How I paid off my debt by taking on more debt- From Rags to Reasonable

Lots of artists have lots of debt. But tons of those artists are managing to pay it back, all while living this crazy variable life.

I recently put out a call for artist debt stories and got this email that I just had to share.

Meet Charlotte. She’s a Canadian opera/musical theatre singer based in Toronto. This is her debt story…

“It’s an unconventional debt repayment story – I paid off all of my debt by taking on more debt – but it’s worked out beautifully and given me more stability and peace of mind than I ever thought was possible while still pursuing a full-time performing career.

The short version is this: four years ago, I was freelancing and working part-time at a law office – and I felt like I was drowning in dept. In 2008, I graduated from Western with $26,000.00 in student loans. By 2011, my student line was still sitting at $18,000.00 – due largely to the constant strain on my income from continuing to re-invest in my developement i.e. summer program tuitions, lessons, coachings, travel expenses, audition expenses, etc. I also still owed my parents $4,000.00 and my credit card was maxed at $1000.00. Eeek.

So I bought a house.

With ZERO financial backing from any outside source (not even a mortgage co-signer), at 25 years old, with an annual average income of $24,000.00 gross – I bought a rental property.

In four short years, my rental income has paid off the following: my student line, my parents, and all of my consumer debt – not to mention it also pays my mortgage and all operating expenses (property tax, house insurance, utilities, maintenance and updates, etc.)

I wasn’t simple by any means – it took a LOT of creativity and hard work – but really anybody could do it.”

– Charlotte

I was super fired up by her awesome solution to her debt problem… I also had a ton of questions.

Artist to Artist - Debt Story - Charlotte - QuoteThis is an awesome solution… but admittedly kind of a crazy response to being in debt… what gave you the idea?

I had been working part-time as a real estate clerk in a small law office in St. Catharines and I was STUNNED to see some of the prices that were coming across my desk. Having grown up in downtown Toronto, I had no clue that there were places in Ontario where you could still buy a nice, two bedroom house for under $100,000.00. I also have an aunt who owns several rental properties in Toronto, so I knew that, for the right price, it could be done. So I started trolling MLS.CA and COMFREE.COM to figure out my options.

Where did you end up buying? And how did you make that choice?

I started looking for a place in downtown St. Catharines for three reasons:

  1. I was familiar with the city and it was only an hour from Toronto, in good traffic.
  2. While the house prices downtown remained low, the demand for nice, livable rental properties for families and students was really high.
  3. I could see the writing on the wall – the city had just broken ground on three massive building projects: a new performing arts centre, a new arts faculty building for Brock University, and a new hockey arena/concert venue… all being built on the same strip of St. Paul Street in the hopes of revitalizing the downtown core. I had a feeling that real estate values and rental demand had nowhere to go but up.

How the heckerooni did you manage to get a mortgage with no co-signer on an income of $24,000?

No two mortgage advisors are made alike. I was turned down on the spot by my parents’ mortgage advisor at Scotiabank in Toronto, who informed me that without a 20% down payment, I could not be approved for the mortgage that I needed. Then after a minor (okay, MAJOR!!!!) internal freakout, I made an appointment with a Scotiabank mortgage advisor in St. Catharines who specialized in lower income “Purchase plus Improvements Mortgages”. I had already put in a conditional offer on a nice fixer-upper that required $10-15k in renovations and updates. She crunched the numbers on my income to debt ratio, factored in the potential rise in property value after the renos were completed – and I was approved!

Is there a downside to having an income property? Time commitments? Costs of being a landlord?

There are always downsides to new responsibilities, but in my case, none have yet outweighed the upsides. But that being said, I don’t really remember the summer or fall after I bought the house. It’s all a blur. I was there everyday, supervising the renos and getting estimates and picking colours and fixtures. Then after two months of chaos, I advertised and started showing the house to potential renters.

After my tenants moved in, things got less and less hectic. I still have to be on call to deal with any problems that come up, but so far it’s been relatively stress-free. I’m also very lucky to have AMAHHZING tenants and a partner who doesn’t mind stepping in to help when I’m unavailable or out of town for singing gigs and auditions. For the first few months, my tenants actually thought I was some kind of opera superstar because it seemed like every time they texted me with a minor issue, I Artist to Artist - Debt Story - Charlotte - Quote 2wasn’t around. “Sorry, I’m in Amsterdam/Vancouver/New York/Boston/London right now. I’ll get my partner Jon to give you a call asap!”

What would you tell someone who’s thinking of following your example?

Be patient. I looked around for about six months before I found the right house. The price was good, it had been on the market for a while, and it was being sold Power of Sale (the Canadian equivalent of a foreclosure by a mortgage lender) so I knew I could probably get it for a lot cheaper than the asking price – about $16,000.00 cheaper, as it turned out!

Be practical about how much time and energy (and $$$) you’re really willing to invest, and decide for yourself if it’s worth it. I was up to my eyeballs in reno quotes, drywall dust, roof shingles and house paint for two months before I could even start showing the place. And even now when things have died down, I’m still on call and responsible for every little thing that comes up.

Ask for advice. After my initial mortgage application was rejected, it didn’t even occur to me to try another mortgage advisor (at the same bank, no less!). But needed advice so I asked around and thankfully got pointed in the right direction. Find people who have purchased/sold/renovated/financed a property and pick their brain. There are always new things to learn!

Don’t be afraid to partner up. As it turned out, I didn’t end up needing a business partner, but that doesn’t mean I wouldn’t have considered it. Two incomes are always better that one in the eyes of a mortgage lender and a 5% down payment doesn’t seem nearly as ominous when there are two (or three or four) contributors. The buddy system is a nice way to share the cost and time commitment of a rental property.

So what about you? Are you a debt free artist? If you’ve got a story of how you achieved that goal… I want to hear it!! Send me a note either through the blog (there’s a contact page right at the top of the page) or at