Graduating from college with $87,000 in student loans might not seem so bad when you’ve got a law degree and a promising six-figure starting salary right within your reach.
So when attorney Kevin, aka the Financial Panther, landed his first job at $110,000, tackling his student loan debt wasn’t so much a matter of affording the payments, but resisting the urge to let the money go to his head.
“When I started working, I was fortunate enough to get a good job, but I didn’t want to fall into this trap of buying all this stuff and living like a bigshot lawyer, living a lifestyle like many of my classmates and colleagues did,” Kevin explains.
“Everyone falls into that trap. The first thing they do is go and get themselves a fancy apartment in a cool part of town. They’ve got this nice car and their money is going to everything except student loans.”
So what did he do? Kevin didn’t pressure himself to present an outwardly lavish image. He buckled down, doubled up his loan repayments, and even took on some creative side hustles, parting ways with his debt after only two years.
It’s hard to manage the immediate transition to a well-paying career after years as a starving student. Imagine the stuff you could buy and the status you could outwardly present — all before turning 30.
When Kevin earned his degree in 2013 at age 26, he was tempted to make his student loans a lower priority simply because his new, lucrative job as a corporate litigator could easily buy all the trappings of success.
“I think it’s true for all high-earning professions,” he says, “that you’ve been deprived for so long, living like a student, and then all of a sudden, you’ve got that paycheck.”
But Kevin immediately observed what that type of foolish spending did to some of the veteran attorneys in his circle. They’d disposed of most of their income and were stuck paying down their student loans for years on end, in jobs they were no longer passionate about.
“These were people who were still paying their student loans off,” Kevin says. “They don’t like the job, but they have to stick it out because of the paycheck.”
According to Kevin, his monthly payments weren’t even that high — roughly $1,000 a month, about 11 percent of his attorney take-home pay. Though comfortably manageable, that wasn’t enough for Kevin.
“I didn’t want to be the normal young lawyer and take 10 years to pay back my student loans,” he writes on his blog.
“There was an opportunity to do something great with this newfound income … A time will probably come when your job is the worst thing in the world, and I didn’t want to be forced to have to stay in a job I hated because I needed the paycheck to keep up my lifestyle.”
The plan: Treat salary as windfall
Kevin looked at his long-term goals. He wasn’t happy at his then-current job and had his eye on a more fulfilling, albeit lower paying, opportunity.
For the time being, he fully intended to treat his high income as a windfall — a temporary boost of revenue that wouldn’t be around forever, so he needed to make it count.
His first step relied on this mantra: “Even though you can afford it, you shouldn’t buy it.”
Not wanting to squander his income, he dialed back his spending to only the necessities. With his fiance, they split the rent on their modest Minneapolis apartment. Kevin also began using budgeting apps like Mint to balance his finances, manage his expenses, and stay on top of his loan repayments.
By mid-2015, Kevin also refinanced and consolidated all eight of his federal loans through SoFi, cutting down his original interest rate of 7.9% down to 4.3%.
Swinging those side hustles
To further accelerate his debt payoff, Kevin took on several side hustles. He started earning extra cash by dogsitting through sites like Rover. Already a dog owner, caring for one or two additional dogs wasn’t too much of a burden.
Kevin also began making food deliveries on his bike and renting out a spare guest room via Airbnb. Selling trash finds also netted him a good amount of extra money to put towards his loans.
Living in a college town, Kevin searched for discarded items in between semesters, when students would throw away items of value that could be resold. In his first year alone, Kevin earned more than $1,000 just from selling found items on Craigslist or OfferUp.
Through dialing back his spending, refinancing his loans, and mustering side-gig money, Kevin was able to double his payments, and in the final stretch, triple them. This summer, just over two years after graduating, he was done with his entire $87,000 debt load.
On an episode of The Simpsons, Marge suggests to Homer that they consult a financial planner, but Homer mishears it as financial panther, picturing a large black cat mauling a banker.
For Kevin, the cartoon resonated and Financial Panther, his blog, was born. The effort: Teach people how to aggressively maul their debt, save money, and come out financially solvent.
His first piece of advice to anyone facing student loan debt is to start planning early, and expect to make concessions if paying off your loans is something you want to do quickly. Don’t wait, he says — start in your 20s and make 30 your goal to be debt-free, if possible.
“If you’re young, most people aren’t living super baller,” he says. “It’s a good time to really get rid of your debt.” But he notes, ”You’ve got to really plan it out. You’re not going to accidentally get out of debt. That’s not going to happen.”
Kevin encourages his readers to start educating themselves on ways to build wealth in the long term. Investigate the best tax-advantaged investments, like a Roth IRA or 401(k), he says, and get to know your loans: what types they may be and the terms, interest rates, and payment options.
But most of all, he advocates for a frugal lifestyle, regardless of your income. The proceeds from the sacrifice can be used to pay down debt now, freeing up your future income to save and spend debt-free.
Even the most upwardly mobile professionals may encounter fluctuating income or extenuating circumstances over the years. Facing them without the responsibility of student loan debt can better prepare you for whatever life may bring.
For Kevin, this reduction in income was deliberate. Once he paid off his debt, he took on another job as a government attorney where he earns $50,000 less than he did previously. But that was the point: A higher salary doesn’t always equal a better job.
By taking advantage of a well-paying job and scaling back, he was able to pay down his debt, giving him the freedom to pursue whatever opportunities he wanted without being chained down by his student loans for years on end. Now, although he earns less, he has zero debt and a challenging career opportunity.
Kevin advises readers to ask themselves what they really care about.
“The more stuff you get [and] the more things you buy, the more you’re forcing yourself to make a certain amount to cover the things you’re buying,” he says. “Once you’re used to living on less, it’s a good idea to do that forever. You never know what the future will hold.”
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
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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 firstname.lastname@example.org, 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
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed 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.
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% – 6.97%1||Undergrad & Graduate|
|2.56% – 7.30%3||Undergrad & Graduate|
|2.68% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|