I graduated from college almost 6 years ago, but some days it feels like yesterday. My college years were definitely some of the best years of my life, and oftentimes I wish I could go back and relive them all over again. I made amazing friends, stayed up past midnight and woke up after 8am (I can’t remember the last time I did that!), spent a lot of time fooling around making videos (I was a broadcast/film major), and in general was living the good life.
But after college, the real world snuck up on me and reared its ugly face. No more privileged life for you! Now you need to get a real job! Get a car! Pay your bills! Be an adult! I resisted as long as I could – I volunteered for a film project in Reading for a couple of weeks, and then I tried to find a job that could be considered within my field of study, but there was absolutely nothing to be found unless I wanted to move 150 miles away to NYC, which was NOT happening. So I buckled down and starting working in the office of a construction company. And to be honest, the money was good, but I was pretty miserable. However, I had to pay bills, and my $22,000 student loan wasn’t going to pay itself.
So I put together a plan to pay off my loans as soon as possible. While a lot of the things I did would have driven my friends crazy, or wouldn’t have been doable for them, I wanted to be debt free. While in college, I had taken a course at my church called Financial Peace University, which helped me see why living debt-free is desirable and very possible. I took things I learned from that as well as some of my own ideas and created a budget that allowed me to pay off my student loans in 4 years!
While my accomplishment pales in comparison to some of the stories I’ve read online (eg. people paying off $22K in debt in one year), I’m proud of what I was able to do, and the fact that I feel I lived a comfortable life while doing so. Most of my sacrifices didn’t feel that difficult, and as a single girl with a modest income, I think I did a pretty dang good job of prioritizing needs vs. wants.
I’m sure some of my strategy can help you out as well, so without further ado, here is how I paid off my student loans in 4 years:
I HAD NO OTHER DEBT
When I graduated college, the only debt I had was my loans. I bought a car outright with my savings right after I came back home, and my graduation present from my parents was paying for my first year of car insurance, so I had no other bills or payments to my name. I didn’t have to pay on my loans for the first six months after graduating, so that gave me ample time to find a job before I had to fork over my hard-earned moolah. If you have other debt, like a car or credit cards, I would choose the debt that is the smallest and/or has the highest interest rate and tackle that first. Once you whittle those down, you can concentrate solely on your student loans.
I LIVED WITH MY PARENTS
I know this one is probably causing a lot of you to cringe, or laugh, or cry, or hyperventilate, but hear me out – I had virtually no bills to pay other than my loan. I didn’t have utility bills, a mortgage, home repairs, food, etc. I did pay my parents $300/month to help them cover those extra costs of having me stay there, but you can’t even get rent anywhere that cheap (and I would be concerned for your safety if you did rent a place out for that price, at least around where I live). The money I didn’t spend on rent and other normal bills went directly to my loans or into my savings.
If living with your parents is not an option for whatever reason, look into staying with another family member who might love to have you, like a sibling, aunt, grandparent, etc. While you may feel you are giving up some of your newfound freedom after a care-free college life, you may be surprised to find that the extra money in your pocket outweighs the occasional inconveniences, like having to be home by 9pm so the dog doesn’t wake your parents up, or not being able to host your friends because your grandpa walks around the house in his boxers.
I did end up moving out after almost 2 years, but when I did I found an apartment that was well under my budget and was close to my work, so I wasn’t paying an arm and a leg for gas. I originally looked for a roommate, but the few options I had fell through, so I went at it alone. If living with family isn’t working or isn’t possible, make sure you get a place that supplies your needs and nothing more. My apartment was probably only 400 square feet or less, but it had a living room, kitchen, bedroom and bath. Smaller space = smaller utility bills = more money saved. Plus I got off-street parking and the laundromat was right down the street – what more did I need? If you have the time to look, make a list of exactly what you need and how much you can spend and stick to it!
I MINIMIZED MY TECHNOLOGY
I only just jumped onto the smartphone bandwagon a little over a year ago, and while I don’t regret it, I sure do miss my $30/month phone bill. Having a smartphone means more expenses, and unless you absolutely need it, you can save a heck of a lot of money by going basic. If you have a tablet or iPod, you can access email and the internet at WiFi hotspots, which are practically everywhere these days, and you can go to your public library as well. If you are resourceful, you can do without a smartphone and get along just fine.
