Student loans get a bad rap. Yes they can set you up to fail at net worth, but they are not the worst thing in the world. I graduated from college strapped with debt but I also had a degree and was able to get out from under the “life-sentence” that everyone treats student debt as. I paid off my $30,000 student loans in less than 5 years within graduating, and I didn’t do it conventionally. My student debt payoff plan evolved from nonexistent to so passive that I didn’t even realize it was happening.
Honestly I’m a little shocked to have pulled it off, which is why I had to share my story and offer insight.
To make matters worse, in those 5 years I turned down “good” jobs and experimented with commission-only gigs. I traveled to Europe (a few times) and ultimately moved there when I snagged a husband. We had a baby, bought a house, and lived on my one small income with my husband in school.
I did all of that before I turned 27 and I paid off all of my student loans in that same time.
Getting into student debt
There’s a ton of anti-debt disclaimers these days, but either I missed those or they weren’t around when I was applying for school. I only remember being pumped up with statistics surrounding income of high school v college grads. So I thoughtlessly checked the box agreeing to student loan “terms of conditions” in early 2008.
My timing wasn’t awesome, and during my college career I watched my state scholarship awards dwindle while tuition rates crept up and salaries became stagnant and crazy competitive. But I wanted to go to college. I love school and I really wanted to move out of my house, and taking out loans was the only way that was going to happen.
Those were my circumstances and I honestly can’t complain, because I paid off all of my debt without sacrificing living life.
Finding work after college
Erin Lowry from Broke MillennialBroke Millennial advises you take any job that is legal and will pay you. That is solid advice for anyone, but it wouldn’t have worked on me.
The easiest way to build wealth and get out of debt is with a job. But I was so afraid of missing out on the perfect opportunity if I took a job I wasn’t in love with. I was willing to take my time and test the waters.
Since student loans are deferred for 6 months after graduation, I had until late October to score something. Anything! But I didn’t want to get trapped in a job I knew I’d be desperate to leave.
Then I moved back home after graduation and it suuuuccckkkkkedddd. You can say I was desperate to gtfo, just like before I went to college, but I was still so damn starry eyed and blissfully ignorant.
Despite witnessing a full blown recession over the previous 4 years, I thought my skillset would seep through in my resume and I would have awesome offers coming my way. That was not the case. Still, I bombed interview after interview and rejected a good accounting job that I knew I would hate and I did it with a sunny disposition.
My standards were high but I wasn’t living a life of luxury at my childhood home so my positive outlook was going south in a hurry. In my mind, I had earned a higher than average salary and a cool role. By the end of July, my standards dropped a little lower after every “we’re pursuing other candidates” email.
Paying off debt with low income
My first 3 jobs after college we’re part time. I bounced from one to the next, making between $15/hour and $8/hour. In that order.
Yes I downgraded my pay, but my priorities at that time we’re more focused on the dude I had just met and racked up credit card debt for when he was shipped overseas with the Army.
I was completely aware of my impending student loan payments, but they weren’t going to stop me from living my life. So I charged a flight to Oktoberfest 💁♀️
I paid that $1500 trip off in less than 3 months, and this wasnt my first rodeo with credit card debt (although it was the highest balance I ever held). I had legitimate experience paying off debt, but still hadn’t wrapped my head around how much nearly $30 grand was (and how fast it was growing).
Over the next 1.5 years, I made minimum payments on 2 separate loans. $75 and $279.
My measly $8 job barely covered the two payments with one paycheck, and I had to cover my cell phone bill and bi-annual car insurance payments too.
I had less than $100 every month after all my bills were paid, and that was just enough to forget about missing my boyfriend and being broke over dollar draft beers.
Lowering those payments sounded like the next best idea, and luckily that was an option! So I dug into the idea and searched for the fine print.
why a new repayment plan wasn’t for me
The traditional payment plan that borrowers are assigned was not ideal for me. I had so little money leftover, so the thought of restructuring my plan was tempting. You are offered a chance to lower the monthly payments amounts, but after reading the fine print it turned out to be what I considered a scam.
They offered to lower my monthly payments in exchange for limiting the amount I could pay on them. So if I stumbled into a pit of $30,000, I wouldn’t be allowed to pay off my student loans. Not without a penalty.
Despite my desperation, I wrote off the option of lowering my monthly minimum payments. That was the first time I really wanted to pay those things off.
I forfeited the opportunity to save money every month in exchange for the opportunity to pay them off in one lump sum (or, more realistically, several medium sized lump sums).
Rule of thumb: Always pay extra principal
At this point, I was already used to being broke 🥴 and ignored the finance degree I paid for with these loans and embraced blissful ignorance. Then one day I got sick after accidentally catching a glimpse of my payment breakdown.
MOST of my minimum payments were going towards interest. Well over half of the $350 I was shelling out was alllll interest. The interest had been accumulating since I took out the loans, years before.
That’s how it goes, but I guess I skimmed past that part. That’s the reason why student loans are so horrendous. Kids are able to take out loans and accumulate interest for years before ever being expected to make a payment. Even Rooms To Go will let you be interest free for a year, or something awesome like that!
So needless to say, I was pissed and hellbent on getting out from under my debt. I spent every spare penny on extra principle and made a ton of sacrifices.
The sacrifices I made
Less than a year after graduating and less than 6 months after meeting this guy we tied the knot. As untraditional as possible.
Now I’m sure some people might think “Oh! Her trick is to get married and let him take care of it!” Look at it as you like, but my lifestyle did not change. And still pretty much haven’t.
We didn’t have a wedding (and still haven’t). We didn’t live together for another year but that was heavily influenced by Uncle Sam (still hard AF) and I stayed at home. Which still sucked.
