On February 6, 2013, at 4:00 in the morning, my final student loan payment went through.

happy dance!

I saw the email when I woke up, and immediately went to Mint, because I wanted to see the green bar filled all the way to the top.

Then, I thought, what the heck, let’s log in to ACS.

ACS isn’t as pretty as Mint, but it’s just as satisfying

I like this one because it tells me where I started. In 2004, I graduated with $15,000 in student loan debt, and while my financial picture got worse before it got better, I paid this off while still looking youthful enough to get asked what I’m studying.

How did I pay them off?

Well, it was number two on the list of financial priorities (number one being the credit card debt, of course).

Every month, my paycheck gets directly deposited into savings (Average Joe was seriously right about how significant that one little change is when it comes to mindset — it’s easy to transfer half into checking, and no more).

Then, two or three days later, all the money goes out. Everything is automated. Well, almost everything. I don’t automate my current priority because I want to throw as much money at any time of the month as possible on it.

So, credit cards get paid (full balance due, always), my IRA gets its share, and rent gets deposited into my landlord’s account, all by the 10th of the month.

With that, I’m ready to take the first crack at my student loan. This is typically somewhat conservative, usually around $200. Then, as the month progressed, and nothing expensive came up (broken stuff?) I paid another $200.

And I chipped away at it. Bit by bit (or if you know how to eat the elephant, bite by bite).

Around this time last year, I paid off the last lingering balance of my credit card debt. Then I shifted my focus and honed in on the student loan, which had a balance of about $8,000.

And now? It’s gone. I went to college, and I am no longer shackled by the recurring cost.

Just to put hot fudge on my already overflowing bowl of ice cream, when I logged in to ACS this morning, I noticed something strange. My “fixed” interest rate had gone up half a percent. How does that happen? I thought fixed meant that it didn’t change!

So, check your student loan rates — I don’t know if this was a fluke, or it had reset because I no longer had a loan with them or what, but I know that my rate went from 4.75% to 5.25%. So, I’m even more happy that it’s gone.

And it’s a debt I won’t have again.

I mean, I loved college, and yes, I still have that youthful glow about me, but it seems unlikely that I’ll do formal education in my future.

And if I do, it’ll either be free or much more than $15,000.

Now I just have my car loan left, and I’ll have that knocked out well before summer.

remember to have fun!

Frugal Portland’s Ten-Step Get Out of Debt Process:

1. Prioritize. Get rid of the credit cards first, then use your best judgement about which one’s next. Personal loan to your parents? That might even outrank credit cards. For me, it was a matter of interest rate, after the credit card was paid. Some people (like Jeff) would put the car loan above the student loan, since it was tied to an asset. It doesn’t matter how you prioritize, just definitely write a list.
2. Automate (almost) everything. And get the money out of your account before it has gotten a chance to get cozy and give you a false sense of wealth. If you trust yourself to use credit cards (and truly, only you can know for sure) then make sure you’re paying entire amount due every month. Pay $500 a month into your IRA, unless you’re a lucky punk with a 401(k) then that should be coming out of your paycheck.
3. Don’t automate your #1 priority. Or, if you do, then automate the minimum, and manually add more several times a month. This will help you feel active in your plan.
4. Throw all extra and unexpected money toward your #1 priority. So, that check from Nana? Even though it was supposed to be for Christmas? Goes on the pile. Did someone pay you from PayPal? Awesome! Transfer that money into your own account, but then also transfer that exact amount into your #1 priority. This worked out really well for me, because both PayPal and ACS are on the slow boat when it comes to actually transferring money into or out of my account, respectively.
5. Celebrate milestones. Every $5,000 paid off, every time the total debt loses a digit, every time one piece is paid, deserves a celebration. Should you go on vacation the second your credit card is paid off? Sure, if you want… to the closest beach town that’s within driving distance. In my opinion, nothing says “good job, Kathleen” like a glass of champagne. But that’s just me. It is also my opinion that nothing says “Happy Tuesday” quite like a glass of bubbly, so your mileage may vary. These celebrations should be on the order of cupcakes, not fancy designer handbags or those high-heeled shoes with the red bottoms. You want to celebrate without derailing yourself.
6. Before you get a chance to do otherwise, readjust your list. You now have a new #1 priority. Mine’s the car loan. And also fully funding the IRA. And also building my savings in case I find a little piece of property. Or something else. Like a car in a few years, when this one dies a natural death.
7. Be prepared to be underwhelmed. If you’re anything like me, you’re totally amazing, and you’re also a little obsessed to fix your finances. So you focus! focus! focus! and then one day it’s simply gone, and the feeling is strange.
8. Remember that getting out of debt is not a stand-alone goal. It’s simply step one on the lifelong path toward the ultimate goal of dying before you run out of money. Or whatever your goal is. Swimming in cash à la Scrooge McDuck? Not my thing, but whatever floats your boat.
9. Set higher standards. It’s easy to puff out your cheeks and pat yourself on the back for a job well done. But don’t get smug. You will end up with egg on your face. You’ll take a look at your financial snapshot, and think, dang, girl, you are so awesome, and then someone like Sam will post something with an innocent looking chart with your age on it and somewhere between 4 and 7 times what you have in your IRA as a conservative estimate. Then you will be put in your place, and you will realize that just because you’re better than you were, you are still much closer to the starting line than the finish.
10. Repeat as necessary, until your #1 priority is saving, then help others. That way, you’ll know you’re done getting out of debt and you can move on to the next step on your path!