Nov 01

Staying Frugal Once You’re Out Of Debt

Untitled[important]The following post is a guest post by Connie over at Savvy with Saving. Connie is a 20-something trying to live big on a budget…in New York City. Follow her on her road to financial independence over at Savvy With Saving.[/important]

I graduated college with approximately $20,000 worth of student debt. Certainly not insurmountable compared to others, but still a sizable amount. The idea of paying all that interest and living life in debt really did not sit well with me, so I made it a goal to pay it off within a year. After adopting some frugal spending habits and living on very little, I was able to do just that.

While my debt story should’ve ended there, it didn’t. I was a young 20-something who suddenly found herself out of debt and with a lot of extra money to spend every month. I was spending and splurging on everything – nights out, handbags, and new clothes just to name a few. Luckily, I wasn’t putting myself into more debt, but I was living paycheck to paycheck. I wasn’t properly planning for my future and was just living in the moment.

I slowly began to see the error in my ways when I became unhappy at work. The hours were long and I felt like it was sucking my soul away. I kept thinking to myself, “wouldn’t it be great if I had enough saved up so I would be able to quit my job and still live comfortably?” And then I realized – How would I ever be able to do that if I wasn’t putting any effort into saving my money?

Ever since, I’ve made a conscious effort to be wiser with my money, even without any debt to pay off. Here’s why:

Living in the moment won’t get you anywhere in the future.

I’m all for being spontaneous and “living in the moment” every now and then. But I had to draw the line somewhere because that kind of spending isn’t sustainable. I like to treat myself occasionally, but I’m much more careful about what I spend on and I try as much as possible to decipher between “needs” and “wants”. If I spend on everything I “want” now, I won’t have anything left for what I “need” later on.

You never know what will happen.

The funny thing about life is that you never know what will happen. It’s unpredictable, sometimes in great ways and other times, in very bad ways. You never know when you’ll need extra money. I’ve made it a priority to build a healthy sized emergency fund because I don’t want to be stuck without any options if I find myself in a difficult situation. Having peace of mind when it comes to money is much more fun than going out and having a few drinks.

Retirement won’t fund itself.

I’m absolutely looking forward to retirement – spending time with loved ones, picking up new hobbies, and traveling. However, I’m not going to get to do all that if I don’t save up for it. The earlier you save up for retirement the better. I don’t want to be 70 years and still slaving away because I wasn’t smart enough in my 20s and 30s to save money for the future.

I’m happy to say that I’m longer spending like a crazy woman and saving more. However, I still have a long ways to go before I feel financially secure.

KK’s note: Spending can easily get out of control after months (or years) of scrimping and saving. When I first became debt-free, I was the polar opposite. I had a really hard time spending any sort of money and I was still living a really minimalistic lifestyle (which wasn’t really a bad thing necessarily). Thankfully, I’m now finding a little bit of balance between saving and spending.

Are you debt-free? Did you “go crazy” once the debt was paid off? Or continue to live like you were broke? Have you found the perfect balance yet?



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  1. Great point about not knowing what will happen. It’s so important to plan for unexpected expenses (that sounded ironic) because they come out of nowhere and never seem to be cheap. I hope to stay frugal once I have my student loans paid off, but I definitely can see where temptation would arise to inflate your lifestyle.

      • KK on November 2, 2013 at 10:26 am
      • Reply

      Beating the temptation to spend can be difficult. I know I made a few bigger purchases once my student loans were paid. Nothing crazy, but definitely bigger purchases that I would normally make.

  2. Thanks for letting me guest post today! 🙂

      • KK on November 2, 2013 at 10:26 am
      • Reply

      No problem, great post, I’m happy to have you here!

  3. That’s awesome you paid off $20k of student loans in just a year! Obviously you have the determination to do that, so I am sure you will be successful in funding your retirement. I am still working on paying my student loans off, but I very much plan to keep my frugal habits once they are paid off. I would also love to retire early and be free to quit working when I want. I plan on moving to a lower cost of living area (I’m on LI) within the year to speed the process up.

      • KK on November 2, 2013 at 10:27 am
      • Reply

      Early retirement sounds lovely! LI certainly isn’t cheap. Do you know where you’ll be moving to? Just curious, maybe I should go there to save money too 😉

  4. Its a really tough turning point and is sometimes difficult to maintain the same attitude towards frugality once you get out of debt. I tried to deal with it by considering paying off debt vs saving as both being investments with set ROIs etc and striving to earn the same ROI on investing once out of debt than when in debt!

      • KK on November 2, 2013 at 10:29 am
      • Reply

      That’s a good way to look at things. Being frugal after you pay off your debt definitely speeds up the savings process.

  5. I think about this sometimes with respect to our incomes. We anticipated three or four moderate jumps over the next few years as we graduate and move into “real jobs” but I want to be very careful about succumbing to lifestyle inflation. I do want to increase our lifestyle, but not unconsciously. I just can’t imagine right now what we’ll do with 2-4x our current income. That’s part of the reason we started our blog – to keep us accountable to not inflate our lifestyle.

