I Believe I Can Fly

Hello all :). I hope those of you in Ontario are having a great long weekend. I know I am! There were so many free events this weekend in Toronto that it was hard to choose where to go. Long weekends are especially fun in the city because there are usually more events than normal. And normally summer weekends in Toronto are already packed with events.

I love Toronto

This month I continued to spend a lot. Sad face. However, I should note that while it is a lot compared to the spending I did when I was at home it is not that much considering that I am on my own and am going out a helluva lot! Also, after last month’s total and utter failure I made a big effort to put way more towards my debt, although I once again was dealing with some late payments.

In July, I made a bunch of extra payments towards my b-school loan. In so doing, I finally paid off the accumulated interest part of the loan and now some of my monthly payments are being applied to the principal balance. This is great news. It is great to see the principal going down now, after well over a year of seeing every payment I made only being applied to interest. THAT was depressing because it felt like my principal balance owing was never gonna go down.

I had a big credit card bill of over $1500 at the end of the month. Over $600 of it was towards my dentist fees. I forgot to pay off the credit card balance before the month’s end. Otherwise, my debt reduction progress for July would have been much better! Don’t worry though, I didn’t carry the credit card balance past the due date. I actually just paid it off, before the due date, so I’m good.

 

Name July 31, 2013 July 31, 2014
Mastercard $6,123 CAD $0
Visa $8,653 CAD $1167 CAD
B-school loan $96,800 USD ($105,503 CAD) $91,038 USD ($99,222 CAD)
Ontario Student Assistance Program (OSAP) loan $20,931 CAD $19,039 CAD
Student Line of Credit (LOC) $9,678 CAD $0
TOTAL $150,888 CAD $119,428 CAD

At the end of June my debt total was $122,675. So that means that in July I paid off $3247, thereby meeting both my minimum monthly goal of $2500 and paying off more than my desired goal of $3000 per month! I still have some catching up to do though since June’s progress was so dismal. I need at least a couple more months of paying off more than the desired goal to be fine again.

In great news though, I met my goal of paying off $30,000 in one year! I paid off $31,460 of debt from July 2013 to July 2014! So I am on track, actually a little ahead, of my goal to be debt-free five years from July 31, 2013!

I am extremely grateful that I was afforded the ability to be able to pay down so much in one year, while still living my life in a way that worked well and was enjoyable for me. I love this feeling of having met a goal. Believing that I can fly does get me places! I pray and hope that next year I will be in a similarly joyful position when it comes to my debt reduction progress!

Phone Savings

A month ago, for the first time ever, a phone I owned crapped out on me. Of course, as is my luck, it was a phone I had bought outright, not on a plan. I spent total $450 for it. It was a Samsung Galaxy S3, a great phone, that is before it started giving problems. And it conveniently died just a a week after the warranty ended so repairs are not covered.

phone dies days after warranty ends

Joking aside, you are probably asking why I spent so much on a phone. Why not buy a cheap phone? Or better yet, why not get one for free on a plan?

One major concern at the time was that I was not sure I was going to be staying in Canada/Toronto long-term and I did not want to lock myself into the typical 3-year plan the major Canadian carriers had at the time (most Canadian plans are city-specific or region-specific with roaming fees charged once you leave a coverage zone). By buying a phone outright I could either sell it if I left Toronto within a few months and get back most of my money OR bring it with me unlocked and, rather than buy a new phone in my new location, use it instead.

I got the phone on sale at a great price too, $200 less than it cost elsewhere. As a testament to how much of a sale I got, new phones of the same model and make as my phone are currently selling for the same price I paid for it a year ago. So, if needed, I could have easily sold back the phone a few months after I bought it and got back basically all my money. Another reason I had at the time was that, during b-school, I got used to using a smartphone like a mini-tablet. So when I came back and had to get a Canadian number I was looking for a fast phone with features that were excellent for business and personal use when on-the-go. The Galaxy S3 fit the bill!

It sucks that my phone died and while I am way more pissed at Samsung than at my carrier, Mobilicity, I am still a little angry with my carrier’s non-helpful response that they are not responsible for helping me with my phone problem, especially considering I bought the phone from them. However, I’m not gonna switch from low-cost Mobilicity to try to get a phone for much cheaper on a 2-yr plan with one of the bigger carriers. Here’s why.

If I got a phone and plan with one of the three major cellphone providers here in Canada I would have paid something like $299+tax for the same phone, instead of the $399+tax I paid. That is $100 less than what I paid. However, as previously mentioned, if I had signed up with one of the major carriers I would also have been locked in to a minimum 2-year plan at a much higher monthly rate than my current one. As it was though, I got unlimited talk, data and text PLUS free calling and texting to the US at a discount rate from Mobilicity ($29+tax, instead of $45+tax) and I was NOT tied to a plan. Furthermore, my all-inclusive bill from Mobilicity has been $39.55 for 14 months now, taxes and fees included. The average for any of the big three phone companies for a similar plan is $95 and that’s only for 2GB of data. This means that I have saved at least $45/mth for the past 14 months, or $630. I paid just over $450 all in for my phone. So although my phone has now died I am still $180 ahead. And I can once again do the same thing of buying a phone outright and continuing on Mobilicity’s unlimited plan because I’ll still be saving money compared to if I was on a plan with one of the major carriers.

