Facing massive amounts of student loan debt can feel like a journey you have to take alone. If you’re patient enough, it’ll eventually get paid off in a decade or two.
But make it a joint effort, and it’s remarkable how quickly the debt payoff process can be expedited.
That’s precisely what Lance Cothern did, helping his wife pay off $80,000 of her own student loans in just three quick years — barely enough time for most people to make a dent in their debt. Through a combination of budgeting, thrifty living, and earning extra income, the couple was able to become debt-free, all while buying two homes in the process.
If you have high student loan debt, keep reading to see how the Cotherns made their success story happen.
Building a budget
By the time Lance and his wife Victoria were married, they had already paid off about $28,000 of her existing debt. That left the couple with $50,000 to tackle.
“Thankfully, I knew this debt was taken on to improve her financial future and wasn’t frivolous spending that quickly spiraled out of control,” remembered Cothern. “Had it been credit card debt, it would have been a completely different story.”
The Cotherns knew that they had no choice but to pay down the debt, but they had a big say in how they would go about it. First, they made a list of each loan and, according to Cothern, the couple decided to pay off the one with the highest interest rate first: a whopping $20,000 loan.
The next step was deciding how they’d get there. Even before they were married, the soon-to-be-wed couple began their plan. They set aside money for a monthly budget that allowed Victoria $50 a paycheck to spend freely. Lance set aside every extra dollar he could get into a special savings account dedicated to the debt.
There were other frugal efforts, like cooking in instead of eating out, combined with a minimalist lifestyle. “We continued to live with hand-me-down furniture and a sparsely decorated home in order to throw as much money as possible toward paying off the student loans,” Cothern said.
Two homes forward, one step back
The Cotherns weren’t without some financial setbacks along the three years it took to pay off the debt.
Victoria underwent two foot surgeries, compelling the couple to dip into their emergency savings. They also managed to juggle the purchase of two homes, which complicated paying down the student loan debt, albeit only slightly.
Cothern described the situation: “The first home I bought completely on my own, before we got married. I had been saving money to eventually buy a home, as well as money to pay down the student loan debt after we got married.”
“An opportunity arose to purchase a townhouse that resulted in a mortgage payment that would have been about half of what we would have had pay in rent for a similar home. That even included insurance and taxes! So, we decided it was the best move and I took some of the money I had saved to buy the first house,” he explained.
Afterward, said Cothern, the couple decided the timing was right to buy a permanent home. Though the 20 percent down payment would have initially gone towards their student loan debt, it was just a slight delay: by renting out the townhouse, it became an extra source of income that inspired more inventive ways of earning money.
A money manifesto
The couple didn’t hesitate to continue their frugal lifestyle if it meant freeing up some cash. But Cothern, an accountant by trade, said the main source of side income came from an unlikely, unexpected source.
“The massive amount of student loan debt led me to read many personal finance blogs,” he said. “After reading blogs for many months, I decided that I had a story that I could share as well.”
The result was MoneyManifesto.com, Cothern’s personal finance blog filled with practical advice on getting out of debt, investing, saving money, and homeownership. “I had no plans to make any money from the site at the time, but it ended up contributing tens of thousands of dollars that we ended up using for house down payments and the accelerated payoff of the student loan debt,” said Cothern.
By March 2014, the Cotherns made their last student loan payment. Totally debt-free, it was a testament to how a little planning and a lot of teamwork can surmount any financial problem if you work towards it.
According to Cothern, the couple’s initial loan payments averaged $700 a month, but in one standout month, they put down more than $10,000.
“Paying off massive amounts of debt is 100 percent possible if you put your mind to it and make things happen,” Cothern wrote on his blog. “If we just sat back, defeated, made the minimum payments on my wife’s debt and made no extra income, we’d still have $700 in student loan debt payments today and every month for at least the next 7 to 17 years.
“I’m so glad that isn’t the case.”
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.44%4||Undergrad & Graduate|
|3.05% – 6.47%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|