuff, and I honestly wish I could be like that person, but I was just obsessed with paying off my debt. I just said, “I have to get these gone. I have to have my money back in my pocket and not in my lender's pocket. I need to stop wasting money on interest.” You know, it was holding me back in so many different ways.
My ideal lifestyle is one that includes traveling and freedom and choices, and when you're in debt and when you have no money, and when you're constantly putting over 50% of your paycheck to debt, your choices are very limited. You know, I've come to realize that money is a tool for happiness and living your best life. I was just sort of surviving. I wasn't living the life that I wanted to live, so I knew that once I got out of debt, I could start making choices based on what I want and not based on what the debt needs.
Hahna: I can totally relate. I became obsessed with paying off my debt, and actually, I remember reading one of your debt letters. I came across it on RockstarFinance.
Melanie: Nice.
Hahna: Talking about being in a relationship with your debt and the love affair that you were having with it. That's exactly how I felt. I felt like I was in a relationship with debt that wasn't going anywhere but wasn't making me a better person, wasn't contributing to my life. I'm giving it 50% of my money. What am I getting out of this? Nothing.
Melanie: Yeah. That's [crosstalk 00:15:03].
Hahna: I was like, “This debt has to go.” I also realized during, I know, my debt journey was that money is a tool that can help facilitate me becoming my best self. When I changed my perspective about money and how it can enhance my life versus giving that same money to a lender, it just revolutionized how I was utilizing my money and making it work for me to make me a better person.
Melanie: Yes, totally agree.
Hahna: What was one of the challenging parts to destroying your debt?
Melanie: Yeah, I think, you know, some of the mean challenges to overcoming debt, a lot of them are actually mindset issues. I talk to a lot of people about this, that everyone thinks that paying off debt is purely financial, which it is to an extent, of course. You need money to pay off debt, you need money to live, but if getting out of debt was just about money, I think a lot of us wouldn't get into debt. You really have to be confronted with some of the mindset issues that might be holding you back.
Some of the mindset issues that were holding me back were that student loans were the good debt, right? For a long time, I just sort of paid the minimum because I thought, “Oh, everyone has student loans, the good debt,” right?
Hahna: This is normal.
Melanie: Yeah, this is normal. Also, sort of accepting the fact that my life wasn't where I had wanted it to be and that it had taken a completely different, but that's okay and then learned to be resilient and to be creative nonetheless. Also, really being open to doing new things to pay off debt and just getting rid of what you thought your life should look like, right? I'm 31 now, and I live in a store apartment that you can see in the background with my partner. Most of my friends have nice houses, cars, pets, kids, and all those sort of things, and I have said, “You know what, I am not going to have those things right now because I am going to focus on paying off debt.”
At some point, you might have to say, like, “This is what a 31-year-old life should look like, but I'm going to break from that stereotype and live like a college student still because I want to pay off debt.” I think that can be the toughest thing sometimes is because as you get older, you sort of feel like you should have a certain life or a certain lifestyle. You see your friends and what they're doing or the way society thinks that people our age should be acting or what they should have. There's nothing wrong with living like a college student longer or forever or being a frugal weirdo as my friend said [crosstalk 00:17:57].
Because you don't have to live like everybody else, and really accepting that and embracing that as well to get out of debt.
Hahna: I definitely want to relate to that because when I decided … Like, when I looked at where my money was going and I wanted to cut back on eating out, right?
Melanie: Mm-hmm (affirmative).
Hahna: Because with where I work, people eat out all the time for lunch, and then after work, they go to happy hours, so we're just spending money. I realized, you know what, instead of eating out for lunch 5 days a week, let me reduce it down to just Tuesday and Thursday. I remember so vividly when a Tuesday or Thursday would come around, and my group would say, “Hey, we're going to lunch,” and I would gracefully and politely decline, and I would say, if it was a Monday, Wednesday, or Friday, I would say, “I only am eating out for lunch on Tuesdays and Thursdays.” They're like, “What?” It did not make sense to them.