On August 19, 2016, I made the final payment on nearly $100,00 in student loan debt! Today I want to share the steps I took to make that happen. But first, a bit of context.
I graduated from undergrad in 2003 with about $30,000 worth of debt. I got married within 6 months of graduating from undergrad. Eric, my husband, had about $10,000 from undergrad as well. We started out our married life with about $40,000 in student loan debt combined. My husband started graduate school shortly after we married, but thankfully it was completely free.
I ultimately completed a master’s degree a few years later and then a doctorate in 2010. My undergrad loans were deferred while I completed my graduate education. And when the academic fog lifted, the reality set in that I had to actually pay all of the money back. Go figure.
You see, I knew the day of reckoning would come, but knowing it and experiencing it are two different stories. The grand total was $92,779.46. I knew the amount was high, but seeing the amount as clear as day on paper in front of me, was a shock to my system.
Strategy #1: Choose a debt pay-off strategy.
After the initial shock wave, I composed myself and got to work crafting a plan to pulverize this mountain of debt. Because the bulk of my loans (roughly $50,000) carried a 6.8% interest rate, I opted for the debt avalanche approach. With the debt avalanche, you focus on paying down the debt with the highest interest rate first. This allows you to pay less money in interest.
It took me about 3.5 years to pay off $50,000 and that left me with about $37,000 of undergraduate debt to pay off. The undergraduate debt had a ridiculously low-interest rate, something like 2.5% so I briefly considered slowing down on the accelerated debt payoff to catch my breath.
But in the end, I made the decision to keep up the momentum and get ramp up my efforts for the home stretch. Back to my promise to share how I did it. Let me first warn you right now, there was nothing magical about how I did it. There’s no secret formula whatsoever, but I do have a few tips that may help you as you grapple with debts of your own.
Strategy #2: Multiple Streams of Income
First off, create multiple streams of income. As a certified physician assistant, I was earning an above-average salary before I completed my doctoral degree. But with my shiny new degree in hand, my income potential skyrocketed.
My reason for pursuing a doctorate in the first place was to segue into higher education and teach at the college level. When I graduated in 2010, the economy was still recovering from the Great Recession of 2008 and it created a unique opportunity to do exactly that. With so many people still unemployed post-recession, many were opting to go back to school themselves, creating a slew of open adjunct faculty positions. Every time I saw a teaching job in my area of expertise, I applied.
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And after submitting tons of applications, I got my first teaching gig. Within a few more months I took on another online class and an on-campus course teaching medical terminology at a local community college. All while juggling my full-time (night shift) hospital job. At night, between seeing patients, I graded assignments on my laptop. I maintained this pace for nearly 3 years.
Looking back, I was borderline insane to carry that type of workload. I was cranking out 60 hour work weeks AND I had a 3-year-old and a 5-month-old baby at home. Thank God for a supportive husband! Obviously, working 60 hours a week isn’t ideal (or sustainable for that matter) but the sacrifice was well worth it. Hustling hard and creating multiple streams of income helped me pay off nearly $100K of student loan debt in just 5 years!
In all truthfulness, those ‘hustle’ years are a blur. I didn’t get a whole lot of sleep and I was a cranky, overly busy, meal skipping mess. But my efforts paid off, and within two years of completing that expensive doctoral degree, I doubled my income. I credit this to a number of factors- super aggressive job searches, God’s favor, and being in the right place at the right time.
Strategy #3: Living Below My Means
If you want to pay down debt quickly, it’s important to live below your means. I cannot stress this point enough. As I created new streams of income in the household I was careful to intentionally maintain our current level of living. I did not go out and get a new car. I didn’t go out and shop… Well, I might have done a little bit of shopping. But far less than I did in my ‘spendy’ days.
And Eric and I continued to travel fairly regularly, even as we paid off the debt. I don’t believe that we should sacrifice everything in order to race to the debt-free finish line. It’s important to continue to live life, enjoy time with loved ones, and engage in activities that you value. Living below your means is about keeping expenses comfortably below what you can technically afford. Even as my income skyrocketed, I made an intentional decision to maintain the same lifestyle even though we could technically “afford” to scale up. By doing so, I was able to allocate nearly every dollar of additional earning to debt pay off.
Strategy #4: Remain uncomfortable with debt
It’s imperative that you don’t become friends with your debt. Don’t become pals with it, don’t become BFFs with it. We live in a society where being in debt is the norm. To maintain an aggressive posture towards paying off debt, maintain a level of discomfort with it. I could have just as easily taken the posture that, ‘Hey, I have my degrees. They can’t take them back from me’. Sallie Mae can’t come and repossess my degree, why not take my sweet time paying them off? I didn’t want to adopt that attitude. I believe that if you borrow something, you should repay it to the best of your ability. By maintaining a discomfort with the student loan debt I created an urgency to pay off the debt well ahead of my 30-year repayment plan. I just wanted the debt gone!
Now that the debts have been repaid I can let my hair down a little bit. But I’m not going to go splurge. That’s just not me. I’ve been frugal by nature for most of my life, so I’ll continue to clip coupons. I’ll continue to shop at Aldi’s to save money on groceries. Why you ask? Because I still have lots of other things that I want to accomplish financially. So, this isn’t the end of my financial story. I can’t afford to get comfortable here. I fully intend to maintain the momentum and keep pressing towards financial freedom. Thanks to everybody who offered well wishes and congratulations on paying off the student loan debt! Be sure to stick around and see what next for me.
What debts are you currently paying off?