The most popular post on the Wall Street Journal today is, “Wiping Out $90,000 in Student Loans in 7 Months”. Mihalic’s methods for reducing his costs are creative. He shows a gazelle like fear of debt that is emotionally necessary to paying debt down early and most importantly he is on the road to being completely debt free. Anyone who has lived no else for seven months probably has a plan for paying off his mortgage, too. This type of debt repayment would make Dave Ramsey proud but it does present some interesting questions about the economy. If this is the most popular post on the Wall Street Journal today, what does that say about the popularity of consumer debt? Has debt reduction become cool and has the America subconsciously picked a new socially acceptable debt level? I speculated in a previous post that it makes a lot of sense for America to pay down its credit card debt to a level much lower than today. If the new level for socially acceptable consumer debt is a number that is much lower than in the previous fifty years, what does it say about our consumer driven economy over the next couple of years if the consumer is diverting some of their spending power to reduce debt?
Here are some of tricks he used to pay his debt down early.
Mihalic said he spent months taking a flask of liquor to bars so he could continue to go out drinking with friends without running up a tab. (Be warned: this is typically illegal.) Instead of the movies, he took dates out hiking, or for bagels and coffee. He ate protein bars packed from home and walked several miles to the city, to save a few bucks on transportation, during a trip to Michigan. He got two roommates to rent out his house.
Mihalic also took steps that financial advisers typically say are a no-no: He liquidated his individual retirement account, drawing a tax penalty, and stopped contributing to his 401(k), even though his employer offers a matching contribution.