How a freelancer went from 'crushed by anxiety' over debt to paying off $68,000 in 4.5 years

Melanie Lockert
Courtesy Melanie Lockert

When I graduated with my master's degree in 2011, I had a $68,000 problem.

I took out $23,000 in student loans for my undergraduate education and an additional $58,000 when I went to grad school, for a total of $81,000. Though I worked several jobs while I was getting my degree, my income at the time was only enough to cover my living costs and make a dent in what I owed. That meant when I graduated, I still had to pay off that remaining $68,000.

At the time, I believed in an anxious but hopeful way that student loans were "good debt" and I would get a significant return on my investment when I got a Ph.D. and became a professor. A few years in, though, I realized that path wasn't for me.

When my grace period ended, I was hit with the reality that living in New York City and paying down debt at $900 per month just didn't make sense. I moved to a studio in Portland, Oregon, with my partner at the time, paying $400 per month for my share of the rent, and I started taking on any jobs I could: catering, pet sitting, handing out flyers, gigs that usually paid $10 to $12 an hour.

My self-worth plummeted. A good job, which would let me pay back my debt, felt out of reach. My student loans were growing by the day and I felt crushed by anxiety. I felt like I'd owe someone money for the rest of my life, and I didn't know how I'd ever get out of this situation. I was temping, interviewing, and actively raiding my savings to keep up with my payments.

I felt stuck and wasn't sure what to do. My life looked like nothing I had imagined, except I had a lot more debt and less money.

How I paid off my debt

In 2012, I hit my breaking point. In a late-night panic, I went online and started reading as many personal finance blogs as I could find. I began taking their advice, but over time, I realized something important was missing from the conversation. I hadn't read about people discussing their emotions or mental health in relation to their debt.

In January 2013, to hold myself accountable, I started my own blog, Dear Debt, as a way to share my debt payoff progress and also shed light on the not-so-pretty emotions I was facing in large part because of my debt. As the blog grew, I began freelance writing and eventually became self-employed. That boosted my income to $60,000 a year.

To pay off my debt, I used the avalanche method, where all of my additional money went to my highest interest debt, my Grad PLUS loans. My daily interest was costing me $11 per day so this made sense. On top of that, since my interest was accruing daily, I made biweekly payments. Sometimes, I would make payments weekly. Anything to try and tame the interest monster and keep it at bay.

What's the difference between a debt avalanche and a debt snowball

Video by David Fang

I kept my expenses low. I didn't have a car. I used my own two feet or my bike to get places. I ate a lot of food from my catering gigs.

I also took some risks. I went without health insurance and put off doctor's visits. I did go to the ER once, but ended up getting the balance forgiven after showing financial hardship.

Ultimately, the biggest factor in my debt payoff process was earning more through side hustling, then eventually self-employment. Also, my perseverance. I learned that consistency is crucial.

I paid off my debt at the end of 2015. Immediately, I felt a wave of relief and like the anxiety that stayed with me for so long had lifted. After paying off debt, I was able to understand how financial security can help you with emotional security.

The link between money and mental health

Through my blog and personal experience, it's been clear there is a link between debt and depression, and between money and mental health.

As I started to share my own mental health struggles, I had many people reach out to me telling me about their own debt and depression. Since paying off debt, I've become more passionate about breaking down the taboos around these topics and created the site Mental Health and Wealth.

If you're feeling depressed or anxious because of debt, here are some tips that helped me:

  1. Remember you are not your debt. Don't mix up your self-worth and your net worth.
  2. Don't go it alone. Contact the Crisis Text Line at 741741. Check out affordable counseling options at local clinics at universities.
  3. Focus on lowering your top three expenses: shelter, food, transportation. A large part of why I was able to pay off my debt was because I resided in a low-cost of living city. I'm a fan of sites like Aunt Bertha, a platform that helps find reduced cost services for things like medical care and job training.
  4. Look at your numbers. Action is the antidote to anxiety and will make you feel more in control. The first step is to know how much you really owe, not how much you think you owe.
  5. Talk to your lender/loan servicer. Start a conversation with your lender or loan servicer to see if you can lower payments, lower interest rates, or come up with a plan that works better for you. It's tough but better than going into default or delinquency. Most federal student loans are eligible for at least one income-driven repayment plan.

I know debt has a real impact, but it is possible to tackle debt and improve your mental health. If you're in the thick of it now, remember to go at your own pace, and prioritize your well-being.

Melanie Lockert is the founder of the blog and author of the book "Dear Debt." Through her blog, she chronicled her journey out of $81,000 in student loan debt. Her work has appeared on Business Insider, Time, Huffington Post and more. Melanie writes about student loans, credit, and mental health. You can find more info at Melanie Lockert.

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