In this series, NerdWallet interviews people who have triumphed over debt using a combination of commitment, budgeting and smart financial choices. Responses have been edited for length and clarity.
What do you do when you have a master’s degree in performance studies, and you can’t find a job — but badly need one because you have tens of thousands in student loan debt?
After months of unsuccessful job-hunting in New York City, Melanie Lockert moved to Portland, Oregon, in 2011 to live with her then-partner. The lower cost of living helped — her share of the rent was only $400 — but she still struggled, making about $20,000 per year from part-time work and side gigs.
Lockert constantly felt stressed and her heavy debt load dictated all of her decisions. She didn’t love Portland — preferring sunnier Southern California, where she’s from — but couldn’t part with her low rent. She desperately wanted a pet but couldn’t afford one.
In January 2013, she resolved to wipe out her remaining $57,426 debt. She started a blog, Dear Debt, to hold herself accountable and made wish lists of things she’d be able to do once debt-free.
Lockert eventually landed a full-time job in May 2013, earning $31,000, and was later able to increase her income by switching to freelancing. In just under three years, she wiped out her student loan balances. Perhaps her story will inspire you to pay off your debt as well.
How did you end up in debt?
I took out my first student loan when I was 17 and entering college. When I was 25, I took on even more debt to get my master’s degree from New York University. All of my debt was student loan debt.
What triggered your decision to get out of debt?
I graduated from NYU in May 2011 and had cobbled together a few gigs — think TaskRabbit, Craigslist — but couldn’t find a full-time job. I went on a dizzying amount of interviews with nothing to show for it. When my student loans became due after the grace period, I realized I couldn’t afford to pay them and live in New York City.
I moved to Portland, Oregon, in December 2011, to be with my then-partner. I continued to struggle in Portland and made between $10 and $12 per hour that first year. I felt crippled by my debt and embarrassed that I couldn’t find a job that could help me pay it back. That led to a deep depression and lingering anxiety. I was getting tired of always feeling this way, so in January 2013, I started my blog, Dear Debt, and committed to getting out of debt no matter what.
» Did you ditch debt? Tell us how.
What steps did you take?
I had a really minimal lifestyle. I shared a small studio apartment with my partner, didn’t have a car, no cable. … I stopped going out to eat and cut out nearly all of my discretionary spending, which wasn’t much.
I began to side hustle and take on any gig I could find. I looked on Craigslist and TaskRabbit and worked as a pet sitter, mother’s helper, event assistant, brand ambassador and more.
I used the avalanche method to pay down high-interest debt first. I also made biweekly payments to cut down on interest charges. Any time I got a raise, a tax refund or birthday money, it would go toward my debt.
What mistakes did you make as you dug your way out of debt?
I have a very all-or-nothing personality, and I totally dipped into my emergency fund to help pay off debt. And I did not save for retirement. For a time, I did not have health insurance.
Also, when I began paying off my first student loan, I paid only the minimum. It did not occur to me to pay more than that.
How has your life changed for the better?
When I was in debt, I created a “debt-free dream list” of all the things I wanted to do once I paid off my debt. On that list was moving back to Los Angeles, taking my mom to Italy, getting a cat and working for myself. Having a vision for what my life would look like after getting out of debt helped me stay motivated.
Now I have two playful kittens. And I make choices based on what I want rather than what’s the cheapest option. That’s really freeing.
What resource do you wish you'd had when you were paying off debt?
I wish there was a site that could illustrate how much you are paying daily in interest. I did the math, and at its highest, I was paying $11 per day in interest.
How do you remain debt-free today?
I have an emergency fund with six months’ worth of expenses and monitor my spending. I make sure I only buy things I can actually afford. Also, I’m so done with school!
How to tackle your own debt
Imagining the life you want can help you stick to your debt payoff plan. Lockert has achieved her wish list items, including moving back to the L.A. area and taking her mother to Italy.
Other tools that can guide you to success:
Save an emergency fund. Though it’s tempting to send every penny you can to debt repayment, get a small emergency fund set up first. That protects you from running up more debt whenever an unexpected expense hits.
Make multiple payments during each billing cycle to decrease the interest you pay. Paying twice monthly or even once a week can help decrease interest charges.
Look for additional sources of income. Lockert started off by picking up odd jobs on the internet. Side hustles can be a big help — or turn into a “real” job.