In Canada the big three cellphone carriers have an oligopoly on the system.

Canadian Cellphone Companies Market Share
Source: Seeking Alpha

Most people are with one of the major carriers (Bell, Rogers and Telus) and make no attempt to leave. People usually mention quality of reception as a reason for not switching to a cheaper carrier. So far, my reception quality with Mobilicity has been pretty great.

Another reason people used to give was the inconvenience of having to change numbers every time you switch carriers. Now that Canada has phone number portability, if you want to save money, the least you can do is try out one of the new, also cheaper, carriers. If you find out you don’t have good coverage in your area then by all means switch back to your original provider. However, you may discover that coverage is good to great and if this occurs you will be well-pleased to know how much money you can save on an annual basis by switching. If you are in the US or elsewhere in the world, it goes without saying that you too can do the same price comparison and calculations before going with the company that every one else uses.

At the same time, it still stings when I consider that I either have to spend a considerable amount of money to fix my phone or buy a new phone!

Two Steps Back

Hiya!

I hope my fellow Canadians had a great Canada Day and that my American readers had a happy Fourth of July!

Social life wise, June was a splendid month for me! Savings and debt reduction wise, not so much :/.

I am too lazy to keep hiding my city so I will just let you know what city I live in:

Toronto skyline
Toronto

Toronto is awesome, especially in the summer! There are numerous events, including many free events, all summer long and I partook in many this past month. I also went to many more meetups. And I went out a lot, eating out and partying, seemingly trying to reclaim the party life I had during b-school. I didn’t reach my b-school heights of partying and I kept my drinking to a minimum but I certainly had almost as much fun!

Excluding rent and the amount I gave to my Mum, here were my biggest expenses for June:

  • Clothes – $210
  • Groceries – $245
  • Dining out – $180
  • Dentist – $150
  • Miscellaneous – $150
  • Gifts – $100
  • Entertainment (clubbing/drinking/movies/recreation/etc) – $85

Looking at my total spending for dining out and partying ($265), I actually did not do that badly for someone who ate out and partied at a club/pub an average of three times a week. It was also less spending in this category than the previous month, my birthday month ($495). The dentist was unavoidable (*siiigh*). However, for groceries, I was hoping to spend $200 per month so I’m quite a ways over my goal. In addition, there were a few expenses that drove up my spending for the month and had they not been present my spending would have been lower than last month’s. My best friend is getting married at the end of summer. I had to buy a bridesmaid dress that cost $200. I also spent about $100 getting sheets, a comforter set and pillows for the bed in my apartment since I had nothing at home that would work and I did not want to have a mismatched, tacky-looking bed. Those were included in the Miscellaneous category. Then a friend told me last-minute about his small wedding. So of course I had to get a gift.

As a consequence of all this fun, extra spending and, this is the main reason, the fact that a client is once again late with a couple payments, I didn’t put too much towards my debt.

As of now, here is a summary of my debt situation.

Name July 31, 2013 June 30, 2014
Mastercard $6,123 CAD $0
Visa $8,653 CAD $0
B-school loan $96,800 USD ($105,503 CAD) $94,944 USD ($103,479 CAD)
Ontario Student Assistance Program (OSAP) loan $20,931 CAD $19,196 CAD
Student Line of Credit (LOC) $9,678 CAD $0
TOTAL $150,888 CAD $122,675 CAD

At the end of May my debt was $123,771.  That means that this month I only paid off $1,096.

TOTAL FAIL! :(

That’s the lowest I have ever paid off in a month and well below my $2500 minimum and desired $3000. :(

I’m guessing that July will be very similar with the spending. However, I will make an extra push to put more money towards debt. On the brighter side, I have now paid off $28,213 of my debt and as long as I do that extra push I can still make my goal of paying off $30,000 by the end of July, to mark one year from when I started my debt squashing journey.

A Lesson In Appreciation and Delayed Gratification

Hello again,

I hope your week started off well. Before the week was the weekend. And last weekend was good for me.

I finally made good on my goal to start volunteering this year. Because I think it is great to give back and it is important to me that I volunteer. I made some sandwiches to give out to the homeless and went around with a group to one of the parks the homeless in my city frequent. We handed out sandwiches, clothes and shoes. It is pretty much the ideal volunteer activity I’ve been wanting to do for a while now.

It’s not just the homeless who benefited from our volunteering effort though. I think we, the volunteers, benefited even more. Having long conversations with some of the homeless, finding out their life stories, made us realize how lucky we are. Made me better appreciate how lucky I am.

