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“Debt is an emergency like a flat tire or broken down car… You would put all your money into [fixing] those things.”
So says 26-year-old Tracy Bindel. CNNMoney reports the Wellesley College graduate just paid off the balance of her $13,000 in student loans. Her 2014 New Year’s resolution was to extinguish her debt. But at the time she was working three jobs and just managing to survive.
Then in March, her highest-paying employer laid her off. But still she managed to accomplish her goal…
Bindel used public transportation or walked to get around. She bought all her clothes and furniture from secondhand stores. She moved to an apartment with rent that cost only one-third of her take-home pay. And she stuck Post-It notes to her mirrors… updating them as her loan balances dropped.
By summer’s end, she got a job earning $36,000 per year. The extra funds were enough for her to put her loans to rest at the start of this month. She saved over 10 years of interest payments through her committed, debt-killing focus.
Remember, when dealing with debt, you’re not only losing money by paying interest. There’s also the “opportunity cost” of that money: The funds you spend paying off your loans can’t be used to save or invest. It earns no interest… no dividends… nada. To put these lost opportunity costs in perspective, read our next item…