Today marks the first day of my No Spend Year. For the next 365 days I will be limiting myself to needs only expenses, which means no more Starbucks, no more new clothes, no more make up or skincare sprees and certainly no more eating out. So what will I be spending money on? In short:
- Groceries – bought according to a meal plan of course!
- Necessary personal care – I’m counting soap, shampoo, conditioner and deodorant etc as essential, bite me.
- Necessary travel – I’ll explain why some travel is a non-negotiable expense in a bit.
- Blog fees – Clearly not a life or death essential but since blogging full-time is my dream, I’m keeping it running.
- Any medical expenses – if I need to go to the doctor I will go.
So, why am I doing this to myself? Well, the short answer is I’m in debt and I’m getting out of it ASAP! It’s been five years since I graduated, and I’ve recently hit the (almost) halfway point in my student loan repayments. This year is about betting myself that I can conquer the other half in much less time.
The Juicy Number Crunching
My total student loan debt is a scary $46,968.70 and counting. How could it be counting when I graduated five years ago? In an effort to keep young New Zealanders at home, the government charges borrowers interest if they choose to live overseas. Now, if you know me at all you know that I travel a lot! I’ve been living overseas since before I graduated and that has cost me $11,449.11 in overseas borrower interest. I’ve managed to get $4,259.21 of that interest written off (always make sure you know what benefits you’re eligible for), because some of my time overseas has been spent as a student. That means the price I’ve paid for living overseas is $7,190.50.
I’ve been making student loan repayments since 2014, and to date I’ve paid off $21,018.36. That means my current balance is $21,935.57. I’m obliged to pay off a minimum of $3,000 annually (because when I last left New Zealand my balance was over $30,000), but if I only make the minimum repayments I’ll be paying it off for another 8 years and 10 months. Plus, I’ll have paid an extra $4,529 in interest. No thanks! I don’t know exactly how much I’ll be able to repay in the next year, but I know for sure it’ll be more than I’ve ever paid before.
Why This Year?
I first stumbled across the concept of a No Spend Year at the very beginning of 2018 when I read Michelle McGagh’s “The No Spend Year: How You Can Spend Less And Live More”. If you’re one of my readers who receives my monthly newsletter, you know I recently re-read this book. When I first encountered Michelle’s story, I read it for fun but I didn’t seriously contemplate doing it myself. So what’s changed?
I spent the last twelve months living in beautiful Zadar, Croatia. My partner Michael is European and so, in order to be together we live in Europe. Last August, I was totally and completely sick of travelling. I wanted to be in one place and have a home. So I got a 12 month working holiday visa in Croatia, and we rented a lovely central apartment for 12 months. Looking back, I know I really needed this last year to feel grounded. It was important for my mental and emotional well-being. But, I also know that if I had spent the money I used for rent and exploring Eastern Europe in the last year, my loan would be almost entirely repaid already.
The real motivator behind this decision is Anna from AndThenWeSaved.com. I’m currently reading her book, (which ironically has been my last purchase before this year began) “The Spender’s Guide to Debt Free Living”. I think the fact that she owed a similar amount of money, part of which was also student loan debt made me think about doing it myself. That, combined with the fact that repaying as much as I could was already a main goal this year.
One of the first steps in Anna’s book is the ‘Get Out of Debt Pledge’. It’s about putting your commitment into words and giving yourself some accountability. Here’s my pledge:
My name is Hannah. I have just under $22,000 of student loan debt. From September 15th 2019, I commit to a year long spending fast. I’m committed to living a debt free existence. I can do this!
Her next step is a Reverse Budget, so this morning I looked at my bank records and meticulously wrote down every single withdrawal in the past 90 days. It wasn’t as shocking for me as it might be for some people, as I’ve been mindful with my spending this year. But, it was good to see where I can make big savings. My biggest weak points are definitely beauty treatments and travel, I just love getting my hair and nails done, and I traveled a lot more than I needed to over the summer.