For one, I am not suffering from any mental illness or destructive addictions. And the other thing is that I have a very strong support system. I think that sometimes a big part of what prevents us non-homeless people from becoming homeless is that we actually have friends or family members we can count on for emotional support and often-times other support such as temporary shelter.

Emotional Support - Hugs

I am definitely planning to volunteer again with the group! It was an especially nice activity to do the day before Father’s Day here in Canada.

For Father’s Day my family came to hang out with me for the day. We walked around downtown for a bit but mostly it was all eight of us in my one bedroom condo. Wouldn’t have had it any other way though. It was an excellent day!

Speaking of fathers…I previously mentioned how much my spending habits have been influenced by my parents. And how a big reason for my desire to pay off my debt as quickly as possible is to help out my parents and my family. I know that in North American culture in particular it is a bit unusual to be planning my life around ensuring my parents’ future well-being. Because in this culture it sometimes seems like every man or woman for him/herself. So I know people are wondering why I want to financially help my parents in retirement and why I am not thinking about saving for only my retirement, like most North Americans.

Firstly, when compared to other cultures, my slightly more wide-reaching plan is just a fraction of what people in other cultures do. Secondly, I mentioned in an earlier post that my family immigrated to Canada eleven years ago. This means that I didn’t actually grow up in North America. So I have that excuse for my different way of thinking. However, truth be told, what is perhaps most influential to my way of thinking is my parents’ history, especially my father’s. My father’s life has been the ultimate example of putting one’s family first and delaying gratification. Delaying gratification is one of the key tenets I think to living a frugal lifestyle, something that’s necessary if you are me and are trying to pay off $151K of debt as quickly as possible.

Delaying Gratification - Now Later

My father was the third child and most book-smart one of six kids in his family. The younger of two boys in the family. He was the only one of his siblings to pass his grade six achievement test and gain acceptance to a traditional high school in his home country, the country I also grew up in.

My home country’s school system is based off the British system. When you are 10 or 11 years old you have to take an exam to get into high school. If you fail to get a grade that wins you a spot in one of the traditional high schools you get to re-sit the exam the next year. If you are lucky and were born in the last three months of the year you get a third try. If you fail the test after your last allotted try you get sent to a technical high school which basically prepares you for a career in trades. When I was in high school, I remember an English exchange student once telling me that everyone in England is eventually placed in a traditional high school. In my home country the number of spots available at a traditional high school is far below the number of students who get decent grades in the exam. So only the cream of the crop get in. Needless to say, it is a very competitive process just to get into high school! And, essentially, your life path is determined when you are eleven years old.

As we all know (well, unless you live in Finland), getting in to high school is not the end of exam stress though. An easy way to understand the high school system in my home country is to think of the Harry Potter books (hopefully you know at least a little about them) and the various school exams Harry had to take. Here is a quick summary:

In grade 6, you take an exam to enter high school. High school goes from grades 7 to grade 11 (or 1st year to 5th year). After grade 11 you take another exam (the equivalent of the OWLs in the Harry Potter books). Your scores in the OWLs determine what kind of jobs you can get. You officially graduate high shool at the end of grade 11, as long as you pass a minimum number of subjects. However, if you want to attend university you must continue on to grades 12 and 13, also known as lower 6th and upper 6th. Once again, spots are limited. It is more competitive than the process of getting into high school. If you get in, thank the Gods. But then prepare again because in grade 13 you have to take the equivalent of the NEWTs in the HP books. Your scores for those exams determine whether or not you get into university and into the programs you want. If you do not do grades 12 and 13, university life is off the table and your only option is to enter the job force.

Back to my father…

His father got sick a couple years before he started high school. Shortly after my Dad started high school his father died. Before my grandfather got sick, the family was doing pretty well because my grandfather owned a successful small business. However, when my grandfather died that immediately made my grandmother a single mother of 6 kids. And life got rough after that point. Actually, life had started getting rough from before he died, since he had a lengthy illness before his death. My grandmother had had to sell the business from pretty early on. It might even have been before my grandfather died. And she was not educated beyond elementary school level so the multiple jobs she got to support the family were all low-paying.

By the time my father sat the equivalent of the OWL exams in grade 11, things were bleak financially. My father’s two older siblings had long since dropped out of school to help their mother by doing odd jobs. Pretty sure they didn’t make it past grade nine even. He had no one in his family who had ever finished high school, much less college. He wanted to attend university but didn’t realize he needed to sit the equivalent to Harry Potter’s NEWT exams. In any case, he also did not have the money to apply for the entrance fees for university, knew he could never afford tuition anyways and after getting decent grades in his OWLs had a job offer from a family friend offering him a job that paid decent wages. He decided to accept the job offer to make money to help out his family.

