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.”
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 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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 firstname.lastname@example.org, 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|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.44%4||Undergrad & Graduate|
|3.05% – 6.47%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|