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Here’s How to Get Debt-Free Without Sacrificing the Fun Stuff

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I’m sad to say that debt held me back from living my best life.

One of my biggest goals was to get away from the Philadelphia cold and move to Florida, but the idea of a long-distance move with student-loan debt prevented me from doing it for years.

Yet after another dreary winter day, I’d finally had enough. I designed a plan that would allow me to move within six months without racking up more debt.

It wasn’t easy. Finding the balance between living the life I wanted and paying down debt was a constant struggle. I’m not alone; a survey found that one in four college-educated Americans has postponed moving out of their parents’ house because of student loans. One in five put off moving to a major city.

While paying off debt is important, allowing yourself to enjoy life is essential to your mental and physical health. Here’s how I set myself free from the debt barrier and started accomplishing my dreams.

Stop Debt from Running Your Life

There’s a whole school of thought in the personal-finance realm that any debt, big or small, requires immediate action. Advocates say you should live on rice and beans and put off nonessential purchases until you’re debt-free.

But extreme action plans don’t work for everyone. You can’t afford to wait to be happy; delaying your dreams and personal fulfillment could be a costly mistake.

That doesn’t mean you should spend every cent you earn or stop making your loan payments. But it does mean you should give yourself permission to start living your life. The best way to do that, while still keeping your finances in good shape, is to come up with a comprehensive plan to reach your goals.

Make a Plan for your Money

Having a plan is crucial: It’s what makes your dream achievable while balancing your debt.

I focused on increasing my income to build a moving fund without hurting my debt repayment. I took on odd jobs such as dog sitting and freelance writing and hoarded my extra money in a savings account. Even after I moved, I continued working side jobs to minimize the financial impact of moving 1,000 miles away.

Consider different ways you can make that happen without taking on more debt.

Boost Your Income

If getting a raise isn’t an option, consider earning extra money through a side gig. You can make money delivering groceries, driving people around town, or babysitting.

I became the queen of side gigs during my debt-repayment journey. One of my most lucrative jobs was braiding horses for shows (seriously, this is a real thing). My hands cramped up from all that braiding and I smelled like a horse for months, but that side hustle netted me about $1,000 per month. I used that money to make extra payments on my loans.

Side gigs are a great option for busy young people who already have a full-time job but need more money to pay down debt. Side hustles allow you to work when it fits your schedule, so you can make money when it’s convenient for you.

Cut Back on Unimportant Stuff

I love clothes. I find shopping relaxing and a source of entertainment — and that’s why it became one of my worst habits. I got a sharp wake up call when I reviewed my credit card statements and saw that I dropped $500 in one month on clothes.

I realized that to achieve my goal, I had to prioritize. That meant eliminating clothes shopping and other splurges. Instead, I read free books and watched movies from the library as my entertainment. Doing so freed up hundreds of dollars each month.

I firmly believe you can have anything you want. You just can’t have everything you want. For example, you can travel or have a beautiful wardrobe, but you probably can’t have both. Prioritize what’s important to you and spend fewer dollars on the less crucial things.

Sit down and list what matters to you, whether it’s having an apartment of your own, traveling the globe or buying a new car. Once you have a list, go back and prioritize what makes you happy. Cut back spending on items that are less important to you or eliminate them completely.

Bank Your Dreams

A smart way to keep yourself motivated is to open a savings account that’s exclusively for your goal. I opened a savings account with Capital One and labeled it “Florida, Here I Come!” Seeing the account grow each month was a strong motivator and kept me on track.

A separate savings account can help ensure that you don’t dip into that fund for other things. Set a goal and stick to it. Tell yourself that when you meet your savings goal — say $5,000 — you’ll book that dream vacation.

As an added bonus, many banks offer cash incentives when you open a new account. That perk can help you get a head start on your savings.

Refinance Your Student Loans

If your student loan payments stretch your budget, consider refinancing your debt. In refinancing, you take out a new loan to pay off your old loans. The new loan could have different repayment terms and a lower interest rate. Refinancing can reduce your monthly payment and potentially save you money down the road.

While refinancing isn’t smart for everyone, it can help some borrowers find wiggle room in their budgets. You could become debt-free faster and enjoy what you love sooner.

For me, refinancing helped accelerate my debt repayment. Although I was funneling extra money from my side hustles toward my loans, my progress still seemed slow. My federal student loans had an interest rate of 6.8%. Because of the high interest rate, much of my payments went toward interest rather than principal.

By refinancing my debt with a private lender, I was able to drop the interest rate on the remaining $10,000 of my loans to 4%. Even if I made only minimum payments, I was on track to pay off my loans a year earlier and save nearly $1,000.

What’s Going to Make You Happy?

Personal finance is, above all things, personal. While many financial gurus will tell you there’s just one way to handle debt, you have to do what works for you. Balancing debt repayment with your life’s dreams can be a much more fulfilling approach — one that makes you happy while remaining fiscally responsible.

Kat Tretina is a contributor to Student Loan Hero who writes about student-loan repayment, side hustles and other personal-finance topics. Her work has appeared in the Huffington Post, Money magazine, Business Insider and more.

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