My father was sixteen when he graduated high school and started that job. He worked and moved up the ranks slightly, doing little certifications here and there to get better positions. He used his earnings to help his mother, his siblings and then later on his siblings’ first children. It was only when he was certain that his mother and his siblings were taken care of and his sisters had worked their way up to decent-paying jobs that he felt okay enough to leave his family to attend university in the UK. But it took many many years for that point to be reached. So many years that my father did not end up attending university until he was 28. He graduated with his Bachelor’s degree when he was 31. My exact age now. Many people would have given up on their dream to attend university. My father didn’t. And by doing so he showed me that whatever I put my mind to I also can accomplish!

I will never be as selfless in my actions for my family as my father was. However, I would like to at least somewhat take my family into consideration when I think of the future. In addition, whenever I think of all the things that I want for myself and realize sometimes how self-centred and/or selfish I am being I only have to think about what my father did for me to realize how good I have it in this world. If he could wait TWELVE YEARS to accomplish his goal of attending university then I can certainly wait a few years to start enjoying life more and can most definitely get by holding out for a few months to have whatever rare material thing it is that I desire.

If any of you reading this are fathers or serve as fathers, I hope you had a wonderful Father’s Day :).

Next post will be the monthly update on my debt reduction progress!

Material World

Hi all. I apologize for not posting the last two weeks. Things got busy with main client the first weekend and then this past weekend was spent preparing for and then moving downtown. I also didn’t have internet at the new place for a few days. So it took me longer to download my bank account transactions to my personal finance software, run my reports and do my usual monthly analyses of spending, expenses, etc. One day I will write a post about the process and tools I use to keep track of my money. Today, however, I will give an update on my debt reduction progress as of the end of last month and my life in the new digs.

Since I last posted, I paid off the last of the student line of credit (LOC)! Yay!
LOC paid

So that’s one more debt erased! Or rather squashed – haha. Next step is to focus on the b-school loan since it has the higher interest rate!

By the way, I realize that I have been zigzagging between the avalanche method of debt repayment (where you pay off the debts with the highest interest rates first, in descending order of interest rates) and the snowball payoff strategy (where you pay off the smallest debts first in ascending order of debt size, to get emotional wins). To be honest, I wasn’t really consciously following either one. I made sure to pay off my credit cards first because they had the highest interest rates AND they were the smaller amounts. Then I needed the emotional win of paying off my student line of credit (it’s been 11 years since I’ve had it!). And now I am back to focusing on the debt with the highest interest rate because the saved interest payments on my massive b-school loan will be a lot of money.

Alright, back to my progress…I didn’t get to throw money at much else besides the LOC because I didn’t have as much money coming in this past month. A couple payments I was to get in May have been late. And I didn’t want to put too much money towards the debt without for sure knowing I had a certain amount in my savings (planning for uncertainty remember?). In addition, besides the extra expenses of rent and living expenses, I am planning to spend a few thousand towards much-needed dental work before the summer is out. I will write about them later but my teeth issues are depressing :( . The point though is that, thanks to those mentioned things, I was more conservative this month in the money I threw at debt.

As for my life and last month’s spending…

If you remember from my last post, I told you all that I planned to temporarily move from a rent-free situation with the ‘rents to downtown living for the summer. That time arrived last weekend! Last Saturday, I moved into a condo for the three full months of summer!

It is a pretty nice, centrally-located condo with lots of amenities. The complete opposite of my living environment at home. And it is in a totally different type of neighbourhood from where my family lives. I got a really good deal on this nicely furnished luxury condo. It was listed at a price I could not afford so I emailed the owner and asked for a greatly reduced price, with the offer to pay all 3 months upfront. He initially said no. But then he emailed later saying that though he had others willing to pay more he liked me (he probably checked the links I gave him and googled me to make sure I was legit). After some back and forth we agreed on a price. I met him, saw the place and it worked out!

Basically, I negotiated the rent price (protip to saving money taught to me by my parents: negotiate on everything!).

funny negotiation

Nonetheless, I will also confess that, in securing this sweet pad, I went over my monthly rent budget quite a bit. However, by renting for only 3 months instead of the 4 months I had been thinking I’d do, I will end up spending the same amount of planned money on rent. A shorter stay in uber-convenient, swankier digs was a price I was willing to pay. Best believe that I will be using as many of the amenities as possible. And, since I have no flatmates, I achieved my goal of having a place where I can finally host visiting friends, without worrying about flatmates. Also, I figured that since I will be able to walk to many places I will be able save on transportation costs.

In other news, last weekend was also my birthday!
happy dog birthday

And as I feared, downtown living, with fun and temptation within easy grasp, started out proving to be rough on the wallet. As part of my birthday celebrations, I went proper clubbing for the first time in many years. And was simply reminded why I don’t really like the clubbing experience. It is time-consuming and expensive!

Club night was the day of my move but I unexpectedly had to help my parents with something so I spent all day driving them around. This had me moving in and getting ready two hours later than I intended. I was going to a nice club with a dress code (clearly not my choice) and my company was to include at least one girl I knew was going to go all out with dressing up. She is one of my new friends. We had gone out the night before to a stylish event and she had come dressed to turn heads, while I basically just flung on whatever clothes I could grab. I didn’t want to disappoint her again Saturday night. She hadn’t said anything Friday night but I definitely felt imagined her disappointment.

