28 and Debt-free
By Bryan Gilmer (Newsman)
August 18, 2000
Recently I dropped a $490 check into the mailbox, the final payment on my student loans. Everything I now have is mine, completely. Because I rent an apartment rather than own a house (I'm not planning to stay in this city long enough to come out ahead financially), I have literally zero debt. I'm 28. It feels great.
Here are some of the ways I did it:
Ever since college, I resisted the nearly overwhelming temptation to buy a new car. Instead, I have driven my 1987 Prelude, which I bought used seven years ago for $5,000. It now has 140,000 miles on it. I have always lived near work to minimize wear and tear on the car, and to avoid the time wasted in commuting.
I got out of credit card debt first (about two years ago) and stayed out. I charge several hundred bucks worth of stuff each month, but pay off the balance in full each time. Great way to borrow money for free for up to six weeks.
I paid off my student loan in 5 years instead of 10. I was lucky that I only had to borrow about $8,000. When money was tighter right out of school, I'd tack on $10 or $20 extra to each month's payment. But I paid off the last half of the loan over the past 12 months. I transferred the balance to an AT&T Universal Mastercard at 2.9% interest (one year introductory rate). This was a savings over the 8% rate Sallie Mae was charging. It was hard as hell to make those huge payments some months, but I did it, knowing that any leftover balance would revert to the card's standard 11% APR.
I resisted the temptation to spend money on trifles. I have my share of fun (vacations to Seattle, Europe, and the Appalachian Trail over the past two years), and my girlfriend and I eat out a few times a week. But I try to bring lunch to work, cook at home much of the time, do free things for fun, look for deals on clothes, and all those other Living Below Your Means suggestions.
If you are still working on shedding your debt, let me tell you how great it feels to accomplish it. It truly does mean freedom -- so many more choices are available to me now. I can't wait to see how much extra money I have next month when I don't have to scrape up $400-$500 for that student loan payment. I have a few thousand in a brokerage account already, and I hope to use the extra money for more investments to get farther ahead of the curve.