After graduating from college in 2011, Kara Perez had $25,302 in student loan debt and no job to speak of.
While she spent her first year after college living with her parents and eventually getting a job as a waitress, Kara started paying back her loans — making double payments at some points.
In 2012, she moved to Austin and continued to work as a waitress. Over the next couple of years, Kara successfully navigated life as an adult, working various gigs and doing her best to manage her student loan debt.
But in 2014, everything changed. Kara found herself struggling to find work. It became too difficult to keep up on student loan payments. Ultimately, she put her student loans into deferment while she looked for a job.
The turning point
“I put my loans in deferment for six months about two years in. I was overwhelmed by my debt, and that was a year I would only make $15,000. It was depressing to think about,” she said.
Kara’s low income was a burden for her and also a barrier to paying back her student loan debt. But making so little money and putting her loans in deferment was also a wake up call for Kara.
“I realized if I didn’t get a serious hold on my debt, this could be the rest of my life. I wasn’t guaranteed an income, but I was guaranteed that debt,” she said.
The ball and chain that was her debt spurred her to action. Realizing she had to do something different to change the situation, Kara committed to getting out of student loan debt once and for all … no matter what.
“When the deferment was up, I sacrificed everything else in my life to make the minimum payments and hustled to generate more cash,” she explained.
Cutting expenses to pay off debt
Once Kara realized she could not continue to live with the weight of debt, she knew she had to do things differently.
She began to cut out unnecessary items in her budget. She cut out spending money on alcohol and restaurants. One month she slashed her food budget down to the bone by eating catering leftovers from one of her side hustles.
In addition, she started walking everywhere in order to save on gas. She also gave up haircuts, clothes shopping, and even Christmas gifts.
“I just totally downsized my life, so I could supersize my debt payments,” she said.
While Kara’s measures may seem drastic, it’s what she felt compelled to do to get out of debt. Living on a limited income, Kara knew cutting back was the easiest way to free up some more cash for her debt repayment.
Hustling to pay off student loan debt
In addition to cutting back on her expenses, Kara knew that in order to really make a dent in her student loan payments, she would need to earn more money.
While paying off debt, she never made more than $32,000 per year and none of her income came from one full-time job. It was all from various gig jobs. Over the past year, Kara has:
- Coached lacrosse
- Worked as a caterer
- Worked in the nonprofit sector
- Performed PA work
- Did social media management
- Worked as a freelance writer
- Drove a van for a high school golf team
For anyone thinking about starting a side hustle, look for Kara for inspiration. You can turn just about any skill or service into a side hustle.
How you can pay off student loan debt on a limited income
Kara was able to pay off $25k in just three and a half years — and during that time, she faced unemployment, student loan deferment, and low wages.
Paying off her student loans wasn’t easy, but she made it happen. In addition to earning extra cash through side hustling and cutting out unnecessary expenses, Kara also had a strategy in place to ditch her debt.
She used the debt avalanche method to pay off her student loans, which focuses on paying off highest interest debt first, while paying the minimum on the rest. Also, instead of making one monthly payment each month, she made several payments each month to cut down on interest.
Once Kara realized she didn’t want to be trapped under the weight of debt any longer, she completely changed her lifestyle and focused on earning more. Through her cost-savings strategies and intense focus, she was able to eliminate all of her debt in a short period of time.
Her biggest tip for people dealing with a low income and trying to pay off debt? “Just commit to paying it off. I was focused on that and nothing else, and as a result, I paid off huge amounts very quickly.”
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