Most of the time, I try to avoid comparing myself to other women. But sometimes I can’t help it. Like when I know I am going to a club where most of the women will be dressed to kill. So I spent a lot of time on Saturday getting ready – deciding on a nice outfit, doing my hair and doing my makeup. Then because I started getting ready late, by the time I was ready to leave the apartment, it was after the time I should already have been at dinner with my friends (dinner was to be our first stop before the club). I had been planning to take public transportation to the restaurant, 15 minutes away. But I was late and in super high heels and a cab would take 7 minutes and only cost me $10 versus the $3 bus ride, i.e. $7 more. So I took a cab.

After dinner we briefly went into a pub and then went to the club. By the time the night was done I had spent $70, including dinner! I know that’s a small amount for clubgoers and high rollers (of which I count many of my former b-school classmates) but it was a big amount for me, especially since I had also gone out the previous two nights and had spent $40 each of those nights. That was a $150 weekend just for entertainment alone! I justify it a little though, because last year when I became 30 life was pretty depressing for me. So I tell myself that that big spending on just food and drinks was ok because it was my birthday, I didn’t do anything for my 30th last year and I don’t spend on myself like that often.

The cab spending is what I will have to watch out for…I live near enough to everything that it shouldn’t cost me more than $10 to take a cab anywhere, which is pretty cheap. However, public transportation is cheaper and runs 24/7 near enough to me that I can take it late at night. As long as I am not in heels. This is why I will try to avoid clubs/dressy lounges this summer and if I take a cab I will try to have at least one friend with me so we can split the cost.

On the bright side, this week I have already saved on a few round-trip transportation costs, because I walked to events/meetings. So cheers to that!

I will continue to keep you posted of my spending. As of now, here is a summary of my debt situation.

Name July 31, 2013 May 31, 2014
Mastercard $6,123 CAD $0
Visa $8,653 CAD $0
B-school loan $96,800 USD ($105,503 CAD) $95,807 USD ($104,420 CAD)
Ontario Student Assistance Program (OSAP) loan $20,931 CAD $19,351 CAD
Student Line of Credit (LOC) $9,678 CAD $0
TOTAL $150,888 CAD $123,771 CAD

That means that so far I have paid off $27,117 of my debt, which is not bad and still keeps me on track to my $30K payoff goal by July. However, I also have a goal to put at least $2500 per month towards debt, preferably $3000.

At the end of April my debt was $126,370. With May’s end of month debt balance being $123,771, this means that last month I put $2599 towards debt. That’s a little short of my $3000 per month goal. But I’m actually surprised. In a good way! With all the spending I’d been doing and few payments towards debt, I thought I only paid off $2000 at most (low expectations all the way).

This month of June I will again be spending extra on living expenses AND also have to put aside money for future dental treatment so I don’t know that I will be able to put $3000 towards debt. Hopefully, I will! Please check back in a week or two to get an update from me!

Journey to $25K

Hi all. In my last post I explained how I found myself $151K in the red last end of July. In this post I will bring you up to speed on how I paid off $26K in nine months. I put $25K in the title because it sounds better. Like one of those long-distance races.

As a reminder, here is what I owed last July:

Name Amount Interest Rate
Mastercard $6,123 CAD 19.99%
Visa $8,653 CAD 15.75%
B-school loan $96,800 USD ($105,503 CAD) 8.25%
Ontario Student Assistance Program (OSAP) loan $20,931 CAD 5.5%
Student Line of Credit (LOC) $9,678 CAD 4.5%
TOTAL $150,888 CAD

My general strategy in life is to enjoy it as much as I can but set low expectations. This way I get to enjoy life but I am hardly ever disappointed and more often than not I get to be ecstatic by the smallest of achievements or things that happen in my life. I am a peachy overachiever, aren’t I? Anyways, since I have that outlook on life, I try not to count on money too far in advance. This includes salaries and contracts. So when I signed the first contract mentioned in my last post and set about planning out my money, I only counted on a little money at a time and tried not to count too much on money I did not actually have in hand.

The First Contract

That two-and-a-half month first contract had an initial deposit, a midpoint payment and a final payment. I was to work as a strategic consultant for the client. A few days before the first payment (and for each one thereafter), I wrote out how I would allocate that payment. With the first payment, I only allocated money to paying the minimum payments on the line of credit and credit cards and the monthly amount for the loans. The extra was set aside to save towards the next month’s b-school loan payment, by far the biggest fixed expense at $745USD per month. In my mind, the client could theoretically end the agreement whenever they wanted and I wanted to ensure that if that happened I would at least be able to survive a month.

