If you have read our About Us page, you already know that I completed two years of service as an AmeriCorps VISTA member. AmeriCorps paid me living allowance stipend of about $11,000 – $14,000 plus a Segal AmeriCorps Education Award per year. Yikes. However, between the two Segal Awards, my savings, and then a few months at my first “real” job, I was able to pay off my entire $16,500 of debt just 2.5 years after graduating from college.
You may be wondering how – and why – I did this.
Why AmeriCorps?
As my final semester of college began, I was using the “minimum salary” feature on job search websites and only looking at positions with nonprofit and public service organizations that paid at least a $40,000 salary.
If you are familiar with the nonprofit sector in New England, you probably won’t be surprised to learn I was finding mostly mid-level or mind numbingly dull positions. I still applied to some of both types, but I was struggling to find a good fit. Shockingly (only to me), most of my more ambitious applications were not even getting me interviews, never mind job offers.
Despite my own opinion of myself at the time, I am now well aware that I was most certainly not qualified for anything more advanced than an entry-level position. I had completed a handful of internships, graduated near the top of my class, and I could find the answer to anything online as well as the next person, sure. But had never created an event budget, written a grant application, evaluated a program model, or done much more than completing several hundred essays and tests, if we’re being honest. I had mastered being a student, but I had no idea how to do anything that an employer would actually need me to do.
I’ll get to the point: I did not join AmeriCorps for the noble purpose of serving my country/community. Well, that’s not entirely true; I did want to make a positive impact by focusing my career on nonprofit work. But I also wanted to make some money!
In the end, AmeriCorps drew my attention when I discovered that the VISTA program is designed so that nonprofit/government organizations with limited budgets can receive temporary, full-time help to build their capacity. AmeriCorps VISTA members typically get to stumble their way through important projects, taking on responsibilities that would be reserved for more experienced employees at organizations with more robust funding.
Meaningful work with very little experience required? Sign me up!
So... how did it go?
I found a position at a small state agency with only 4 employees and set to work cleaning up their online presence and marketing materials. I had weekly meetings with the Executive Director of the organization (who was also my direct supervisor), and was free to bother any other staff members with questions as needed. Otherwise, I sat in my own private office and taught myself how to design flyers, share relevant content on social media, and write newsletters and event communication for an audience of thousands of subscribers/attendees.
Sounds pretty cushy until you hear that I was paid about $200 per week for this. I was consistently spending about 40 hours per week at my host site, making my hourly rate around $5/hour. If this was a “job,” that pay would not be legal – but it’s AmeriCorps “service.” Sigh.
“The AmeriCorps VISTA program provides a living allowance that enables you to live very frugally, like the community you are serving. The allowance is based on poverty rates for a single individual in your geographic area.”
– VISTA Campus
When I had previously worked part-time jobs, I often thought about how nice it was going to be to have the extra $20-30 for working a few hours between classes. During my time with AmeriCorps, I learned very quickly not to think about the time-to-money rate. It was not comforting.
That said, I enjoyed many things about being an AmeriCorps member. I liked the level of responsibility I had. I liked going to VISTA meetings with other local members. And I liked having the set 1-year service term. I even decided to stay on for another year, moving into one of New Hampshire’s VISTA Leader positions – which I loved! Having learned the basics of AmeriCorps VISTA service, I eagerly set to work simplifying systems and doing whatever I could to enrich the VISTA experience.
As I helped to support members, I also gained valuable insight into their host site organizations – which are all nonprofits and government agencies similar to the one I was first placed at. I learned about the organizations when members shared the project materials and grant proposals they were working on; I met some of the key players during site visits and supervisor training days; I even got a peek at various organizational cultures by way of member time sheets and supervisor surveys.
By the time my VISTA Leader year was up, I was familiar with many of New Hampshire’s nonprofits and I had made some professional connections.
Forming good money habits
I think that my friends and family would say that I’ve always been frugal. Really, I have always been interested in getting the most value for my money – shopping sales, seeking out coupons, etc. But while I was paying attention to the price tag, I wouldn’t think twice about whether I needed to be spending money to begin with.
Throughout high school and college, I didn’t question my habits of frequently buying snacks (and then alcohol), eating at restaurants, and shopping for clothes. I wasn’t spending much at any given time, but I was spending almost everything I earned.
When I graduated from college, moved away from my friends, and began dedicating 40 hours per week to my VISTA position, I found myself doing most of my spending on weekends. During the week, at least, I was conscious of my limited budget.
Many of the good money habits that I developed were centered around food.
- I quickly developed and fine-tuned the simple meal planning strategy that I have now been using for years.
- While Hans and I had first been cooking dinners at home and packing sandwiches for lunch, I soon began cooking large enough meals that there would be leftovers for lunch the next day – saving time and money.
- I became interested in a plant-based diet. I’m not one for strict rules, so I haven’t ever gone fully vegan or even vegetarian, but steering away from meat and animal products has been a healthy choice that saves us lots of money!
I also did some non-food-related frugal things during this time.
