Roth IRA Challenge: The Freedom From Money

Today’s Roth IRA Challenge is from Taylor over at The Freedom From Money. Taylor started her awesome blog to track kicking her debt. She successfully did it in just seven months! She now talks about how to be overall awesome like she is. Her writing is wonderful, her insights are fabulous, and her exuberance is contagious. She’s here today to talk a bit about her debt journey. After you read it (and love it, obviously), go read her blog! 

Seven months ago, I had $14,000 in debt. Today, the number is zero. When I graduated from college one year ago, I knew that I wanted my debt gone as soon as possible. I never wanted to feel trapped in a particular job, location or relationship. Instead, I wanted complete freedom and I knew that loan repayment was the first step.

So I set a goal: pay off $14,000 of student loans in one year. (I ended up doing it in 7 months!)

Even though $14,000 is smaller than the national average of $35,000, it felt big, especially with my entry-level salary. In order to find the money in my budget, make monthly payments of $2,000 and still pay rent, I had to get creative. Here’s a breakdown of how I saved $5,500 (the yearly Roth IRA maximum contribution) of my $14,000 total.

1. I Sold My Car
When I got serious about paying off my debt, I knew I needed to get serious about my transportation costs. My 2000 VW Cabrio was a junker that barely functioned, but it still got me to work each day. But I knew that I wanted debt freedom more than convenience, so I sold it for $700 to a junkyard (Yep, that’s how bad of shape it was in…) and entered a new reality: car-free existence.

Instead of driving to work, I started Ubering, catching the bus and even biking the eight miles to my office. Some days I arrived covered in sweat from my bike ride or late because of a slow bus driver, but other days I arrived feeling strong, capable and self-sufficient.

I learned to bike massive San Diego hills, coast next to cars and navigate the trolley system like a pro. But more importantly, I learned that when I was pushed to my limits (and beyond), I actually survived. While I tested my physical and mental limits, I also watched my transportation costs drop from nearly $500 per month (the average of car repairs, insurance, gas and parking) to $70.

Savings Over 7 Months: $3,010

2. I Got a Roommate
When I was in college at UCLA, I lived in a one-bedroom apartment with two other girls. On any given week there were dirty dishes, disgusting toilets, passed out strangers and absolutely no personal space. When I moved to San Diego, California for my first full-time job after graduation, I wasn’t eager to repeat that situation (at all…). However, rent prices in Southern California are notoriously expensive and I knew that I needed to save money. My partner stayed in Los Angeles to finish school, so I knew that I needed to find someone to live with. Instead of living with strangers, I opted to move in with my sister. She’s my one of my favorite people in the world; she’s clean, awesome and not at all deranged. (All of which were massive improvements from my last roommates.)

We moved into an adorable two-bedroom two-bathroom apartment in one of the safest neighborhoods in the city and it’s been great. My rent is high, but still affordable at $900 per month. If I had opted for my own one-bedroom apartment, I would have been paying upwards of $1,200. But even better than saving the money, I love living with my sis. It’s the ultimate win-win.

Savings Over 7 Months: $2,100

3. I Stopped Buying Lunches (For Real)

I’ve always prided myself on my frugality and depending on whom you ask, I may even be considered “extreme” about it. But there was one area that snuck up on me: lunches out.

Most days I would pack my lunch, but during college, I would often have 12-13 hours day. The day would begin with a few hours at my magazine internship. After that, I would head to one or two classes and then end the day with a six-hour shift at my part-time campus job. It was a bit brutal and there were days that I ended up STARVING. With no access to microwaves or refrigerators throughout the day, my lunch options felt limited, so I would often accidentally pack less than I needed. But even worse than that, I would sometimes forget my reusable water bottle and end up buying bottled water as well.

Although the expense wasn’t huge, it still set me back at least $15 a week. Once I graduated and started working 8 hours instead of 12, I got serious about my food preparation, bought a reusable water bottle to keep at the office and stopped buying food during the day.

Savings Over 7 Months: $420

Total Savings Over 7 Months: $5,530

All in all, I was able to save a little over a year’s worth of Roth IRA contributions (and nearly 40% of my overall debt!).

As the 7 months came to a close and I made my final payment, I felt a wave of relief. But more importantly, I felt free.