Thank God for my parents and my live-free situation with them! My family immigrated to Canada eleven years ago. Living at home with the ‘rents is not unusual for people of my background and, in general, for many immigrants where I live in Canada. In fact, most of my unmarried friends here (who are friends from undergrad) are like me and still live at home with their parents, although we are all nearing or past 30 years old and we all have decent or well-paying jobs. So I have little-to-no shame from living at home, the opposite feeling from many North Americans I’m sure.

Ok, so as I was saying, the first payment was allocated mainly towards meeting the minimum monthly payments on my debt. With the second payment, I was a little more adventurous. I allocated a few hundred dollars more than the minimums to both credit cards and set aside money for the next OSAP payment. I also put some money in savings.

Just before the deadline for the third payment, the client asked me to continue on for some more months and do more work. Lady Luck or God was smiling down on me! This development was amazing. Especially since, what with my low expectations and all, I had been thinking I’d get fired. But I guess they were happy with the work I was doing for them. Happiness abounded on my end with that request for a new engagement with that client!

With the third payment from main client I set aside some more money towards future b-school loan payments. I was determined to eventually have at least six months of b-school loan payments put aside. I also put aside some money in savings and allocated a little money to give to my parents. Once I knew I had a couple more months of money coming in with a new contract I felt it was my responsibility to give at least a tiny bit back to my parents (a couple hundred per month), especially given my family’s financial position (Mum with lower-paying job, Dad unable to work since shortly after we immigrated, an unemployed sibling, two other siblings working minimum wage and two kids).

I also put aside money in my monthly budget to order biweekly takeout for our family of eight. I should be giving my parents way more but my parents completely support my goal of paying off as much of my debt as possible. They agree that I should do this while I am earning decent money because they also advocate a debt-free life (except for a mortgage) and who knows how long I will be earning decent money? They are also pretty frugal too. When it comes to financial outlook on life sometimes, despite me calling them out on being too cheap sometimes, I have to admit that in my case the apple did not fall far from the tree.

The Next Couple Contracts

Alright, back to paying off my debt!

The second contract from my first lovely client would take me to the beginning of November. Near the end of that second contract I got a second client. It was a pretty small programming job (I’m a developer too) but that meant a couple thousand dollars more, i.e. more money! Joy!

In those first months to November, I continued my strategy of putting some money aside for the b-school loan payments, paying the minimums for the OSAP loan and student line of credit (LOC) AND putting more than the minimum payments towards the two credit cards. At some point, I decided to throw more effort into paying off the Mastercard since it had the higher interest rate. So, for instance, there were times I’d pay $300 towards my Visa bill and $1000 towards the Mastercard. With that strategy, I paid off my Mastercard balance by the beginning of November when I got that last payment for the second contract from the main client!

mastercard paid

The Fun, Frugal Lifestyle

In addition, in those summer months to November (and the final payment for that second contract from the client) I also continued to limit my spending. I am a pretty frugal person in general especially when it comes to spending money on myself. However, in those months I took my frugality to another level and continued operating as if I was unemployed. I was razor-focused on getting rid of my credit card debt. As I mentioned in my last post, I’d never really carried a credit card balance before (except on a few occasions in the past when I forgot to pay). At the same time I do love to socialize and one of my goals last summer, being back in Canada, was to make new friends. To serve both these desires. I mostly attended only free or low-cost events.

Thankfully, the city I live in has many free events in the summer. I was (and still am) living with my family in a working-class suburb with no access to a reliable car. Once I started telling friends that I was getting clients, many asked me about plans to get a car or move out on my own. My answer was always the same. I feel no pressure to move out and by delaying gratification and staying home longer I can save money. In addition, owning a car, even the cheapest of the cheap, is more expensive than public transportation. Also, why get a car when I live in a city with perfectly fine public transportation?

So I had to take public transportation to the free or low-cost events I usually attended, all of which were usually downtown, 1.5hrs away. I often waited until my Mum was home before I left to attend an event. I did this so I could use her metropass. She usually has a monthly metropass that allows for unlimited travel using public transportation. By borrowing her pass, I saved money on a roundtrip, i.e. $6. It seems little but every little adds up when you are trying to save! Also, by saving money on transportation, I could buy a coffee or a drink at an event and not feel so bad about the spending. With my socializing strategy, I mostly did evening and weekend events.

I like going out and meeting new people but I am a pretty low-key person. I don’t need to have bottle service when I go out. I will buy drinks for friends when I’m making money or if it is somebody’s birthday I will buy the person a drink or present. In those days of extreme frugality though, I never overspent on alcohol. Never more than two drinks when out. And, while I love dancing and like to dress up sometimes, I generally have zero desire to attend clubs/lounges/events where I HAVE TO dress to the nines to get in. I don’t crave material possessions. I also don’t snack often or get urges for fast food or takeout and I could eat the same meal many days in a row without getting tired. So I am content with the food I get at home. In fact, I don’t eat out often, only for one or two of those aforementioned social events to meet new people and one or so nights a month with my friends. Probably a total of three times a month on average. This is in contrast to the things that are common with the business school crowd post-graduation.

