How I navigated student debt

What financial self-advocacy looked like at 22

Your Five-Year Plan is a newsletter about embracing life’s profound uncertainty.

Maybe your own plans went up in flames; maybe you’re considering a big, scary leap. This is your trusty companion while you’re writing the next life chapter.

Welcome to the conversation—and to the adventure that unfolds when your plans go sideways. This is letter #20. ✨

☀️ How was your week?

Last week, paid subscribers received a special edition of the newsletter. We talked about the gifts we gave our Present and Future Selves in August. As for mine:

• Unwinding commitments to create extra margin for healing. I shared research on the nonlinearity of life transitions, and how that’s been showing up for me.

• The world’s worst KonMari project, but make it sustainable. I’ve been going through my late mom’s belongings, and making that process as humane as possible.

🎁 The gifts I gave myself in August 2023

On to today’s letter!

How I navigated student debt

For years, I worked as a financial planner. The irony? My life hasn’t unfolded according to plan. In this series, I share what helped me navigate each chapter of my money story with resilience and flexibility, no matter where life took me.

Here’s what you’ll find in this edition:

• 🎬 Setting the scene of where I was, financially, at age 22

• 🏆 The financial project I tackled

• 🎯 The framework I used to work through that project

• 🏋️‍♀️ The financial habit I adopted

• 🎁 The gifts I gave myself along the way

• 📚 The biggest lessons I took from this chapter

🎬 Setting the scene

It’s June 2009; I’m graduating into the belly of the global financial crisis with a history degree. I owe $14,000 in student loan debt and am subletting a room in a cockroach-infested townhouse. I’m about to spend the summer dashing between my unpaid Capitol Hill internship and interviews for my terrifyingly few job prospects. It’s summer in Washington, D.C., and I’m spending most of it on public transit sweating through my wool pantsuit.

Welcome to adulthood!

I am, in fact, exceedingly lucky. At age 22, nobody’s money story is really their own yet; at this point, mine has been almost entirely shaped by my family.

My parents are divorced, and from the little I understand, money has been a considerable source of stress. Aside from some emotional fallout—which will go on to shape my own feelings about personal finance—I’ve arrived in adulthood as sheltered and cared for as possible.

After two months of parental rent assistance and several circles of temp agency hell, I land my first real job and a $39,000 salary. My round-trip commute is three hours a day, but I am employed!

Let’s talk money.

🏆 The project I tackle

By the time I land my job, I know paying off my student debt will be Priority #1.

That goal stems partly from my own allergy to debt. Seeing my parents fight about money has been a formative experience; I want to erase any potential source of financial stress expediently.

To New-Grad Maddie, being debt-free is synonymous with freedom, with being in the driver’s seat of life—an intoxicating prospect for someone otherwise bumbling her way through early adulthood, who doesn’t yet understand how or when to file her own taxes.

But I also know that, once I put in a good showing at this job—two years or so—I desperately want to move back to my hometown, Chicago.

It’s been so tough to find work (see: temp agency hell, sweating through business attire on the Metro) that I simply can’t imagine entering an uncertain job market again until I’m debt-free.

A single black-and-white goal attached to a clear timeframe, plus the dangling carrot of my Chicago move, turns out to be the specific combination to light a fire under me.

My debt load is a third of my income; I’m extraordinarily lucky compared to my peers, but it’s still a daunting proportion of my earnings given the two-year timeline.

My work is cut out for me.

🎯 The framework I use

I don’t love the word “problematic,” but it really is appropriate in the case of Dave Ramsey. When it comes to certain elements of his teachings, and many elements of his personal and business practices—well, let’s just say Dave Ramsey comes with baggage.

But after stumbling upon his debt payoff framework at 22, I also find elements of his approach to be extremely effective.

Later, I’ll learn that there’s an entire field of academia called behavioral finance. But in this moment, it’s the first time I hear anyone discuss the intersection of money and psychology—or suggest that making a decision optimized for your personal psychology can be preferable to making the most financially-optimal-on-paper choice.

After building a small emergency fund, and continuing to make minimum payments on all debts, Ramsey suggests starting a “debt snowball.”

