This article is reprinted by permission from NerdWallet.
Peter Starkey’s debt repayment approach is like his weight loss method: Buckle down and do it.
For the 26-year-old, that means making monthly student loan payments on the standard repayment plan — even though he could pay less on a different plan — and practicing healthy diet and exercise habits.
It’s effective. Starkey graduated from George Washington University in 2014 with about $40,000 in student loans and has paid down roughly half. He also owns a home, ran a half-marathon in October and has shed 55 pounds since January 2018.
The payoff strategy
Success is incremental for Starkey. He still owes about $19,000 in student loans, plus credit card and car debt. But he steadily chips away at those balances while also covering mortgage payments, home repairs and retirement savings.
Starkey earns $42,000 a year as executive director at Monadnock Peer Support, a small mental health nonprofit in Keene, New Hampshire. He supplements that income by renting out a room in his home. Eating healthy helps him save by avoiding pricey meals out.
Starkey chronicled his spending during a recent typical week to show how money influences his day-to-day decisions. Here are his entries, plus tips for others who are paying off debt. (Entries have been edited for clarity and length.)
Day 1: Monday coffee cravings
Total spending: $0
It’s 8 a.m. and my alarm goes off. Although I would love a Starbucks SBUX, -1.26% or Dunkin’ DNKN, -2.22% I forgo them and decide to get coffee at work, where it’s free.
I boil an egg, my usual “breakfast of champions” lately. That’s a saving of about $3 to $5 compared with buying a breakfast sandwich, plus it has protein and fewer calories.
I get to work, pour my free coffee, and work until lunch. I’m tempted to get takeout Indian food, but in the back of my head I’m thinking of some big purchases I had to make on the house and car, so I need to make sure I have enough money to pay bills.
This week is pay week, so I start to think about my expenses. I know my student loans have to be paid, so I tick off that from the total in my head. My mortgage is also due next week. Essentially, all of my paycheck will be drained on those two expenses.
Day 2: Election Day
Total spending: $40.26 for gas, which will be reimbursed through work.
I go to the polls at 8:30 a.m. to vote. I think about which candidates are going to support my financial success. Will this candidate support student loan reform? Will they establish programs and incentives for young people like me? Are they a good person to trust with my taxes? Will they raise my taxes? All of these questions rush through my head in that tiny voting stall. It’s daunting, thinking about the future and savings.
I stop and get gas because I have to drive to meetings at the Capitol tomorrow. I pick up payroll from my nonprofit’s bookkeeper, which includes a check for my mileage reimbursement.
I start to think of my upcoming bills. It didn’t help that I had to get new tires last week — damn flats. Student loans pop into my head. I’ll need to move some money around to cover them, given an unexpected furnace expense.
I come home to a medical bill. It’s not expensive, but I have to sit down at some point and write up what bills need to be paid with this coming paycheck. Going out will be limited this month.
My friends invite me out for a drink to watch election results. I stop by my mother’s house to raid her leftovers — if I have dinner there, maybe I won’t spend $12 to $15 on food.
At the bar afterward, I opt for seltzer water over alcohol because I need to pay my loans and such. I snag a couple of fries from a friend and enjoy the company.
Expert tip: An emergency fund will help prepare you for inevitable unexpected expenses. Aim to save $500 to start. Then focus on other priorities, like getting your employer’s 401(k) match and paying off high-interest debt, before paying extra on student loans.
Day 3: Payday
Total spending: $53 for electric bill.
I had to wake up early to get to my meetings at the Capitol. Breakfast and lunch are provided, and I got plenty of free coffee.
Today was also payday! I haven’t gotten a chance to map out my expenses for this paycheck given my busy meeting schedule, but I will be setting aside time to do this.
Wednesdays are a late day at work, so I left at 7 p.m. and went to the gym with a friend. I paid the electric bill for the month, which, surprisingly, came in low.
Day 4: Dieting on a budget
Total spending: $17 for coffee, salad and a cookie.