- I split the cost of a $975/month 1 bedroom, 1 bathroom apartment with Hans.
- Our apartment was chosen with our commutes to work in mind – we were both able to travel under 10 miles round-trip for the first year! This meant money saved on gas, and less wear and tear on our cars.
- We furnished the apartment with dated donations from our families, and we didn’t bother with buying much in the way of decorations. It was a dull-looking place, but it served its purpose – and it couldn’t have been much cheaper!
- I started to almost exclusively stay home during weeknights because I had Hans and a kitten to keep me company. We also started playing virtual Dungeons & Dragons with some college friends over Google Hangouts for some good ol’ free socialization.
- My grandma left me her 2004 Toyota Camry while I was in high school, and I kept driving it instead of looking for an upgrade. In fact, I still drive it today (as of April 2020, when I am writing this).
And I got the travel bug.
Another semi-frugal thing I did during this time: I put my research skills to the test planning a 2-week trip to 4 countries in Europe for a grand total of around $2,000 per person (Hans and me).
This may still sound a bit pricey, but considering that the average cost of one round-trip flight between Boston and Europe is around $1,000 per person – and we flew from Boston to England to Switzerland to Spain to Portugal to Sao Migual (a Portuguese island) and THEN back to Boston (not to mention the cost of food and lodging) over the course of 15 days – I’d say that we did alright!
How did I pull it off? Mainly by booking budget flights and staying in low-cost hostels and Airbnbs*.
Why did I pay off my student loans so quickly?
AmeriCorps service enabled me to pay off the majority of my student loans. My two years earned me two Segal AmeriCorps Education Awards totaling $11,590.
- I first applied the award money to my $3,000 Perkins Loan with a 5% interest rate, which was my highest rate.
- Next up were my 3 Stafford Direct Subsidized Loans. I started by knocking out my $5,500 loan (4.41% interest rate).
- Finally, I used my remaining award funds to cut my $4,500 loan (3.61% interest rate) down to $1,410.
Combined with my final $3,500 loan (3.4% interest rate), this left me with just under $5,000 of student loan debt.
With payments of $144 per month, it would have taken 3+ years to pay off the two loans, and up to 3.61% would be going toward interest every month. I had a little bit of money in my savings account, so I decided that my first student loan payment with my own money would be $3,000. Since almost all of the money was applied directly to the loan principal, it somewhat significantly decreased the amount of interest I’d owe overall.
I did make a $144 loan payment during the second month of my job. By the third month, though – excited by the sub-$2,000 standing between me and being 100% debt free – I decided to just knock it all out. And so, almost exactly 2.5 years after graduating from college, I paid off my student loans.
Knowing what I know now, would I do it the same way?
Probably!
Logic dictates that I likely did not save as much money on interest as I would have made by investing that extra money in low-cost index funds. That said, I was never looking at the 20 year time frame that many people take to pay off their student loan debt. I handed over about 3 years worth of loan payments, yes, but 3 years is still a pretty short-term time frame.
Paying off my loans quickly allowed me to feel secure and move right into a wealth-building mindset. To me, that justified the theoretical loss of investment income.
Avoiding lifestyle inflation after AmeriCorps
Entering into adult life with a tiny AmeriCorps budget taught me how to streamline my spending.
I learned the effectiveness of minimizing recurring costs such as food and housing (and other bills) during a time when my income was so small that there wasn’t an alternative. This experience also led me to form habits such as cooking at home and thinking before starting a new paid subscription – habits which were not forced on many of my peers who landed jobs with average or higher incomes straight out of college.
To some, this may sound like deprivation, but I am perfectly content to split the costs of a modest life with Hans. I have goals for lifestyle improvement – things like finding a house with a nice backyard and traveling more frequently – but I don’t desire a lifestyle with more expensive decor, a luxury car, a high-end wardrobe, or top-of-the line technology or sports equipment. Logically, then, I don’t feel like I am missing out when I abstain from spending money on these things.
I’m not always frugal.
I still spend somewhat freely on social activities and on other things/experiences that I find value in – whether that’s a vacation or a new shirt or a box of doughnuts – but I don’t spend mindlessly.
Now that I have a more average income, saving and investing my money has become a high priority for me. I want to accumulate wealth rather than living paycheck-to-paycheck because I am interested in the adventures and security that wealth can bring. I pay attention to how much money is coming in and going out of my bank account by taking 10 minutes each month to update a simple spreadsheet – you can read all about it in my How I Track My Money post!
Between limited spending, consistent tracking, and good money management, I can truthfully say that I don’t worry about money. As long as I keep making similar choices, I may never feel worried about money again.
Does that sound like deprivation? It sounds like luxury to me!
Links with “*” at the end are affiliate links, meaning that we might receive a financial reward if you click the link and buy or sign up for something. This is done at no extra cost to you, and we only include products that we have bought/used or would buy/use ourselves!
Interesting story and one to learn from. Although a lot of people may know most of these tips/tricks to money management the key is the discipline which you certainly have! You have a bright future.
Thank you, Sheila!