Who is Melanie Lockert?
Melanie Lockert is the personality behind the award-winning blog, Dear Debt, where she chronicled her journey out of $81,000 in student loan debt. Through her blog, she inspires readers to break up with debt by writing their very own breakup letter to debt.
In 2015, Melanie (and her journey out of debt) was named one of the top five most inspiring personal finance stories of the year by Yahoo! Finance. She currently works as a freelance writer and event planner. Melanie and her work have appeared in Business Insider, The Huffington Post, Yahoo! Finance, INC, and more.
What is your debt story?
At the age of 17, Melanie was given two options. Take out student loans or don’t go to college. Since she never considered not going to college, she took out the loans and graduated with an initial amount of $23,000 of student loan debt.
She didn’t think about it too much at first and paid the minimum each month. A few years later she went back to school and attended NYU for grad school. She ended up taking out another $58,000 for a total of $81,000 in student loan debt.
By the time she May 2011, she was still stuck with a bill of $68,000 in student loan debt. Now, 2011 was not a good time to try and find a job and that’s exactly what Melanie experienced. She would sometimes get as far as the second or third interview and then be told they’d gone with something else.
Ultimately, she realized she couldn’t continue living in New York so she moved to Portland, Oregon with her partner and started over.
What is the connection between debt and mental health?
In her book, Melanie likens paying off debt to the five stages of grief.
In her case, shortly after graduating NYU she knew she needed to get her finances in order. She got herself a free Mint.com account, saw how much she owed and deleted the account within a few minutes because she couldn’t deal with it at that time.
She also experienced a lot of anger, depression, and denial for a long time. She did go to counseling to work through some of the emotions that were being brought on by her student loan debt. The good news is she started her blog to help her climb out of it and educate people on the connection between emotions and debt.
What are some resources for people struggling with money related mental health issues?
People who are struggling with mental health issues as they pertain to money can get affordable counseling from a variety of places including community centers, graduate schools, and religious organizations.
If you happen to be in a lot of credit card debt, consider speaking with a legitimate non-profit credit counseling agency. They can help you face the numbers and come up with a plan. One such organization is Clearpoint Credit Counseling.
What were the strategies you used to get out of $80k of student loans?
Step one is to face your debt. You need to get clear on what you owe and what the interest rates are. In Melanie’s case, she realized that because of interest, her grad school student loan debt was costing her $11 a day.
It’s especially important to look at the interest rates because it will help you see whether or not you need to increase your monthly payments.
From there, Melanie cut her expenses drastically. She scaled down as much as she could and cut her budget down to the bone.
Since Melanie was a low-income earner, she realized her next step was to earn more money. She took on any side gig she could do that was legal. She also turned her blog into a freelance writing side hustle and double her income.
Did you try anything that didn’t work?
Melanie notes how she was sometimes too strict with her budget and then it would backfire. For example, she would avoid spending money on going out, realize there was no food in her apartment and then end up spending $30 on a meal anyway.
She also points out how she was working herself too hard which caused her to make mistakes and spend money on conveniences.
However, Melanie notes that the biggest mistake she made was only paying the minimum on her student loan debt.
How can people stay motivated when paying off a large amount of debt?
When Melanie experienced debt fatigue, she realized she needed to set up a reward system to keep her motivated. For example, if she paid off $5,000 she would take herself out to a nice dinner.
She also recommends finding ways to do some of your favorite things on the cheap. Do you like happy hours? Buy yourself a bottle of wine from Trader Joe’s and invite friends over.
Journaling is also a great way to get your emotions out of your head. Additionally, Melanie created a secret Pinterest board where she pinned images of what her life would look like after she paid off debt. In other words, she had her eye on the prize.
On a day to day basis when she had to deal with money, she taped her student loan amounts on the back of her debit card so she wouldn’t overspend.
What is one tip that people can use to improve their finances right now?
Sign up for automatic payments. Some student loan services will cut you a deal on your interest rate if you sign up for auto pay.
If you’re having trouble paying your student loan debt, Melanie suggests speaking with the student loan provider. The last thing you want to do is go into default or get your wages garnished.
How do you make money your honey?
Melanie puts in the work! Specifically, she automates her finances as much as possible and mindfully makes her money work for her. Most of all, she’s finally putting money toward her future instead of her past.
Where to Find Melanie
Resources Mentioned Or That Add Value to This Episode
Clearpoint Credit Counseling – For anyone who is struggling with paying their credit card debt.