I eventually pulled the paperwork together to move to Germany where we drove my beat up college car, only used prepaid phones, and lived with only internet before cord cutting was really a thing. We lived in government housing which was free (!!!) in exchange for Tano’s crazy strict commitment to the army. But it wasn’t fancy by any standard, despite some cool German toilets.
We opted out of every luxury and lived so far below our means that we didn’t (and still don’t) have a proper bed frame. 🤦🏼♀️ The only difference between being married and not being married was trading one super cheap living condition for another.
I worked full time as a contractor for the military, making less than $25,000/year and spent 75% of my income on my student loans. The difference was saved for mini-vacays and ultimately a dog to keep me happy at home lol.
I realize these circumstances are not very common. Having no rent payments and obnoxiously low expenses. But I want to emphasize that these options are available through other means too (roommates, less than awesome living conditions, and below standard cars/phones/goodies).
To outsiders I looked broke as hell, and inside I was sick of being broke as hell. I won’t lie, lots of wine and beer was had and I justified it as saving money staying at home. But I started seeing the light at the end of the student debt tunnel. One loan was already paid off, and the other was below $20k by the time we left Germany.
At this point I was seriously considering taking on more debt to get an MBA. The thought of digging the whole deeper upset me, but supposedly all the good jobs required one (and I missed school!!). I had to pass on that too and still consider that a sacrifice I made in my debt payoff journey.
Paying for a mortgage, baby, AND student loans
One little side note for you: up until this point (moving back to the states after Tano left the military) we had separate finances.
He had money saved. Like a good amount of money just chillin. But I didn’t feel comfortable having him pay for my loans. I mean, seriously? Like, what?
So when we got home and scored a crazy cheap house/mortgage, it was his cash that got us in the door. But it was my new salary that secured and paid the mortgage. He went to school full time and I went to work again, this time with extra expenses.
I made $40,000 a year. I definitely under-asked while negotiating my salary from Germany (just super desperate to get something lined up before being stateside!), but we made it work. We kept driving the sad, beat up Mazda 3 that took me through school and through life in Germany. We maintained our very very low standard of living, and I kept paying as much as possible in extra principal.
Our monthly breakdown looked like this:
income: $2800 (after taxes & insurance)
tano’s GI bill BAH: $1300 (prorated while in school, so 8 months out of the year)
mortgage: -$600 (seriously so cheap, but this place was a dump lol)
general expenses: -$1200 (gas, groceries, living in a fixer upper, occasionally going out with friends, etc)
savings: -$250 to -$500
Student loans: -$500 to -$1000, depending on what was left over
Fun things we did: eating the occasional takeout, furnishing our house, making minor upgrades to our house, drinking at home lol, playing pool and darts at dive bars.
things we weren’t doing: vacationing, upgrading our wardrobe, getting a second car (seriously, he drove me to work on his school days and I left him stranded at home on the others), entertainment that didn’t come at a crazy good deal.
Most months I spent more on my loans than the mortgage and it was so worth it because…. drumroll….. I came down with a serious case of pregnant 🤰🏼
Me. The sole breadwinner. The one with the loans we were trying to wipe out on my modest salary.
Things were placed on a brief hold and a lot of effort went to the baby fund.
It was a challenge. We were already living an incredibly frugal life, so the thought of paying for an unpaid maternity leave was daunting. But we kept at it. Saving about $1000 a month and bought used baby gear and took anything we could for free.
Keeping it up, no matter what
Over the next year, we kept our heads down and paid the bills, which went up an extra $450 with a new car. I got real good at being a super frugal mom. I breastfed, my husband stayed at home with the baby, forfeiting his GI Bill payments but I took a new job with a moderate pay increase. We just chilled, and lived like we had no money. It was very much on autopilot at this point.
We were still saving monthly and paying the hell out of my loans. Not a lot of thought went into it.
Our lifestyle had been this way for so long that we didn’t feel broke anymore. It was just business as usual + sleep deprivation. We took our time adjusting to life as a family of 3.
And then one day, one student loan payment day, I saw that my balance was under $5000…..!
That was HUGE. It was another milestone. But because we had been saving so much too, our babyfund was still looking fat. We were too busy to really spend it. After dropping down to about $3,000 during and after my maternity leave, it was built back up to $7k without realizing it.
The idea of paying off my loans once and for all was very tempting. I was dating the idea of freeing up $500-1000 a month. The possibilities of that kind of disposable income was… sexy. So I slept on it.
And the next day, I dropped $4600 in one lump sum on my student loans. Aka I was FREE.
In under 5 years after graduating. While traveling through Europe, moving to Europe, getting into and out of credit card debt, buying a house, financing a car, and having a baby with only 3 years worth of full time work, all for less than $50,000 a year.
That’s all she wrote
When I told my mom the surprising snippets, it sounds very impressive. And listening to myself go on about it, I’m impressed too! I seriously can’t believe that’s how it went down, but it happened y’all.
Within 5 years I wiped out all of my student debt, and after a solid handful of really rough months in the beginning, it got smoother as time went on.
It’s hard to justify living to pay off debt after working so hard to earn a higher standard of living, but the reality is this: if I hadn’t stuck it out and lived below my means over those years, I would still be straddled with student debt (for at least an extra 5 years) and would have paid THOUSANDS more in interest.
And here’s the kicker, the secret to growing your net worth and increasing wealth is living below your means! At this point it’s second nature for us, and I wouldn’t have it anyway. Since paying off my loans, we’ve paid off my car and watched our net worth go from about $15,000 to over $200k.
There it is. Thank you for reading this far. I hope it was inspiring and gives you some insight into my methods, because if there’s one thing I want people to take away from this it’s that student loans don’t have to ruin your life.
Wanna budget like me?
Use the exact same budget spreadsheet system we’ve used for almost 2 years. This thing changed my life and made me finally love and look forward to budgeting FOR REAL.