Luckily, none of my former business school classmates live in my city, my friends here are also pretty frugal and my new friends understand my situation of trying to lower my debt. So I have zero pressure to keep up with the Joneses. (EDIT: OK, I won’t say zero pressure since many of the people with whom I interact for work are in the top 1%. I just focus on being professional and maintaining some distance with them. I have never been one to become good friends with colleagues. My personal life never mixes with my professional life.)

All in all, I don’t feel like my social life suffered much.

The great thing too is that since I started out self-employed right off the bat, I didn’t have to worry about buying clothes for work or money for transportation. I also work mainly in the tech industry and, lucky for me, the tech industry in general has a pretty casual dress code. And I only met with clients in-person once a week on average. Plus, I am good with working from my bed so I didn’t need to frequent a coffee shop to get work done (coffee shops meant unnecessary spending). If I got stir-crazy from being home too much or I needed a break from my always noisy home environment, I went to the public library down the road where wi-fi was free.

I was also a little worried that carrying a credit card balance especially in relation to my limits would negatively affect my credit rating. So I called my card companies and asked for credit limit increases to ensure that my utilization would be below 50% on each card and in total. They gave me the increases as requested, when one would think that my high utilization and month-to-month high balances would have signaled red flags for them. The credit card world is really something! I guess my good record in the years prior helped.

The Third Contract From Main Client

Anyways, God and luck came calling a third time. Towards the end of that second contract with my main client (sometime near November), they again decided to rehire me! This time we set up a recurring engagement. If all went well, I’d be on a monthly retainer for 6 months to the end of April.

Then I got a couple more clients!

I continued to map out exactly how I would allocate each payment. With the third longer contract from my main client, I started planning a couple payments in advance. I also increased the monthly amount I was giving to my parents. It was still just a tiny fraction of what I was earning. But I think that the quicker I am out of debt the quicker I will be able to help them more. After paying off the Mastercard, I focused on the Visa. I got that paid off at the end of last year.

visa paid

At one point, I calculated that from July to January I spent an average of $347 per month on non-debt expenses and that included me taking two 2-week trips to see friends (b-school friends) in the US!

Current Financial Situation

Ever since I paid off the credit cards at the end of last year, I’ve been focusing on the student line of credit (LOC). I know it has the lowest interest rate but an extended family member co-signed that line of credit for me eleven years ago. I hate being indebted to people in general, including family members, so the line of credit was my next target because I don’t want someone to have one of my debts on their credit record. It also seemed like an easy target since it was the next lowest debt after the credit cards. As of today, I am just under $900 away from paying it off!

Actually, I would have paid off the LOC more quickly. However, I was also focused on saving a significant amount to carry me for a few months of unemployment, just in case my main contract wasn’t renewed, my other clients dried up and it took me a while to find more clients (you’re looking at a real optimist right here!). I was also determined to save for living expenses for 3 months downtown on my own this summer. Come hell or high water I will be taking that break from living at home. Because, I might be frugal but, I firmly believe in enjoying life to the fullest as much as possible. We are only young once and I AM making a little money. Thus, I made the effort to save to have the experience of living downtown, even if only for a short period of time (I am BIG on experiences!). So, yeah, it is taking a little longer to pay off the LOC than it should have taken.

I have also loosened up a little with my spending. Now, instead of living like I am unemployed, I live like a college student. Big change!

On the brighter side of things, I’ve saved almost $14,000 CAD and $2,000 USD, on top of what I had in the bank last July. The $2,000 USD saved added to the $2,000 USD I had in the bank before ($4,000 USD total) is for future b-school loan payments (almost 6 months worth!), while the nearly $14,000 CAD plus the little CAD dollars I had before is a contingency fund for my next bout of unemployment.

Furthermore, altogether, including interest, I have dumped way more than $25K towards paying off my debt. However, if we compare the amounts owing last year to the amounts currently owing (9.5mths) here is the sitch:

Name July 31, 2013 May 15, 2014
Mastercard $6,123 CAD $0
Visa $8,653 CAD $0
B-school loan $96,800 USD ($105,503 CAD) $95,909 USD ($104,532 CAD)
Ontario Student Assistance Program (OSAP) loan $20,931 CAD $19,501 CAD
Student Line of Credit (LOC) $9,678 CAD $886 CAD
TOTAL $150,888 CAD $124,919 CAD

As you can see my total debt has reduced by $25,969! As I mentioned earlier, in that same period, I also increased my savings by just over $16K!!!

All of this was made possible with gross earnings of somewhere around $60K in these nine months (obviously I don’t want to give away my exact income here). Of the money I spent in that time, i.e. the $18K difference (income – [debt paid + savings]), much of it was towards interest payment expenses, including $6,300 towards the b-school loan interest payments alone. Another big expense was the couple thousand in taxes I had to pay for my net earnings from the second half of last year.

