Most of us stuck with large amounts of student loan debt will make some sacrifices to make those repayments more quickly. Maybe you’ll downsize to a smaller apartment, sell some belongings, or lower your cost of living.
If you’re like Aja McClanahan however, you’d kick these changes up a notch.
To reduce her cost of living, Aja and her husband, along with their children, moved to a house where they could stay for free–in a crime-ridden Chicago neighborhood. They went an entire scorching summer without air conditioning just to save on monthly energy costs.
Most importantly, Aja and her family stopped splurging on everything and anything like it was a religion. What’s more, all of these major lifestyle changes got Aja’s family out of $120,000 in student loan debt in about six years.
But here’s the kicker: the whole financial experience made such a profound impact on the McClanahans that the family isn’t looking to return to their former spending habits anytime soon.
Staring $120,000 of debt in the face
In 2007, Aja and her husband Kelvin were saddled with $60,000 in combined student loan debt.
Then their debt doubled thanks to some luxurious “keeping up with the Joneses” lifestyle spending, sending their cost of living expenses sky-high.
“When we got married, it was definitely $60,000, and then after that, we financed a $30,000 car,” Aja says.
Shortly afterward, Aja began financing the expenses for her new business venture all on her credit cards.
“I needed an office, I needed furniture,” she recalls. “I put everything down on the credit card. I was paying [office] rent. It was an unwise way to start a business.”
This failed business venture led the McClanahans further into debt.
The need for a plan
So when the collectors came knocking, the couple knew they needed to re-adjust their priorities and lower their cost of living if they wanted to get back on track.
Both of their daughters were attending expensive private schools with tuitions around $13,000 a year, so the McClanahans knew that their financial status quo wasn’t sustainable.
“Things were very hopeless for us,” Aja says. “We had this big number staring us in the face. But when the number came, the plan came.”
“Bullet holes in the back door”
The family’s plan wasn’t simply finding ways to earn more money, or scaling down their housing costs.
Instead, the McClanahans made what Aja calls a “drastic” choice. The family relocated to Englewood, one of the most dangerous and crime-infested sections of Chicago.
According to Aja, a relative had inherited a house in the inner-city neighborhood. The four-bedroom, 2,000-square footer was already paid off, but they didn’t want to live there. So they offered it to the McClanahans.
“We’re not city kids, we’re not city people, this is a bad idea,” Aja says she and her husband told themselves. “But what could happen in our life with no rent, no mortgage? We could totally demolish our debt. So we moved to the inner city.”
“There were bullet holes in the back door, but we had no mortgage, no rent,” she adds. “We used that opportunity to go in hard on our debt.”
Aja estimates that the 2010 relocation freed up about $1,400 previously used for mortgage or rent payments.
Relocating didn’t come without its share of issues, of course.
It’s not uncommon in Chicago to see central air conditioning units protected in elevated metal cages. That’s because thieves have been known to steal copper and other precious metals to sell. One blisteringly hot summer in 2012, that’s exactly what happened to the McClanahans’ A/C unit.
But instead of charging a new one to their credit card, they simply went without climate control in the 90-100-degree heat. A family friend gave them a small window unit to use in the meantime.
“We’d all pile up in one room, all summer, the whole family, and go to sleep,” says Aja.
Lowering their cost of living
Apart from no monthly energy bill, the family continued living cheap, saving up, and paying down their debt by making small changes to their budget. They would order one meal at a restaurant and split it, or pass on the purchase of paper towels.
Aja also learned how to combine business with pleasure. If a client subsidized a business trip for her, her husband would come along. The travel would turn into a mini-vacation after hours since the couple only needed to pay his part of the airfare.
With this savings plan in place, the McClanahans aggressively tackled their collective debt. It wasn’t uncommon for the couple to make payments upward of $2,000 to $3,000 a month through 2012 into 2013.
By April 2013, the McClanahans had $20,000 in debt remaining. Aja struck a deal with her alma mater forgiving her of nearly $9,000 in accrued interest. Afterward, she owed only her principal of $3,700.
As her cloud consulting business grew, Aja forwarded most of the excess income towards debt payments. By the end of the year, the sale of an old laptop and some vintage silver coins helped finance the remaining $1,600 left to pay.
The family was finally debt free.
A house of cards is “not really wealth”
Aja says that she doesn’t miss the lifestyle she had previously.
Her daughters, who earn their own lucrative income through voice acting and modeling, are now home-schooled.
Aja and Kelvin own cars that are both over a decade old, maintaining a manageable cost of living. Apart from financing a new refrigerator, the family still lives in the same four-bedroom house in Chicago, where solutions — not problems — abound.
“It’s actually worked out because it’s one of those places where a lot of helping hands are needed,” she says. “We do a lot of volunteering and community service to stay plugged into the neighborhood.”
Frequently, Aja gives talks on financial literacy to residents. It’s an extension of McClanahan’s newfound pursuit as a personal finance blogger and expert through her website, Principles of Increase.
Now that the family found its way out of debt, they’ve mastered how to live cheap. But are they really not tempted to go back to comfortable suburban life and the cost of living it entails? According to Aja, it’s a matter of perspective.
“I think you have to get over yourself and realize that outward expressions of wealth, and what you have, is fake wealth, in some cases,” says Aja. Buying and spending for the sake of acquiring more stuff, she adds, is merely a house of cards built on a false foundation.
“It’s not really wealth,” she says. “I don’t care if I drive a 40-year-old car, as long as my bank account is tight. That’s what’s important.”
Light at the end of the tunnel
Aja hopes to encourage people struggling with similar financial problems to dig their way out of debt the same way she did: with a solid get out of debt plan in place.
“So many people ask us, ‘How did you do that? Can you show us?’” Aja says. “I would encourage anyone, someone who wants to get out of debt, to get a plan.”
“Once you get a plan, hope will come,” she adds. “Confidence will come.”
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|1.88% – 5.64%3||Undergrad & Graduate|
|2.50% – 6.85%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.90% – 5.25%6||Undergrad & Graduate|
|1.89% – 5.90%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance 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 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for Navient.
4 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.15% effective Jan 1, 2021 and may increase after consummation.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 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.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
7 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.