When Jen Smith of Saving With Spunk finished her master’s degree in 2012, she walked away with $61,000 in student loans, after interest ballooned her balance. But while her debt exceeded her income, Jen was motivated to pay it off as fast as possible. With an aggressive repayment strategy, she was able to pay off $53,000 of her loans in just one year.
Coming to terms with her debt
Like many people, Jen was overwhelmed and stressed out by her debt.
“My loan balance was more than I made in a year,” says Jen. “I couldn’t see a light at the end of the tunnel. It was hard to be focused because the debt seemed so big.”
But after she got married, her husband convinced her to work towards paying off the debt early. At first, Jen was nervous about the idea. She was afraid to give up her freedom to accelerate debt repayment.
“I didn’t want to live under a rock for five years while we paid off debt. It took me some time to think about it and analyze it. But I realized that paying off the debt faster was the best choice financially for what we wanted to do in the future.”
Creating a plan
Jen was ruthless in coming up with a strategy to pay down her loan balance. She realized that if they stuck with their plan, they could put more than half of their joint income towards debt repayment. In fact, they ended up putting 60 percent of their earnings towards their student loans.
She created a detailed budget, and she and her husband rented a cheap apartment to cut down on living expenses. They cut out extra spending by meal planning and buying used versus new.
“But the number one thing we did was take on as many extra jobs as we could,” says Jen.
Jen’s husband took on a number of odd jobs. Around the holidays, he decorated people’s home with Christmas lights and stuffed newspapers with advertising inserts.
“The first day he was covered with paper cuts, so he went back on day two with gloves,” says Jen.
Jen is a full-time acupuncturist, but she was contacted by a rehabilitation facility to provide her services two days a week at $75 an hour. That turned into an extra $600 a month they could put towards their debt.
Jen’s favorite side gig was babysitting at a group home for foster children. She assisted the house parent and took the kids out for excursions. This side gig provided extra income, but it also fueled their desire to adopt foster children and kept them motivated.
Staying the course
To help keep themselves focused on debt repayment, the couple got creative. They became mystery shoppers, so they could eat out or try out local events and get reimbursed for whatever they spent.
“It wasn’t a source of income, but it provided free dates,” says Jen.
And as a visual person, Jen needed something she could see every day to remind her of her goals. She created a giant thermometer that they put by the thermostat. They would color it in whenever they made a payment, to show how much progress they made.
Their hard work paid off; in just one year, they paid off $53,000 of debt.
With her debt nearly gone, Jen expects her loans to be paid off this year. That will free up money for her other goals, such as traveling internationally and buying a home.
“We want to buy a fixer-upper. I like the idea of doing the repairs ourselves and creating the home we want.”
With that new home, Jen hopes to one day adopt children in the foster care system. The house she plans to buy will have space for her to provide a home and family for kids.
Paying off student loans
Jen knows what it’s like to feel like you’re drowning in debt, but she urges people to tackle the problem head on.
“When you’re starting out, it feels like you’re facing a huge dam. You can’t see the effect of your efforts just yet,” says Jen. “But if you stick with it, the dam will eventually crack and your hard work will snowball on itself. Keep plugging away – every little bit helps. Then you’ll look back and realize just how much you accomplished.”
By putting extra money towards your loans, you can take off years from your repayment period and save yourself hundreds or even thousands in interest payments. Putting just an extra $10 or $25 a month can make a big difference over time.
To find out how putting even small amounts towards your loans can help you pay off your loans early and save money, check out our prepayment calculator.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|