Personalize Your Debt and Pay It Off Faster


Do you have a ridiculous amount of debt that doesn’t seem to be anything but a soul-crushing number you grudgingly throw a few hundred dollars at each month? I feel you, friend. When I had $20,000+ of student loans, it appeared to be little more than a big fat bill from the government. But I have a simple way to personalize your debt in order to pay it off faster.

You racked up your debt buying something. Why not remember what that was?

To cope with my own balance, I allocated every penny of my student loan debt to the recorded costs of my education. This isn’t a crazy strategy. In fact, going back and figuring out exactly what every dollar of my debt bought helped me both to accept it and to pay it off faster.

If you’ve been reading Money After Graduation for a few years, you might remember me writing posts like “financially I’m still in my first year of university” because I was measuring my debt-payoff progress by where the money had actually gone.

My tactic was simple: I retrieved my tuition statements from past years and added up all the balances. My first relief? My student loan balance was less than I had actually paid for school. This means even though I took out loans to fund my post-secondary education, there was still some evidence working part-time and during the summers had spared me from worse financial straits.

Nevertheless, I still owed tens of thousands of dollars. But after realizing that each course had cost about $500 and there were miscellaneous fees here and there for $100 or $30, I suddenly knew where all the money had gone. Because I had just graduated, most of my courses were still fresh in my mind. I could remember my first-year biology professor, I knew my second-year calculus final exam nearly killed me. I could see where my student loans had gone. I knew what each dollar and cent had bought. So I immediately started paying it off in that context.

If a class cost $505.23 and I was ready to make a student loan payment, I paid exactly $505.23 against my $20,000 balance, and then I crossed that class off my list.

It worked for everything. An extra $10 to my second-year transcript fees. $58.13 to athletics and recreation. Suddenly no dollar amount seemed too small. I never waited to have a complete $200 or $500 or $1,000 to make a student loan payment, if I had an extra $5 I used it to hack off those charges for lab supplies.

Not only did it make my debt go down faster by throwing every bit of extra money at it, I hated the process so much less.

The money was going to something I had experienced or used, it wasn’t going to the black-hole government creditor that had loaned me the cash

What about interest? you ask. I took that off the top. My online student loan system had this horrible torture device where you could log in and see your balance go up with interest from that day. It was really depressing, but it was accurate.

So if I was making a payment, I tacked on a bit of interest to pay for the lag time between my bank payment and the time it would actually show up against my balance. Once my payment credited to my account, I went back to my spreadsheet where I was keeping track of everything my debt paid for and crossed an item off the list.

Since paying off my debts, my habits haven’t changed much. Whenever I charge things to my credit card, I rarely wait for the bill to arrive in the mail before I start making payments. As I’ve mentioned before, I keep track of my money in an app called Money by Jumsoft. At any given time, my credit card spending will look something like this:

Screen Shot 2015-02-26 at 7.00.26 PM
a snippet of my credit card spending!

You can see my strategy at work here: various charges, payments in odd and inconsistent amounts, and a way of keeping track! The blue dots are next to items I haven’t paid for yet, whereas if a charge has no dot, it means I’ve paid it off.

This is how I maximize my credit card rewards without ringing up a giant debt: I pay down everything I charge before the bill even arrives. I love this strategy because I’m never stuck looking at a statement for hundreds, or even thousands, of dollars and wondering, “what did I buy??”

If you’re fighting debt fatigue and feeling frustrated by how much you owe, remember what you bought.

Pay it off in bits and pieces: one shirt, one coffee, one class, one textbook at a time. 

What if your student loans are more than your tuition bill? Estimate the monthly costs of things like rent and groceries when you were in school, and add them to your list. Managing things this way lets your personalize your debt. It no longer becomes just a big number you owe, it is all the things you bought.

When I saw things like a small charge for $30 for whatever fee, I just thought in my head, “I only need $30 and that charge is gone” — which made me look for extra money to throw at my debt all the time.

This, of course, doesn’t mean your happy with your choices. Maybe you overspent on clothes or beer or made mistakes and a good portion of your debt is interest. This isn’t easy to admit, but the sooner you deal with it, the sooner you can move away from it.

When you pay off your debt, you erase most of the evidence of those bad decisions. But if you leave the balance lingering on your credit card, your mistake continues to follow you.

What is your debt-busting strategy? What do you think of my method? Any tips for other new grads struggling with student loans and credit card debt?

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17 Comments. Leave new

  • I like this idea. When I finally smartened up and went from spending with reckless abandon to spending less than I made and living on a budget, I felt like my consumer debt was a big pile of “???”. I not longer remembered what I spent all that money on, it had been layered on top of itself over and over so many times… balance transfer after balance transfer, original debt tacked onto new debt, trips, clothes, who knows what else. I really did feel huge remorse that I was paying all this money towards basically NOTHING. It sucked. When it was finally gone I swore never again and have been debt-free for a few years now. I definitely like this approach better than the one I used!

  • I actually use this strategy now with my credit card, it’s the only way I can use it without letting the spending get out of control. Even if I overspend, I use the student loan method you mentioned above on my credit card. Like the $30 payment I just made paid off my dinner with my sister a few weeks ago.

    Great strategy!

  • Aleksandra Sagan
    February 27, 2015 9:29 am

    I totally pay off my credit card balance throughout the month before I even get my statement. Most of my friends seem to think that I’m crazy for doing that, but it just makes good sense to me.

    • I do the same thing. When I use my Credit Card when I get home I transfer the money from my chequing account. That way whatever is in the bank is always what I have.

  • Yes! Brilliant!

    I feel like your blog has been on FIRE lately 🙂

  • This is such a great idea! My biggest motivation to pay off my debt fast was to pay it off while I could still remember law school. This is taking it one step further! I have just under one 2-credit class left to pay off!

  • Great article. Personal finance is more about accountability and behaviour than math. It just goes to show being a disciplined spender pays off.

  • I use this method to help me track my budget too – I pull all of my bank statements, bills and credit card statements once a week and go through them line by line to track where my spending is going to make sure I’m on top of things regularly throughout the month. Before I started ticking things off as I tracked them, I was spending like crazy. Great tip!

  • What a great way to look at debt! I wish I’d seen this years ago when I was in my 20’s but I’m going to start using it right away. Who says you can’t change at 59?!?!?

  • What a cool way to look at debt! I graduated in 2009 and admittedly have no idea where my tuition statements are… in any case, this would totally work for my graduate loan. I love this idea.

  • What a great idea. I can see how this would be much more motivating than just throwing money at what seems like a insurmountable pile of debt. Great Idea! I think this could really work for me as I come upon debt repayment.

  • What a great idea Bridget! I definitely feel like my $40k student loans are just huge amounts of money. I did make some stupid mistakes when I was borrowing so maybe I’m afraid now to go back and see exactly what those mistakes are.

    But then again, I might just enjoy the process and actually be more motivated to pay it off 😛

    • hahaha

      It makes a big difference! Or it did for me. It made payments more manageable because sometimes I would throw $10 at it and then I would remove “transcripts fee” or whatever from the list. It felt like every payment made progress, even if it was small, and that made a big difference.

  • Interesting approach! I like that idea!


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