I have a small handful of student loans, incurred from my freshman through senior years, each with different interest rates. Instead of making the financially optimal choice (starting with the highest-interest-rate loan), he suggests paying down the debt with the smallest balance first—the first tiny snowball.

Having booked a win, Ramsey then suggests taking everything you paid towards that first debt, and applying it to the next-smallest one—and so on and so forth, until your payments have gathered momentum into a massive snowball.

This forms the basis of the framework I follow—the structure I build in support of my bigger-picture project.

🏋️‍♀️ The financial habit I pick up

So I know what the finish line looks like, and how to get there, but that finish line is really far away.

What helps on a day-to-day basis? Picking up a habit that aligns with my debt-payoff framework. This is a short section, because in order to make a habit sticky, it has to be dead simple.

First, I take pains to keep my expenses low throughout the month. On the 30th, I see what’s left over. I call Sallie Mae—I’m practically on a first-name basis with the customer service reps. I say, “Hi, Jane! Please apply this extra payment I’m making to the principal of my debt, rather than the interest.”

Jane complies, and the snowball gathers force, reaching critical mass by the time I move to Chicago.

🎁 The gifts I give myself

As you might remember, we’re all about the gift-giving mindset around these parts.

Most months, the little extra money I have goes directly toward my loans (I make one monthly exception for the wood-fired pizza at Dogfish Head Alehouse). But I do treat myself to two memorable splurges.

A Nikon D40

When my very first paycheck hits via direct deposit, I buy myself a digital camera. My Sallie Mae grace period hasn’t ended yet, which is how I justify the purchase.

Netflix mail-order DVDs are my biggest source of entertainment, so I use this camera to create a diversion for myself: a blog! At 22, I don’t yet know that it’ll hold my creative interest—in one form or another—for close to a decade, or that it’ll pave the way for this newsletter someday.

Right now, all I know is that it makes life way more fun.

I document my recipe experiments and Northern Virginia day trips, craft some accompanying prose, and publish them on A Little Ginger to great acclaim, mostly from my mom. (I’m a 5’2” redhead, and it was initially a food blog, so I found this to be an extraordinarily creative name, thank you very much.)

A trip to Croatia

The entire trip costs $2,000, with airfare comprising 60% of that total. It arrives at the end of my debt payoff journey; it would be so easy to skip, to use those funds to pay Sallie Mae instead.

I go anyway.

For the first time, I feel flush—every dollar goes far in Croatia, so each meal is an opportunity to order a carafe of wine at a fancy restaurant along the waterfront. I stay in the historic center of Split, taking day trips to Krka National Park, Hvar, and Mostar in Bosnia.

I’ve spent almost two years fixating on my Future Self. This is the perfect reminder that my Present Self deserves equal care (and feeding, because gelato).

📚 This chapter’s biggest lessons

As I move into the next chapter of my money story, here’s what I take away.

“Learn the lesson, lose the rest.”

Self-proclaimed financial “gurus”—Dave Ramsey being just one example—often come with a lot of baggage. As

Sandra Ann Miller

says so eloquently, “Learn the lesson, lose the rest.” I take one powerful lesson from Dave Ramsey, and leave the mountain of questionable stuff behind.

When it comes to personal finance, psychology matters—and your gut does, too.

It’s easy to get wrapped around the axle of what “the best” decision is. I find myself gravitating toward what will work with my own strengths, and avoid triggering my weaknesses. In other words, I learn to do what’s best…for me.

Every approach has tradeoffs.

On paper, paying down my loans ASAP is a Responsible Life Decision™️—one I don’t regret. However, it also plays into my instinct to always delay gratification, to always live for the future. This will help me avoid big financial mistakes moving forward; it will also make it more difficult to strike the right balance between my Present and Future Self.

💬 What about you?

Let’s meet in the comments section for your hot takes:

• If you have experience with debt, how have you approached yours?

• What splurges are non-negotiable, even when your income’s constrained?

• When it comes to your first apartment, how many cockroaches is too many?

Had your own plan-in-flames experience? Taking a leap into the unknown? I’d love to hear more. Just hit “reply” to get in touch, or introduce yourself here.

Warmly,
Maddie