A few weeks ago, I did something I’ve been dreaming of for years but hardly thought was possible: I made my very last payment on my student loans.
After seeing the balance at zero, I was hit with a flood of emotions — relief, joy, and disbelief.
My journey into student loan debt started innocently enough at age 17 when I headed to college. Loans were my only option to pay for school, so I signed up without flinching, not truly knowing what I was getting into.
I graduated with my B.A. and had $23,000 in student loans. Over the next few years, I paid the minimum. Then I decided to go to graduate school.
I knew more about student loans this second time around, but I still ended up going to graduate school at my dream school and taking on an additional $58,000, making the total amount borrowed $81,000.
How to Pay Off Student Loan in 5 Years
When I graduated in May 2011, after paying the minimum on my loans for five years, I had $68,000 left. In December 2015, I made my very last payment. Here’s how I did it.
I Moved to a Cheaper Location
I went to graduate school in New York City and absolutely loved it. But when I graduated, I couldn’t find consistent work. After six months of giving it my all, I realized I couldn’t afford my rent in NYC and make sufficient payments on my student loans.
I could have opted for an income-driven plan, but I considered it a last resort since I knew interest would keep accruing. At the time, my loans were already generating $11 in interest per day — and it made me sick.
So I ended up moving to Portland, Oregon to be reunited with my partner (after doing long-distance for nearly two years, which also isn’t cheap) and lower my rent. In fact, I cut my rent in half.
I Side Hustled Like Crazy
Portland proved to be more affordable in a lot of ways, but wasn’t great for my employment situation. I continued to struggle, making $10 to $12 per hour for a year and a half.
I could pay my bills, but was dipping into my savings to continue to put more towards my debt. I knew I didn’t want to completely wipe out my savings, so I began to side hustle every chance I got.
Over the past four and a half years, I have:
- Sold water at a rave
- Participated in a medical study
- Worked as a coat checker for a party
- Worked as a brand ambassador (which increased my income by $5,000 per year with a few gigs per month)
- Worked as a housecleaner
- Worked as a pet sitter
- Worked as a registration assistant for a race
Since I didn’t have full-time work, I made my job finding work. Weekends and holidays were especially lucrative, and Craigslist and TaskRabbit were my best friends.
I would venture to say that I’ve worked the majority of weekends and holidays for the past four years. At certain points, I was so tired and sick of working, but the dream of being free of my debt kept me going.
I knew I didn’t want to spend one more day than I had to with the burden of student loans. To me, student loans felt like a ball and chain, holding me back from everything I wanted to accomplish.
Although it seemed never-ending at the time, I can now say that working so hard was worth it. It wasn’t always glamorous and it wasn’t always fun, but it helped me pay off student loans even faster.
I Lived Like a College Student
I’m 31 years old; many people my age are “settling down” with houses, new cars, and little ones on the way. There’s absolutely nothing wrong with that and it seems like a natural progression in life. However, I knew if I wanted to make debt repayment my priority, I had to continue to live like a college student.
I focused on the big three expenses first: housing, food, and transportation:
- My partner and I live in a small studio apartment together (it’s romantic!).
- I don’t have a car and mostly bike or walk everywhere.
- I limit my food expenses by buying fewer packaged foods and cooking instead.
In addition to the big three expenses, I also said no to having pets, cable, clothes, makeup, a gym membership, and most other luxuries.
That’s not to say I had no fun — I still budgeted for some travel and restaurant outings, as I believe it’s important to have some fun and rewards while paying off debt, or else debt fatigue will set in.
I Quit My Job
Now, this is not a standard tactic I would recommend for most people. But quitting my job and starting my own business was one of the best financial decisions I made.
After a year and a half in Portland, I eventually found a full-time job paying $31,000. I was ecstatic about a nearly $10,000 raise over the year before, plus benefits. At the same time, my side hustles became more specialized. I started freelance writing on the side, managing social media and more.
Though there was a huge learning curve for managing my own side business, I started to see that it could potentially be more lucrative than my full-time job at a nonprofit. And having been a longtime nonprofit employee, I knew the probability of me making much more was small.
So after I built up my client base and was making at least what I made at my day job, I quit my job and struck out on my own. It felt like a huge risk at the time, quitting my steady job when I had so much debt.
But a funny thing happened when I quit my job. My mindset shifted and I was determined to make it work. I would not fail and I would make sure that I made more than my day job, so I could pay off student loans.
It didn’t happen overnight, or easily, but after six months of trial and error, I started making more money than I ever had. After a year, I more than doubled my income.
I had always put roughly 50 percent of my income towards debt. When you’re making $31,000 before taxes, that’s not a lot. After quitting my job and doubling my income, I was able to put $30,000 toward debt this year alone.
Many people in personal finance extol the virtues of cutting your expenses. I think that’s one important part of personal finance, but there’s only so much you can cut back on. You’ll always have some expenses. I found that earning more — even if it required more “work” — was far more fruitful for my debt payoff efforts and helped land me a new career.
Now that I’m debt-free, I plan on replenishing my savings, some of which I used to help make the last payment and get laser-focused on investing. I also plan to enjoy more travel.
Want to Pay Off Student Loans?
I know just how hard, long, and annoying the debt payoff process can be, but here’s my advice:
- Know that being debt free is possible, even if it doesn’t happen overnight.
- You have to change your lifestyle.
- Paying off debt is a lot about mindset and not just money.
- You have to always remember why you’re doing it (for me, it’s freedom and travel).
- Don’t beat yourself up over debt — we all make mistakes, some months are better than others.
- You have to be ruthless about your goals — what you’re willing to spend money on and what you’re not (and some people may not agree with you/be offended by it, and that’s okay).
What strategies have you used to pay off student loans?
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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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|