      • KK on November 2, 2013 at 10:32 am
      • Reply

      I think it’s easy to fall into the lifestyle inflation “trap”. Once you’re finally free from the debt (or get a pay increase) it’s easy to want to “treat” yourself. I think you have the right idea with consciously planning for the pay increases so that you don’t spend more than you’d planned.

  6. This is a good example of why people have to go through the process of paying down debt “the hard way”. If you simply get a loan or something and pay it off, your spending patterns will likely not change- and you will soon find yourself in the same boat again.

      • KK on November 2, 2013 at 10:34 am
      • Reply

      Such a good point Jefferson. If you don’t learn the right “lessons” along the way your spending hasn’t changed and you’re going to go right back into a bad situation. I think about that scenario sometimes when peoples’ parents pay off their consumer debt. They’re debt-free but they didn’t do it themselves and then fall back into the same spending habits.

  7. Like Connie, I graduated with a “reasonable” amount of student debt (around $24K). After diligently paying of $12K in 2 years (and making just over minimum wage for most of it), I went a little crazy. It may have been debt fatigue but it was mixed in with some personal issues I was going through at the time. Not only did I stop (yes, I said stopped) paying my loans, I started accumulating consumer debt at a wicked clip. By the time I was done with my rebellious period, I was $4K in student debt but $18K in consumer debt! In August, I finally paid back all of that debt (about 5 years) but I haven’t been frugal. We bought a house and did some renos. So, I’m back in debt again and not really living frugally either. I really need to get my act together. Thanks Connie and KK for the reminder 🙂

      • KK on November 2, 2013 at 10:36 am
      • Reply

      Nobody is perfect and we all make mistakes. Sometimes they are “big” mistakes and other times they are smaller in the grand scheme of things. As long as you’re aware of them and don’t make the same mistakes I think that’s progress.

  8. Great post, as I do get concerned that I’ll go crazy again once I get rid of my debt. I don’t think I will, especially with some life goals I have, but I agree it’s important to keep in check.

      • KK on November 2, 2013 at 10:38 am
      • Reply

      I think having goals is a huge deterrent for going back into debt (they were for me). Once I paid off my student loan debt I immediately started saving for a down payment on a house. Because I had that goal I was motivated to stay frugal and keep my spending in check.

  9. Your story sounds a lot like mine years ago…the money was flowing through my hands like water I was spending so much. Fortunately I got saw the light and got a hold of that. Nice reminder of the importance of being wise with your spending.

      • KK on November 2, 2013 at 10:39 am
      • Reply

      I think having a goal or seeing the light at the end of the tunnel-so to speak really keeps people on track (I know it works for me).

  10. Nice work paying 20k in a year. I really wish I would have buckled down and eliminated my student debt right when I got out. Instead I waited a few years until I was half way into a Master’s program. It’s going to take me a couple years to get debt free but I’ll keep working on it slowly but surely. I don’t think I’ll be at risk for not staying frugal, I’m already in the habit of paying myself first when paychecks come in. I’d put the money towards the student loans but it would only save me a year and I’d lose 3 years worth of tax sheltered IRA contributions.

      • KK on November 2, 2013 at 10:40 am
      • Reply

      I pay myself first as well. It’s sort of like forced savings because if I don’t stay frugal and follow a basic budget outline I’ll over spend and not have money for my bills (which obviously is something I won’t do). The “fear” of having to take money back out of my savings account to pay bills keeps me on track.

  11. It’s a similar philosophy to keep living like a starving student once you’ve graduated. If you can avoid lifestyle inflation, your inflating salary will help you become financially secure!

      • KK on November 2, 2013 at 10:41 am
      • Reply

      Exactly! It’s like that old saying: if you live like a doctor when you’re a med student you’ll be living like a med student when you’re a doctor.

  12. “Living in the moment won’t get you anywhere in the future”- living the situation. Do not like present job. Their is chance a that I may get an interview call which is suppose to be a well paid job. However, not getting the call is very frustrating.

  13. Connie, you’re a smart girl – you’ve learned this lesson early!!! We didn’t have that “aha” moment until we were in our forties, but better late than never, right? 🙂 Keep up the great work, and thanks for sharing your story.

      • KK on November 2, 2013 at 10:42 am
      • Reply

      Some of us figured it out later than others (I wish I’d figured it out a little earlier), but as long as we finally had the “aha” moment that’s what matters 🙂

  14. “Having peace of mind when it comes to money is much more fun than going out and having a few drinks.” That’s exactly it…I always have to weigh what purchase is really worth. If it’s worth it, spend it, but if it’s not, don’t. I think debt and spending is a slippery slope. You are never “cured” once you are out of debt. If that makes sense?

  15. Wow – $20K in one year?? Amazing! I graduated with about that much in debt in 2010 and I’m still paying it back.

  1. […] Yesterday, the lovely Kari over at Student Debt Survivor gave me the opportunity to guest post on her blog. Check out my post on Staying Frugal Once You’re Out of Debt. […]

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