March 2018: What did I buy.

*Side note: I decided to not call this a ‘No buy’ as I am I still purchasing things. Maybe Low Buy? Yeah, that doesn’t have the same ring to it. Will update with a new title when I have a better name for it.

March has been one of the most stressful seasons I have ever encountered. I am thinking on putting a number of things I can buy in a month (excluding transportation passes) but still continue with a no clothing buy.

I’m going to try my best to decrease the number of purchases in April as I am aiming to build a good savings buffer before moving out in the summer.

What did I buy:

  • Brunch with family
  • Coach Chelsea boots
  • Lunch x 5
  • Uniqlo blouse x 2
  • Salsa dance lessons

What did I not buy:

  • Vince Camuto blouse ($40)

What I did to pay off $28,300 worth of student loans in less than 2 years.

Thank you, OSAP, for my education. I don’t think I could ever pay you back.” – Broke, unemployed 22-year old me, fresh out of university.

Here is the magic formula:

1. Switch to a low to no interest loan

You will never pay your principle amount if you keep accumulating interest and you would end up paying even more than your initial loan amount. This is where compound interest DOES NOT work in your favour. I was fortunate enough to have family help me pay off OSAP first, and then I would pay the full amount back to them. Effectively, having a zero interest loan. Thanks fam.

2. Budget, budget, budget

Never go to war without a plan.” – Sun Tzu, The Art of War.

Joking. I don’t even know if the book said that. However, that does not change the point.

You are in this for the long run. Paying off your student debt is like a marathon where it requires patience, pacing, and a lot of stamina. It’ll be all motivating at the start like the first 2KM – 5KM, but afterwards, it is so easy to slip and fall to old habits, spending away what could be going towards your loan. Plan exactly where each dollar should go before every month, which leads me to my next point of execution…

3. Set an aggressive monthly minimum amount

My minimum amount was determined by calculating how long I want to realistically take to pay off this loan. (I.E Loan amount ÷ # of years ÷ 12 months) I averaged about $1,600 – $1,800 a month, depending on the month’s financial situation.

4. Decrease expenses

There are two parts to this: A) Reoccuring expenses and B) Other expenses.

A) These would be expenses that would repeat month over month. Living at home and commuting via public transit meant that I could save some money by paying a lower rent and transit rate. Then, I put the difference towards my loan.

B) Other expenses would consist of going out to eat, shopping for clothes, etc. I am guilty in this area where spent a bit more than I should. Going out with friends and clothes were weaknesses of mine. Looking back, there were many occasions that I said ‘yes’ to, but there were many more instances when I had to say ‘no’.

5. Little to no savings

Honestly, this is one of the dumber things that I did in order to dump more money into my loan. I only did this, because my landlords were my parents.

6. No vacations

Plain and simple. I have not traveled for leisure or gone on a vacation since graduating and started working at my first full-time job.

Stay-cations ALL THE WAY.

7. Delay major purchases

Sony Vaio & Samsung Galaxy SIII

My 6 year-old Sony Vaio and 7 year-old Samsung Galaxy SIII.

I staved off major purchases till I neared the end of my loan. Here, you see my 6-year old Sony VAIO laptop that kept blue screening and slow AF Galaxy SIII that constantly crashed, dropped calls and no longer connect to wifi, among a plethora of other issues. Despite these issues, I kept holding onto them, because my budget could not take the massive hit of new purchases.

And that’s it! The truth of the matter is, there is no magic solution to student debt.

Decrease spending, increase loan payment.

I admit that I could not have done it all on my own. I had help in terms of family giving me a lower rent rate, and giving me an interest free loan. This helped significantly. The rest was on my own when it came to planning and putting money aside to ensure that I was on track to pay everything off as quickly as I can.

Best of luck and I’ll see you on the other side!

Loan Payment #22

This post is to officially announce that I paid off my $28,300 loan on March 15, 2018!

FREEDOM never tasted so sweet.

I woke up exactly at 5AM to check my paycheck deposited in my bank account. Then, made the final transfer of $1,800.

