When I graduated college in 2006, I took roughly $75,000 in student loans with me. My starting salary at my first job out of college -- just $31,000 -- was less than half that. I lived in a small studio apartment with living expenses around $1,000 per month. Even with my small salary, I felt comfortable about my finances, and I was able to save a decent amount each month. In addition to my full-time job, I had an ongoing freelancing gig I'd been doing for a year or so that brought in a couple of hundred dollars every other month.
In November 2006, things changed: my student loan payments kicked in. The interest rates were all over the place, and my combined monthly payments were over $1,000. In an effort to exert some minor measure of control over the dozen or so bills that were coming in every month at wildly different interest rates, I consolidated most of my loans, bringing my monthly payments down to about $575. I made the payments on time every month and still had a little leftover to put in savings, but I definitely felt squeezed.
A few months passed, and I got a better job in publishing, my field of choice. Had I accepted the $27,000 starting salary offered, I would've taken a $4,000 pay cut, which I just couldn't afford. Despite being told that the starting salary was non-negotiable, I got them to agree to pay me what I had been making at my previous job. Around the same time, I moved into a larger studio that increased my living expenses by about $100 a month. I panicked and started applying for part-time jobs, and wound up landing a job as an innkeeper at a bed & breakfast just down the street from my new apartment. I worked only one shift per week, and after a probationary period, I was making $12 an hour plus monthly bonuses (between $100 - $150) based on sales, bringing in an additional $400 a month, on average.
This February, at my annual review for the full-time job, I was given a promotion and a 5% raise (the company rarely offers more than 3%, pathetically enough). I also received a performance-based bonus of $4,500 a month later. Meanwhile, my innkeeping hourly rate went up to $13 at the time of my one year anniversary. I was still freelancing, too, though not as much since my computer died around Christmas and I couldn't bring myself to buy a new one.
Throughout all of this, I was doing my best to save at least $300 per month, though I frequently put away $500 or $700 when I could, or more, in the case of the aforementioned bonuses. I was aggressively paying down my student loans. I was also investing in a Roth IRA, and putting money into my 401k at work.
Things went on this way for a while. I worked no less than 6 days every week, doing everything I could to pull in extra cash, and saving as much as I could after making my gargantuan student loan payments every month. I worked really hard, and made a dent of about $5,000 on the principle of my student loans within the first year of paying them. I was financially stable, but I didn't *feel* stable at all; I worried about money all the time, and felt guilty any time I went out to eat with my boyfriend, or bought something for myself (which hardly ever happened).
I'm incredibly lucky.
Last month, one of my fellow innkeepers abruptly quit to move out to California, freeing up the one-bedroom apartment attached to the inn. This apartment is given to the innkeeper who agrees to take all the emergency calls that come in after hours. In exchange for being the on-call emergency contact, this person is given the apartment, along with all electricity, gas, cable, and internet costs waived. Though my lease wasn't up until May, I could not pass up this amazing opportunity. I quickly enlisted the help of a broker, rented out my apartment within days, and moved into the inn. I even inherited several pieces of furniture (including a less than one-year old pillowtop mattress) from the girl who lived here before me.
My expenses have decreased dramatically -- I'm now able to save over $1,000 a month in addition to the large payments I apply to my student loans. At this rate, my loans will be paid off within the next 7 years. I'm also putting money away for a downpayment, as I hope to purchase a condo or home within the next couple of years while prices are still low.
Living rent free is great, but it's not without its challenges. With an extra $1,100 in my pocket every month, it's really tempting to spend. People in my life who know about my arrangement pressure me to go out to eat or to go shopping all the time, and frankly, it's hard to say no. When I do make these purchases, I don't feel a lot of the guilt I used to, which scares me. Being able to breathe easier shouldn't mean spending more -- just because I can now afford more doesn't mean I *need* more, afterall. I did just fine for the two and a half years before I moved in here, buying clothes and going out to eat sparingly. I want to hold myself accountable to my goals and financial aspirations while I'm living here. My goal is to live well below my means for the next year and save as much as I can so that I'll never have to pay rent again.