5 Steps This Woman Took to Pay Off Nearly $75,000 in Student Loan Debt

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This report was originally published Aug. 15, 2016.

When Beth Walker graduated with her bachelor’s degree in 2008, she had $60,000 in student loan debt.

And when she got her Master of Business Administration (MBA) in 2010, she increased her total to almost $75,000 in student loan debt.

What’s more, Walker was only earning $35,000 a year from her first job out of college. But she was determined to make her payments. In fact, she thought she could do better. As a result, she made a plan to pay off her debt in January 2017. Here’s what she did.

  1. Embraced debt avalanche method to pay off almost $75K loan
  2. Put herself on a tight budget — and stayed on it
  3. Bought a house and got roommates to help with mortgage
  4. Lived where there were job opportunities, low living costs
  5. Looked beyond her student loans

1. Embraced debt avalanche method to pay off almost $75K loan

First, Walker consolidated six federal student loans totaling $25,000 at an APR of 6.8%. She also had two private student loans — one for $39,000 with a 3.9% APR and another for $10,000 with a 2.5% APR.

She opted for the debt avalanche method, putting as much toward the highest-interest loan as possible while paying the minimum on the other two. That means she started paying off the $25,000 loan first.

Though Walker understands the appeal of the debt snowball method — paying off the lowest balance first so that you see concrete results faster — she found debt avalanche offered a similar sense of accomplishment.

Walker used the ReadyForZero app (which has since shut down) to determine her payoff date and see her daily interest. If you’re looking for another app, you could consider Mint, Debt Free (iOS) or Debt Payoff Planner (Android).

Once Walker had paid off the $25,000 loan, she began focusing on the loan with the next-highest interest. With just $2,500 left on the $39,000 loan and $7,000 on the $10,000 loan as of mid-2016, Walker aimed to pay everything off early in 2017.

2. Put herself on a tight budget — and stayed on it

“The whole time I was working on my MBA, I lived with my parents and saved up my money,” said Walker, who worked full time.

With her salary at $35,000 a year, her first priority was putting $1,000 a month toward her nearly $75,000 student loan debt. Her second priority was allotting just $400 a month for basic living expenses. Whatever was left, she put toward her savings.

“If I didn’t have enough money for something I wanted to do, then I just didn’t do it,” Walker said.

Sticking to a budget requires discipline, but Walker noted that it is essential to pay down debt in a timely manner and avoid additional interest charges. And even as Walker’s salary had doubled as of mid-2016, she still stuck to the same budget.

It’s easy to spend more money when your salary doubles, but you need to commit to not getting in additional debt or spending your increased salary on unnecessary expenses. And for Walker, the only thing that changed was her ability to double up on her student loan payments — every time she got a raise, she put it toward her student loans.

“I live paycheck to paycheck, but it’s a choice because I have goals I’m focused on achieving,” she said.

Walker also kept her other debts at a minimum. For instance, when she’d make a big purchase with a credit card, she does so with an interest-free offer. Then she’d pay off the entire balance before the introductory interest rate ends.

It can be tempting to buy a new car or go on a fancy vacation once your student loans are paid off, but by sticking to a tight budget and making a conscious choice to avoid more debt, you’ll be able to pay off your existing loans quickly and save money for your retirement.

3. Bought a house and got roommates to help with mortgage

“At first, I was just saving money to pay off the loans,” Walker said. “And then one day I just thought, I’m going to buy a house.”

While still living at her parents’ house — and without breaking the bank — she bought a condo. Then she got a couple of roommates to help cover most of the mortgage.

4. Lived where there were job opportunities, low living costs

To keep her plan in order, Walker depended on the relatively low cost of living in Raleigh, N.C., to help, though she did acknowledge that “my plan would never work for someone who lives in a big city.”

In mid-2016, she was employed in IT sales, and suggested that North Carolina’s capital was a perfect place to find work as an IT sales rep.

“I know it’s a big deal to make a big move, but look at the cost of living in your area,” she said. “Would there be better job opportunities someplace else, where you could also live so much cheaper?”

5. Looked beyond her student loans

Once her approximately $75,000 in student loans were to be paid off, Walker would be free to pursue some of her other financial goals.

But while her main focus continued to be paying off debt, Walker bought another house in January 2016 and lived there while she rented out the condo. After paying off her student loans, Walker planned to put the extra money toward paying off both mortgages.

She was also thinking about buying a new car — well, a used car. This was just one of the many ways she planned to continue living below her means.

One area where Walker wasn’t cutting corners is her retirement savings. She contributed more than the minimum to her company’s 401(k) match, and has also raised her contribution by 1% every year.

Back in 2016, Walker vowed to stay on that same track, even after she’d reached her goal: “I won’t change my lifestyle too much when the loans are paid off. You choose what’s important, and this is what’s important to me.”

Indeed, her extreme financial discipline allowed her to pay off $75,000 in student loans. She crushed her debt by sticking to a budget, living with relatives to avoid additional housing costs and eventually buying a home and renting it out to help with the mortgage.

Other ways to earn extra cash

Beyond the tips Walker provided, you could consider other ways to earn extra money to pay off student loans or debt.

Take Marie Kondo’s advice and declutter your home, but take it one step further and sell your items for extra money. Consider putting your items on eBay or Craigslist, whether that’s a bicycle or comic books.

Another way to earn extra money is to become a landlord or property manager. If you are able to purchase a home or condo and rent it out, you can make a substantial amount of additional money. But before you become a landlord, you’ll want to make sure the amount you make each month covers the mortgage and provides enough extra money to put toward your loans.

Lastly, consider taking on a side hustle. Like photography or music? Consider becoming a wedding photographer or DJ on the weekends. You can also look for part-time jobs with perks or benefits that will save you money. For example, if you work at a restaurant, you may get a discount on food or even a free meal. The money you save could go toward your student loan payments.

The additional work now will not only help pay off your loans more quickly, but it will pay off in the future if you’re living a debt-free life with little to no financial stress.

Sage Evans contributed to this report.

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Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

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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.

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Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.15% effective Jan 1, 2021 and may increase after consummation.

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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.

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As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.

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  1. Student loan Refinance: 1. Fixed rates from 2.99% APR to 6.99% APR (with AutoPay). Variable rates from 2.25% APR to 6.53% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.12% plus 2.38% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The discount will not reduce the monthly payment; instead, the interest savings are applied to the principal loan balance, which may help pay the loan down faster. Enrolling in autopay is not required to receive a loan from SoFi. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score.Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

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Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.