How This Math Teacher and His Wife Paid Off Student Loans With Help from Fantasy Sports Winnings

 August 15, 2019
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For every household with a “man cave”, a cable package and an obsessive fascination with touchdowns, home runs and three-pointers, there’s typically a partner with mounting frustration.

But imagine if the all-consuming sports habit helped end the family’s student loan debt.

Meet the Johnsons. Nick and Elizabeth were staring at nine federal student loans soon after getting married.

Sure, they adopted common debt-cutting strategies when they got serious about ending their debt in January 2016. But they also received an unlikely assist in repayment: several thousand dollars’ worth of fantasy basketball winnings that helped end their debt once and for all.

“Our final payment is pending now,” Nick said. “$36,000 in 38 months, and we couldn’t be happier that they are gone.”

Snowballing student loan debt

Nick avoided education debt up until his senior year at Kansas State University, in part by living at home with his parents and putting his part-time job earnings toward his tuition.

“But in my final year, I couldn’t work because I was student teaching,” he said. “I needed a loan to get through the year.”

Elizabeth, on the other hand, had borrowed $27,585 and when she met Nick, she was only paying the minimum.

They both benefited from qualifying for Direct Subsidized Loans that are interest-free while in school, during post-school grace periods, and with other deferment periods. Elizabeth received a deferment — or postponement of loan payments — on two occasions for one of her subsidized loans, for example.

When the Kansas State grads got serious about repayment in January 2016, Elizabeth and Nick — by then, a public school math teacher — started tracking their spending using EveryDollar. They refrained from unnecessary purchases like new clothes, video games and dinners out, while also putting off fixing their microwave, for instance.

Nick also took on summer side hustles like painting houses and coaching and umpiring sports, while Elizabeth babysat and sold haircare products (which she still does).

For their repayment strategy, they chose the debt snowball method, generally attacking their lower-balance loans before progressing toward larger ones, even if those bigger loans sometimes had higher interest.

“Oddly enough, we went against math a little bit,” said Nick, who taught algebra, geometry and trigonometry to eighth- and ninth-graders. “Math would say to pay down the highest interest rates first to maximize the savings, but we thought it was more important that we have momentum on our side.”

Loan Original balance Interest rate Payoff date
1. $1,600 5.00% 02/24/2016
2. $1,300 5.00% 05/23/2016
3. $1,500 5.00% 05/23/2016
4. $3,500 6.80% 08/01/2016
5. $5,500 4.66% 10/19/2016
6. $1,685 6.80% 07/24/2017
7. $5,500 3.86% 04/24/2018
8. $5,500 3.40% 07/02/2018
9. $7,000 3.86% 02/08/2019

“Each time we got rid of a loan, it was a boost to our confidence,” Nick added. “Early on, we were getting rid of loans very fast and dropping our minimum payment. That slowed down a bit as the loans got bigger and bigger, but it was almost like a ‘Why quit now? We’ve come so far’ sort of feeling at that point.”

Gaming the end of student loans

As the Johnsons rolled their way through smaller loan balances, they became more and more motivated to reach the finish line — so much so, that they once made a $2,500 monthly payment on one loan.

“That was a little scary,” Nick said, “but we trusted that it would be the right move.”

Their final payment of about $2,000 — and the celebratory family vacation that followed it — was financed by Nick’s fantasy sports winnings. In February of this year, he snagged his biggest prize yet, a $3,250 pot in a daily fantasy NBA tournament on DraftKings. It’s among a few companies that offer online jackpots in exchange for nominal entrance fees to single-day gambling events.

“I was actually in the middle of a really cold streak and was considering taking a break, but I decided to play (that night) anyway,” he said. “My wife and I were sitting there watching the Spurs-Warriors game, talking about how our debt would be gone if I could finish first.”

Earlier in the day, Johnson had frantically made last-minute adjustments to his lineup in the wake of a Chicago Bulls-Washington Wizards trade. Then he found himself rooting against a particular player — the Spurs’ Davis Bertans — started by a DraftKings competitor.

“When the game finally ended and I was in the lead, it was surreal to know that our debt would be gone,” he said. “We could hardly sleep that night we were so amped up from the win.”

What strategy could send you to the top?

For Nick, who started crashing his dad’s fantasy football league when he was 10, combining his passion for math and his interest in sports was a veritable win-win. It charted a path for his family’s student loan repayment and even led to his new job: He’s now the chief operating officer at a daily fantasy sports website.

But like all forms of sports gambling — and that’s what this is — no one wins all the time. Johnson estimated he’s “played” $2,000 worth of daily fantasy games in nearly three years of using DraftKings.

“Some days, I am good, and some days I’m very bad,” he said.

Even if you have a great case of beginner’s luck or have Rain Man’s mind for sports betting, consider:

  • You can’t guarantee you’ll win more than you lose. Unlike earning a salary and socking it away to yield interest, gambling your cash is risky practice and could become addictive. You wouldn’t want a hobby to add to your debt instead of helping you to repay it.
  • Your earnings are reported as income and are taxable. Johnson won’t keep all of his fantasy sports winnings, as he expects to fork over $500 to $600 in taxes. DraftKings requires users to upload IRS Form W-9 before withdrawing winnings. You would also have to file Form W-2 G to report it.

Simply put, gambling isn’t the way to go for your student loan repayment.

“I know that not everyone is as fortunate as us to have extra money each month, but there are ways that you can maximize what you do have,” Nick said.

For example, you might apply more practical strategies, such as taking a personal interest and turning into a small business. Elizabeth sells haircare products while being a stay-at-home mom. Nick also used his interest in sports to coach football at the school where he taught. These side hustling strategies brought in money risk-free.

Even for the Johnsons, the spoils of fantasy sports was a bonus, nothing more. They relied on cutting costs and increasing income, pairing their new and improved budget with the snowball method. Ultimately, they also relied on each other.

“We weren’t going to let life changes scare us into playing it safe and just paying the minimum on our loans,” Nick said. “My wife was my coach, my MVP and my hero throughout the whole process.”

The information in this article is accurate as of the date of publishing.