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?
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