Breaking Free from Student Loan Debt: My Journey as an Expat in Japan
As I stood at the gates of Toronto Pearson airport, ready to embark on my adventure in Japan, I couldn’t help but feel a mix of emotions. Excitement for the new chapter ahead, but also anxiety about the $22,000 CAD ($16,618 USD) student loan debt weighing on my mind. I knew I had to make a plan to tackle it head-on.
Rule #1: Avoid Taking on More Debt
I had considered taking out a student line of credit to fund a summer study program in Korea, but I knew better. As an avid reader of personal finance content, I understood the dangers of digging myself deeper into debt. Instead, I focused on saving and prioritizing my expenses.
A New Chapter in Japan
Six months into my expat life, I got my first Japanese credit card with a generous limit. But I was determined to use it responsibly, only charging essentials and ensuring I had the funds to pay off my balance in full each month.
Rule #2: Keep Fixed Costs Low
Living in the Tokyo area proved to be more affordable than Toronto, and I was able to find a shared house with a reasonable rent of $650 per month, including utilities and Wi-Fi. I also opted for a cheap mobile plan, buying a phone outright and paying just $17 per month for unlimited data and a set number of minutes.
Rule #3: Prioritize Debt Repayment
As a recruitment consultant, my salary wasn’t extravagant, but my low living expenses allowed me to save $500-800 per month. I split this amount between building an emergency fund and paying off my student debt. Occasional commissions also gave my debt repayment a significant boost.
Rule #4: Budgeting Made Easy
To manage my finances, I adopted an envelope-style budgeting system. I divided my monthly expenses into categories, allocating a specific amount for each, and placing the corresponding cash into labeled envelopes. This system helped me stay on track and avoid overspending.
Rule #5: Diversify Your Income
To accelerate my debt repayment, I took on a part-time English teaching job at a café, earning an extra $150-200 per month. This side hustle allowed me to enjoy local trips and social events without feeling deprived while paying off my loans.
The Result: Debt Freedom in Just One Year
By following these five essential rules, I was able to pay off my $22,000 CAD student loans within a year of starting my job in Japan. Being debt-free is an incredible feeling, and I’m now focused on building investments and enjoying my hard-earned money.
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