From the Reverse Budget I’ve formulated a Wants and Needs List, here it is:
- Travel for fun with friends and family
- Eating out
- Beauty treatments
- Movie tickets and books
- New clothes, shoes and accessories
- Make up and fun skin care
- Super-foods and herbal supplements
- Travel to next the house sit
- Personal hygiene and basic cosmetics
- Any medical expenses
- Blog fees
What Will I Spend Money On In A No Spend Year?
I think the wants are self-explanatory, but I want to discuss the needs section in more detail.
Housing and Travel
Part of the big savings I’ll be making this year is on rent and utilities, as Michael and I have decided to spend the next year house sitting. This means we’ll live for free in somebody’s place in exchange for looking after their home and animal(s). It’s a win win situation and I know I’m fortunate to have this option available to me as I work online, and can earn my paychecks from wherever I have an internet connection. By the way, if you’re interested in house sitting, I recommend Trusted Housesitters. It’s fuss free and we always find great matches on there. If you use that link or this referral code: RAF58232 you’ll get a 25% discount off an annual membership, and in return we’ll get two free months. So, this year I expect our housing budget to be almost non-existent, but we will be taking buses, trains and maybe flights to the next sit.
I think groceries will be challenging area because I find it SO tempting to try out different goodies that aren’t on my list. My idea for tackling this is shopping online so I stick to my list more and don’t get sidetracked in a fun aisles.
Personal Hygiene and Basic Cosmetics
I’ve decided that personal hygiene and basic cosmetics are essentials for me, because I know myself well enough to know that if I don’t give myself an allowance here, I’ll suffer and break eventually. I despise smelling bad, I can’t stand having dry, frizzy hair and this year is not about being barefaced when I don’t want to be.
I already have a lot of stuff with me so I will use what I already have and only replace the basics which are: Soap, shampoo, conditioner, hair oil, deodorant, cleanser, toner, moisturizers (body and face), toothbrush, floss, toothpaste, concealer, liquid eyeliner and mascara. Also a razor, tweezers, nail clippers and files, hair clips and hair ties etc. There are probably a bunch of things on that list that you may think are not essentials, but I know I will be very happy to have them all, and you’re always free to do your own no spend year with just a toothbrush 🙂
Can I Have Some Treats Though?
One thing I can’t figure out is whether to have treats built into my plan. My idea is that for every $5,000 I repay, I get to treat myself to the value of… $100? That sounds totally reasonable to me and I think it’ll be really helpful. What do you think? Let me know in the comments.
The No Spend Year Inspiration
I’ve always had this idea in my head that I would travel in my twenties, and settle down in my thirties. Having turned 27 a few months ago, I’m starting to think about how I’d like to end my twenties. I’ve spent the past seven years studying, living and working all over the world. In fact, I’m writing this in green and rainy Ireland, which is my 40th country. I’ve achieved my childhood dream of seeing the world, and I don’t regret it for a second. I felt a deep urge to spread my wings and see, smell and feel what it was like in other countries and cultures.
I will always love travelling, but I’m growing tired of doing it so much. For the first time in my life I’m starting to feel a sense of wanting to put down roots. Now my dreams are less about wandering and more about having a home to nest in. I want the freedom to make a place my own, spread out and work on another growing passion of mine – ethical fashion and capsule wardrobes. Michael and I would like to settle in our own home in Norway one day, so being debt free is my first step to making that a reality.
Will You Follow My No Spend Year Journey?
To keep myself accountable, every month for the next 12 months, I’ll put together an update on how I’m going. That includes my wins, struggles and challenges and ultimately, how much I’ve paid back. If you’re keen to follow along, sign up for my newsletter here (and feel free to check the boxes of any of my freebies that you want to check out), and I’ll pop into your inbox and let you know when a new post is live.
P.S. Do you want to save this post for later? You can save THIS PIN to your money/budgeting/personal finance board on Pinterest 🙂
Pingback: My No Spend Year: Update #1 | hannahimsa on September 15, 2019