5 Steps This Woman Is Taking to Pay Off $75,000 in Student Loan Debt

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

And when she got her MBA in 2010, she racked up an additional $15,000 in student loans, increasing her total debt to $75,000.

What’s more, Beth was only earning $35,000 from her first job out of college. A salary that would have been hard for anyone to make their minimum student loan payments.

But Beth was determined to make her payments. In fact, she thought she could do better. As a result, she expects to have her student loans paid off in full by January 2017.

Here’s how she did it.

1. Embrace the debt avalanche method

First, Beth consolidated six federal student loans into one – $25,000 at 6.80% APR.

She also had two private student loans – $39,000 at 3.90% APR and $10,000 at 2.50% APR.

Beth opted for the debt avalanche method: putting as much towards 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 Beth understands the appeal of the debt snowball method – paying off the lowest balance first, so that you see concrete results faster – she found the debt avalanche method offered a similar sense of accomplishment.

“I use the ReadyForZero app, which tells you exactly what your payoff date will be,” says Beth. “Plus, it shows my daily interest going down every day I open it. I see that go down and that’s what keeps me motivated.”

It definitely did the trick.

Beth has already paid off the $25,000 loan and is now focusing on the loan with the next-highest interest.

With just $2,500 left to pay on the $39,000 loan, and $7,000 left on the $10,000 loan, Beth expects to have everything paid off by January 2017.

2. Put yourself on a tight budget, and stay on it

“The whole time I was working on my MBA I lived with my parents and saved up my money,” says Beth. She also worked full-time.

With her first salary at $35,000 a year, her first priority was putting $1,000 a month towards her student loan debt.

Her second priority was allotting herself just $400 a month for her 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,” Beth explains. “When the money was gone, it was gone.”

Beth’s salary has doubled since then. But, she still sticks to the same budget.

The only thing that’s changed is her ability to double up on her student loan payments. Every time she gets a raise, she puts it towards her student loans.

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

Beth also keeps her other debts at a minimum. For instance, when she makes a big purchase with a credit card, she does so with an interest-free offer. Then she pays off the entire balance before the regular interest rate kicks in.

3. Buy a house and get roommates to pay the mortgage

“At first, I was just saving money to pay off the loans,” says Beth. “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. Live where there’s lots of job opportunities and low living costs

“My plan would never work for someone who lives in a big city,” says Beth.

She depends on the relatively low cost of living in Raleigh, North Carolina. She also works in IT sales, and Raleigh is the perfect place to find work as an IT sales rep. 75 percent of IT companies have headquarters there.

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

5. Look beyond your student loans

Once her student loans are paid off, Beth will be free to pursue some of her other financial goals.

While her main focus continues to be paying off debt, Beth bought another house in January. She lives there and rents out the condo.

Once her student loans are paid off, Beth plans to put the extra money towards paying off both mortgages.

Beth is also thinking about buying a new car. However, new to her is really a used car. This is just one of the many ways Beth plans to continue living well below her means.

One area where Beth doesn’t cut corners is her retirement savings.

She contributes more than the minimum to her company’s match of her 401k. She also raises her contribution by one percent every year. When her student loans are paid off, she plans to raise the contribution even more.

“I won’t change my lifestyle too much when the loans are paid off,” says Beth. “You choose what’s important, and this is what’s important to me.”

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Published in Pay Off Student Loans, Success Stories, Tips for Paying Off Student Loans

  • Jacob

    If I magically doubled my salary, I’d be able to pay off my loans too.

    • Beth Walker

      After 8 years, and many raises, yes my salary has doubled… but over 50% of my take home pay was going to my loans since the beginning.

    • Beth Walker

      after 8 years of changing companies and getting new jobs yes, my salary has doubled. Although from the beginning 50% of my take home pay was going to loans…

  • disqus_lkanuY6mnJ

    Great action plan Beth….The issue I see is not everyone can just move in with mom and dad for free–some people don’t have parents, or their home life is an unsafe environment….This seems to be he huge part of your ability to put away thousands of dollars a month during your MBA because your parents had the resources to provide you basic room and board (and am sure more) at a minimum…which then afforded you the ability to just buy a condo one day and essentially use it as an income generator, which is smart.

    However, as real estate professional myself that would much more difficult for say a first generation college grad when maybe their parents didn’t buy real estate and certainly not an income property which basically made you a landlord as well. You’re making complex business and now real estate investments seem ridiculously easy…when they are anything but… Other ideas for people who don’t have your exact living condition? Try harder to think outside yourself…so your tips can be applicable to someone less privileged or even under privileged working their way through college on their own. Many people are less financial and investment savvy that yourself, or even have the ability to learn it on their own if that is what you did.

    • Beth Walker

      This article was written to explain one way of tacking debt and how I accomplished that. I understand that everyone is in different situations and may have had the options that I did. The internet is a wonderful place full of many resources. It is where I learned most all of my investment decisions. Every generation will have different information available to them that the previous did not. For instance, there was no websites or forums out there trying to educate young people on student loans and the impacts that they could have on your life back in 2004 when I graduated high school. If there were, I would have probably made much better decisions about my schooling and the loans I took out.

      The main advice I think that can be universal for anyone is this. No matter how much or little money you make, set a budget and stick to it. I still live off the same budget that I did when I finished college, now 8 years later. That is what will allow anyone to make financial strides, stick to one goal, and stay with it until you accomplish what you are set out to do.

  • disqus_lkanuY6mnJ

    The article and your follow up just really missed the mark for me, but thanks for the reply and defending you positions.