In all honesty, I did not feel any different. It didn’t seem like as if I paid off everything. Instead, it was just like any other payment. I have a feeling that it will truly hit me in April when I can actually keep a large sum of money for the first time in two years.

No Buy – February 2018: What did I buy.

I put myself on a ‘No Buy’, for clothing or new tech, after setting a personal record in spending during the holiday season and noticed that I had spent a little over $3 000 on clothing over two years. It helped that work kept me in the office all February and out of stores.

To put it into perspective, that’s essentially two months worth of student loan payments. TWO MONTHS. I can’t even remember what I bought or how much I wore the items. Lesson here is, everything adds up and know your habits.

Clothing is my weakness. Back when I was younger, we would only have one shopping trip a year and that is because our grandfather wanted to treat us. My folks were (and still are) incredibly frugal as they came as immigrants with barely anything. So, now that I have disposable income, being able to buy clothing gives me a sense of freedom to do what I want and have what I want.

My ‘No Buy’ is not meant to deprive me of enjoying life but rather train healthy, financial habits. I like how I use to only buy clothes once a year, it made the purchasing that much more special. On the other hand, you can’t save as much money because certain items are cheaper during the end of certain seasons. In order to not pay ticket price and recreate the occasional purchasing trip, I have a list of pre-approved items:

  • Black Chelsea boots with 2-inch heel (specifically the Coach BOWERY boot) – $470
  • White blouse (Uniqlo) – $35
  • White flowy, button-down shirt (Uniqlo) – $35
  • Red dress (or any one-piece in that tone) – $100
  • Black blazer – $80
  • Black pair of jeans, solid, no-distressing (Levi’s) – $80
  • Merino Wool crew-neck, knit, sweaters x 2 – Uniqlo ($80)

Notice that most of them have a specific store assigned already. That’s from me doing research on what exactly I am looking for and prevents me from wandering off and seeing other things. These are all officewear as I have more than enough of ‘university/lounge-wear’ and not enough professional outfits. I identified that these should be the remaining pieces to have a well-rounded office wardrobe that I can wear many times over.

Finally, I think it would be really interesting to document what I wanted to buy and what I did end up buying this month.

What I bought:

  • Treated family to dinner
  • Reunion dinner with high school friends
  • A chicken soup because I felt sick that day
  • Tea x 2
  • Weekend Cottage/Snowboarding trip
  • Gift for Dad’s birthday

What I wanted to buy, but didn’t:

  • Gold chevron ring ($60.00)

Why I pay rent when living at home.

Yes, I pay rent when living at home and I think it is the right thing to do.

No, the money is not going back to me sometime in the future. My folks are not holding it for safe-keeping for me.

Two main reasons:

1. I am a working adult who has a job and I am using their space.

If I am contributing to the monthly utility bill, eating food, and utilizing a room that they could have rented out, I think it is only fair that I pay my share. My folks are paying for the monthly mortgage and groceries, so it is not like they are skipping out on paying their part of living expense.

2. Teaches me to live realistically.

Because I am paying rent already, my monthly expenditures already have a buffer for rent. If I were to move out, it would not be as much as a shock to my budget as not having paid it at all. I am use to living with a certain amount of disposable income after basic needs are accounted for.

All in all, there is a sense of pride of being independent and self-reliant because of my own finances.

Why I manually input my expenses.

Mint. Adaptu. HelloWallet. All great budget and spending apps.

But.

I will still keep all my physical receipts, manually input my expenses, and plan out my budget through the good ole Excel spreadsheet.

Why though? Why make an extra step in your weekly routine to do book-keeping?

Because I want to literally be hands-on with my money when I keep tapping my cards. Apps are great because they compile everything for you in a nice diagram to see where you are spending the most. However, when handling receipts and logging it in individually yourself, this truly gives you the pain of how every little purchase adds up.

When everything becomes digitized, it is much easier to be disconnected from your cash flow. Looking at every receipt from my purchases that week forces me to revisit regretful purchasing decisions and think before another impulse buy. Editing my spreadsheet keeps personal finance top-of-mind, and prevents me from having a passive attitude towards it.