I woke up and all I wanted was some greasy diner food. Being on a losing-weight kick and trying to save money sucks. Have I mentioned I hate oatmeal? Well, ladies and gentlemen, today I had oatmeal and I survived…barely.
My assistant made a comment that none of my clothes are fitting me. He starts planning a shopping trip for winter clothes and my mind goes to, “How can I cut costs to cover this?”
I’m presenting at a regional community health meeting tomorrow and my presentation partner asks to meet at a coffee shop. I order the bougiest coffee on the menu: equatorial bold. I quickly wonder if I could expense this through work, but the nonprofit life isn’t that generous.
I finish up at work and head to the gym with a former co-worker. Afterward, she twists my arm into going out to eat. It was $11 I didn’t want to spend, but it’s the first meal I bought all week, so I call it a win. My impulse buy of the day was a $3 cookie. I split it into eight pieces so I can make it last and not add too many calories to my day.
Expert tip: Employees of 501(c)(3) nonprofits and government agencies can potentially get some federal student loan debt forgiven through the Public Service Loan Forgiveness program. Make sure you fully understand how PSLF works before pursuing it — only a handful of borrowers have successfully navigated the program’s nuanced requirements.
Starkey is hesitant to pursue PSLF because he’s concerned about paying more in interest over time if forgiveness doesn’t pan out for him, he says.
Day 5: Divvying up the paycheck
Total spending: $0
I wake up early for a meeting and I’m already nervous because I have to do a presentation. This would usually cause me to treat myself to Dunkin’ or Starbucks, but I resist.
The rest of the day is fairly standard, so I go through and start mapping out my bills for the paycheck I just got:
- $500 furnace repair.
- $230 student loan payment.
- $1,200 mortgage payment.
- $150 medical bill.
Definitely more expenses than income, but luckily I’ve been preparing for this. Not eating out helps a lot. I can push the medical bills until my next paycheck, so I call and just submit a $20 payment. The furnace needs to be paid; I can use my roommate’s rent to cover that. My entire paycheck will go to the mortgage (yikes), and the mileage reimbursement from work will cover my student loans. My credit card bill and car payment usually happen on the second bill of the month, and I’ll have money left over to cover other expenses.
Thankfully, I avoided a Friday night bar tab — we hung out at my friend’s house instead and drank wine.
Day 6: Saturday grocery shopping
Total spending: $47.60 for coffee, parking and groceries.
I woke up and realize I desperately need to go grocery shopping, which is kind of an issue since I’ve already talked about my nonexistent bank account balance after bills. I usually try to purchase groceries with my second monthly paycheck, but I need to eat.
On my way to the grocery store there is a rally to support local education. I park my car and join, and buy a cup of coffee to keep warm.
Afterward, I head to the store. I usually avoid shopping while hungry, and all the carbs and calories are shouting out at me. I grab my essentials for breakfast and lunch: bananas and eggs. The chips call my name from across the store as I try to buy carrots, a healthier snack.
For dinner this week, I opt for chicken. It’s a great source of protein, and it’s cheap and quick to make. Pro meal prep tip: Buy a pressure cooker — it will transform how you cook. I can cook a frozen chicken breast in 10 minutes. I also purchase a dinner staple for me, flash-frozen vegetables.
Expert tip: Create a budget to avoid feeling squeezed between paychecks. To start, calculate your after-tax income and divide it among needs, wants, savings and debt repayment.
Day 7: Spending distractions
Total spending: $0
I’m an extrovert 100%, and staying at home kills me. This doesn’t help my wallet because things like brunch, happy hour and day trips call my name.
I opt for something that will keep me occupied and not spending money: cleaning. I cleaned the entire house and raked the front lawn. Success!
My mother invites me over for dinner, which means good, healthy food for free. I swing by the gym with a friend before heading over and chowing down. I leave with enough leftovers for about three meals, a win for my wallet. I spend the night hanging out with a friend at his house and call it a night.
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Teddy Nykiel is a writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @teddynykiel.
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