When I moved into my apartment, I skipped getting internet and cable. Again, I accessed the web via my iPod and went to the library with my laptop after work. I also never watched a lot of TV to begin with, so not getting cable or satellite was no sacrifice. I’m more of a movie person anyway, so I got Netflix with the discs and paid $8.47/month. Much better on the wallet.
Internet and TV packages are still outrageously priced in my opinion, and getting by without them will save you a lot. Besides, you can get a lot accomplished when you’re not parked in the front of the boob tube. Baking, anyone?
I STUCK TO MY BUDGET
Having a budget is important regardless of your financial situation, but when you are in debt of any kind it is crucial. I can’t count the number of people I know who don’t have one, and because of that are living paycheck to paycheck with tons of debt and no end in sight. While I could write a whole other article about how to set up a budget (and maybe I will at some point!), the long and short of it is that making a list of how much you make each month and subtracting all your expenses will give you the extra money you have to designate to paying off your loans. If this number is in the negative or close to it, you should re-evaluate your expenses to see where you can cut costs. But that’s for another article. Basically, you want to make sure you have extra money left at the end of the month to put towards your loans and also to build a savings (which is equally important – see below).
For me, I had 6 student loans after graduation that totaled about $200/month in payments. I tacked on another $400/month to the principal of my highest interest loan and paid it off fast. After that one was paid, I moved on to the next highest interest loan and paid them off one by one. I budgeted $600/month towards my loans. As my mandatory monthly payments decreased, the extra amount being paid on the loans increased, and it made paying off the loans faster and faster each time a loan was finished.
Having a budget is imperative to paying off your loans quickly. If you don’t know how much extra money you have to play with, you’ll never be able to make additional payments. Know your numbers, make a plan, and stick with it!
I HAD AN EMERGENCY FUND
Just as important as paying off your loans is making sure you have money stashed away in case something major happens, like a hospital visit, car repair, computer replacement, etc. If you don’t have an emergency fund, you may suddenly find yourself with a large bill and no money to pay it, which will then lead to more debt.
In your budget plan, set aside a certain amount of money that goes directly into your savings and stays there, untouched. Financial Peace University suggests starting with $1,000 before you pay off debt, and then working yourself up to a 3-6 month fund (enough money to pay all your bills for 3-6 months) after debt is paid off. I made sure I had that $1,000 in the bank so I felt secure about spending all my additional money on my student loans.
I HAD A GOOD-PAYING JOB
Right out of college I was very fortunate to snag a good paying job with full benefits, even if it wasn’t something I necessarily enjoyed. I sacrificed trying to find my dream job for going debt free. I know many people will say, “You only live once, so make sure you have a job you like!” While I do agree with that statement, I also know that sometimes you have to suck it up and do something you don’t want to do in order to better your future so you CAN have your dream job.
My old pastor had a quote that I love and I still tell myself daily: “Delayed gratification for future greater good.” I feel like this is something most people today don’t understand. We live in a society that wants everything now, now, NOW! If you can do it, do it now! Don’t wait! Life is short! You never know what’s going to happen tomorrow! Nobody thinks about the future anymore.
I suffered through worked at the construction company for almost 2 years so that I could get a good jump start on paying off my debt. While getting a good-paying job is not easy, there are always ways to make extra money to put towards your loans even if your full-time job doesn’t pay well. Part-time jobs, online surveys, yard sales – the options are endless!
I MADE IT MY PRIORITY
This one pretty much sums up all the others – in order to pay off debt fast, you need to make it a priority. Oftentimes you will have more than one goal – pay off debt, buy a car, travel more, save for retirement – and that’s OK! But prioritizing what is most important to you and then building a plan and sticking with it is the key.
Plans change, life happens and there is no way to predict what’s around the corner. But if paying off student loans and other debt is important to you (and it should be!), postponing some of your other goals and ambitions may be in the cards. Just think how much more you can do when you don’t have those monthly payments hanging over your head! All the extra money that can go into your dreams! And how accomplished you will feel when you send in your last payment!
I made my last student loan payment right after I got married, a little over 4 years after graduating from college. It was such an amazing feeling – I was debt free! Going into my marriage with no debt and a mind full of dreams and ideas made me feel that there are so many more possibilities. Now we have bought a house, bought a brand new car, and are planning a couple of epic trips in the coming years. While we do have a mortgage now, we are using a lot of the same strategies in order to reach our goal of paying off our mortgage in 10 years. Life is good!
Which of my suggestions was the most helpful to you? What other things have you done to pay off your debt? Leave some love in the comments!