Paying off the last of one’s student loans can be the most liberating experience for anyone who’s been acquainted with their debt for years on end. For recent UCLA alum Taylor Milam, becoming debt free meant much more than that.
Milam, who graduated last year, paid down $14,000 of student loans in just seven months by setting goals, cutting back, and making drastic financial concessions.
Not only is her experience one in how to pay off debt faster than most, but it completely transformed Milam’s entire outlook on money, life, and happiness. Learn how achieving “freedom from money,” as she calls it, has led her to help others accomplish the same.
Avoiding the trap of debt
Before Milam earned her undergrad degree, she knew that staying stuck in a cycle of seemingly never-ending debt was something she didn’t want. Growing up, she’d watched her parents take decades to pay off her father’s law school loans, and saw the financial strain it can cause.
“I always knew that I wanted to pay [my debt] fast,” she says. “I never liked the idea of having debt. It’s always stressed me out and felt like a burden; something that could make you feel trapped.”
This notion wasn’t made any simpler by the fact that while a student at UCLA, Milam was living in one of the most expensive areas on the westside: Westwood. She was compelled to support herself for her junior and senior years without a sturdy financial safety net in place.
“My final years of college can be summarized in one word: fear,” she writes on her blog. “Every dollar I spent was excruciatingly painful because I knew there was a finite amount of money in my account, and although I worked three part-time jobs, everything I earned went towards survival.”
Combine that with the responsibility of attending class and keeping her grades up, and living through fear-based finances wasn’t sustainable for Milam. She decided that some changes needed to be made if she wanted to survive, graduate, and get on track to paying off her loans.
An obsessive groove
Milam started by making a bold move — she sold her car just as she’d relocated to San Diego with a new job opportunity. It was a smart financial decision, though, since the early 2000s Volkswagen had been siphoning nearly $500 a month out of her budget for repairs and maintenance.
To get around San Diego, Milam biked and used rideshare and rental services like Uber, Car2Go, and Lyft. She limited how often she dined out. And she continued the trend of living as a poor college kid, even though she had a full-time income working in media relations at a major university. (All this without refinancing or consolidating her loans.)
According to Milam, it was costing her nearly $6,000 to maintain the car. Now, she bikes, uses public transportation, grabs an Uber, or rents a vehicle when she needs it, saving her an annual amount of roughly $3,000.
She also rented clothing from several online boutiques instead of buying, which saved her nearly $1,100 for the entire year. Previously, she had an annual wardrobe budget of $1,800.
And between a Netflix subscription and frequent trips to the library, renting entertainment options cost her just $108 for the year — nearly one-sixth of what she’d normally spend to buy books, movies, and cable TV subscriptions.
Though she deliberately kept money tight, Milam calls it an “obsessive groove” that began working to her financial advantage. Once she got the frugal ball rolling, she was freeing up $2,000 per month to put towards her student loan repayments.
She didn’t give up on her priorities and non-negotiables, however, and continued to spend on what was important. Though it would have saved her $300 per month, Milam chose not to take on another roommate. She also continued to make regular out-of-state visits to see family and socialize with friends.
“My main goal was to create a sustainable plan that didn’t feel painful or miserable,” she explains, “and I think it helped me to speed things up and remain focused.”
Learning how to pay off debt faster
By April, just over six months from making her first student loan payment, Milam was done, free of $14,000 worth of debt. Comparatively speaking, that’s a blink of an eye for most people, who won’t have even begun to scratch the surface of their debt —much less pay off thousands of dollars — at that point.
Achieving such a major goal might compel some folks to go out on a spending spree or revert to a lush lifestyle. But for Milam, the experience of cutting back, paring down, and tightening her belt led to a new, enlightened attitude about money.
She discovered how to pay off student loans quickly, and learned what’s possible with a creative mind and a disciplined approach. But there’s another important lesson Milam says she learned: Being debt free — and having more money in one’s hands — won’t create (or buy) happiness. She says she owes her student loan experience to dispelling such notions to the contrary.
“It was a really weird experience emotionally to be done,” Milam says. “I think I had placed so much importance on becoming debt free. Your life is still the same, you have the same job, you have the same partner, you have the same friends. It’s not a magic potion that will fix your life. It’s something I’m proud of, but it’s easy to think that once you achieve a certain goal that your life will be so much easier.”
She adds, “I’ve definitely learned that money should never be the goal. It’s a tool.”
It was such a valuable tool that Milam started blogging about the experience on her site, The Freedom from Money, where she shares what she’s learned, and more importantly, how it reshaped her view on money and life.
One point that Milam likes to impart to her readers is to be happy with what they’ve got. Too often, we may desire what other people have, but once that goal is reached, it creates a vicious cycle of never being satisfied.
“One thing I’ve learned is that once you’re done with the goal, there’s something else,” she says. “I think you can get into that mindset, that ‘You can sacrifice today for tomorrow.’”
Her advice to others is to not make that mistake — but don’t stop living your life as you learn how to pay off debt faster.
“Taking care of yourself is important,” Milam explains. “It’s important to not stop living your life, and finding happiness and creating happiness while you’re on your debt journey.”
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 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% 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|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|