I still have a long way to go but I feel good about my $26K reduction and my $16K savings. My goal is to have at least $30K paid off by the end of July this year, the one year mark of when I got my first client.

I think I can do it!

And with that, I end the everlasting story of how I made the journey to paying off more than $25K of my debt in nine months. I am super thankful for all that I have been given this year. Main client has renewed my contract indefinitely too. And I have other clients at the moment. So yeah, suuuuper thankful!

What a difference nine months makes, eh? :D

And Miles To Go

Hi everyone!

Five years ago when I first got the idea to attend business school I knew that undertaking that journey would lead to a lot of debt on my part. I already had significant debt from undergrad and, being that I was only 2 years out from undergrad and earning a salary of $42K in Canadian dollars, I did not have much savings to use towards business school. However, I had weighed my options. Business school was going to be my ticket out of a lower income. I would also use my expected high salary post-graduation to easily pay off my debts and then get to work on helping my family out of the working class.

I was lucky. I got into a top 20 business school in the US and, not only that, but I also got a $50K fellowship! That $50K was approximately equal to half tuition for b-school. I was beyond grateful for it. I still needed to borrow $83K though to cover living expenses and the rest of tuition for the two years.

My 2012 graduation date approached and I must confess that, unlike my few classmates who still didn’t have offers, I totally slacked off on trying to find a position. Most of the jobs that were coming to me (read: interviews I got) were jobs I wasn’t really interested in and the jobs I wanted I couldn’t get interviews for, mainly due to my lack of experience in the functional role I was trying to get.

Shortly after graduation, armed with my MBA, I changed cities to go live in a city I always wanted to live in. That city is also one of the most expensive cities in the US. There, with very little effort on my part, I managed to get a brief, part-time contract with an early-stage startup. The startup had little money so pay was meager. Rent alone ate up my earnings and more. Furthermore, brilliant me had decided to rent through Airbnb, i.e. using my credit card, and not pay off most of the balance. I did this because I wasn’t sure when next I would be employed and I wanted to ensure I had cash on hand for day-to-day expenses. I had never been one to carry a balance on my credit card but my unpaid credit card balances rose sharply in those months.

My contract ended in a couple months and it was back to the grind of the job search. To be honest, I wasn’t happy in that great American city. Actually, that entire first year post-graduation was stressful. I was also in the midst of an existential/personal crisis which had started pre-graduation and I wasn’t looking for a full-time job (or any job) even half as hard as I should have been looking during that time.

In December 2012, when I should have started paying off my b-school student loan AND restarted the payments on my undergraduate loan IN ADDITION TO continuing to make the monthly payments on my student line of credit from undergrad, I realized I couldn’t comfortably do so. So I called up the two student loan lenders and asked for a six-month extension for the repayment start date. What was another 6 months of accumulated interest when I was already six figures in debt, right?

Close to six months later I was nowhere closer to finding a job. However, it was the approach of that 6-month deadline that spurred me into action. I had to start focusing again! I moved back to Canada to live with my parents and decided to work for myself. A few weeks after that decision I landed my first decent-paying client. I was properly self-employed! Almost just in time too. I signed the contract just a couple weeks after my first loan payments were due.

I made the first loan payments with the money I had left in my savings account for that very purpose (to the detriment of my credit card balances of course). With a contract signed, my next step was to make a plan to start paying off my debt with the earnings I expected from that first contract.

Here was where things were last end of July:

Name Amount Interest Rate
Mastercard $6,123 CAD 19.99%
Visa $8,653 CAD 15.75%
B-school loan $96,800 USD* ($105,503 CAD) 8.25%
Ontario Student Assistance Program (OSAP) loan $20,931 CAD 5.5%
Student Line of Credit (LOC) $9,678 CAD 4.5%

*The US total is an estimate as I didn’t start noting the balance until the end of August. It is likely a slight underestimate. And the amount I listed includes the accumulated interest up to that point. I used the current exchange rate for the conversion.

If you total that all up you will see that the total is $150,888 CAD. Rounded up that is $151K.

De-press-ing.

As a sidenote, I feel like during my entire three years in the US the Canadian dollar was, on average, higher than or at par with the US dollar. However, as soon as I came back and started earning actual Canadian dollars, it fell. Just my luck.

Anyways, I have a very strong motivation for paying off my debt. I want to be able to help my parents before they get too old. They have made countless sacrifices for me and my siblings and I want my mother especially, who is in her very late 50s, to not have to continue working at a physically exhausting job well into her 60s. Also, I want to be debt-free by the time I am 35 years old (I am 30 years old now). Partly because I may decide to have children and my biological clock is ticking. But mainly because I just want to ensure that I can enjoy my life (while I still have a little bit of youth in me) and not have to constantly be worrying about money, as I have done my entire life.

In my next post I will explain how I paid off more than $25K in the nine months since last end of July.

Stay tuned!