In this post, I’m going to share exactly how I was able to pay off over $78K in student loans in less than 3 years. I share this post in hopes of providing valuable information and tips that you can apply to your own debt-free journey.
The first $24,000 of debt
When I first considered what college I would attend, money was undoubtedly at the forefront of my decision. Though I had done well academically and accumulated some scholarships, I knew that going out of state would not be a viable option for my family.
My parents were already helping to put my sister through college and I was right behind her. Neither of us was eligible for financial aid, so what scholarships didn’t cover was left between student loans and what my parents could afford to pay out of pocket.
In total, I took out around $24,000 in student loans to cover my undergraduate studies.
At the time that these loans were taken out, I was 17 years old. I had no clue that I was signing myself up for debt that would accrue interest. Furthermore, I had no foreseeable plans of paying them off.
And, if I’m honest, much of that debt came from the fact that I attended summer school every year– mostly because I failed a few classes during the school year.
Spending $54K for graduate school
Fortunately, with the help of summer school, I graduated within four years. Doing so was impressed upon me by my parents, who made it clear that they wouldn’t be funding an extended stay.
However, after graduating from undergraduate school, I was not ready to enter the workforce. Instead, I took up an opportunity to enroll in a one-year graduate program to delay adulthood.
This one-year program costs $54,000. I knowingly took on the debt for what I believed was a great opportunity to attend a top institution. The deferments brought my student loan debt to over a whopping $78,000.
By the time I actually began paying this debt off, the interest made this debt much higher; however, it was right around $78,000 when I actually started my debt-free journey. Prior to this time, I was making minimum payments for about 2 years.
I began my debt-free journey in December of 2013 and by October of 2016, my new husband and I were completely debt-free.
In addition to the tips that I’ll share, there were a few things that contributed to me–and later us– being able to pay off this debt quickly:
- I didn’t have any other debt. Thankfully, I didn’t get into any consumer debt or owe anything on my automobile and my husband came into our marriage debt-free.
- I received bonuses and raises every year that I was able to apply toward debt.
- I got married and we were able to combine finances for the last leg of the debt payoff.
A few things to note about my journey
As I’ve shared my debt-free journey over time, I’ve gotten a plethora of responses– many being attempts to undermine the work that went into this process. So I’d like to clarify a few things before going forward.
- I paid off $31,000 entirely on my own prior to getting married, making less than six-figures.
- I reduced my aggressive debt pay off to cash flow my wedding. This took off about 1-year of funds toward my debt that would have allowed me to pay it off sooner, still on my single income.
If you’re interested in learning how to pay off your student loan debt, continue reading. I break down exactly what I did to help expedite my debt payoff. I’ve also included some free guides and printables that will assist you on your own debt-free journey.
By no means was this journey easy nor did I have an example in my life to go by. I did, however, read tons of books that gave me the knowledge necessary to start my debt-free journey. You can read the books that changed my financial life here.
How I Paid off $78K in Student Loans in Less Than 3 Years
1. I established a clear goal
The most significant thing that I did in my debt-free journey was establish a clear and defined goal for what I wanted to accomplish.
When I started my debt-free journey, I was 25 years old and was certain that I didn’t want to still have debt 30 years from then. I decided that 5 years was ample and feasible time for me to pay off my debt, so my goal became to be debt-free by thirty.
This not only became my goal, but it was my mantra.
Whenever I would get discouraged, I’d remind myself that I would be debt-free by thirty. Having that goal gave me something to work toward and to look forward to.
Establishing a clear goal also causes decision-making to be much easier. If things didn’t align with my goal or bring me closer to it, I could immediately say no without remorse. Saying no to dining out or expensive trips became easier when I had a clear understanding of what I wanted to accomplish and the timeline that I had to do it.
If you want to be successful in your debt-free journey, setting your goal will be imperative.
2. I calculated how much I owed
The very first thing that I did before I started aggressively paying off debt was calculate what I actually owed.
As you’re making minimum payments to different loan companies, the total debt that you owe sometimes escapes you. You’re so focused on making the payment that you’re not even aware of what your overall debt is. Knowing what you owe in total is critical to creating a plan to pay it off.
In order to do this, I used a website called Mint.com. This site allowed me to link all of my accounts for my lenders and bank into one central location. It enabled me to see my total debt from all sources and how much cash I had on hand.
Seeing these numbers together was a real eye-opener because it showed just how negative my net worth was at the time. I had way more debt than I had cash or any other liquid assets.
Though I no longer use Mint.com, I still believe that it’s a great tool to start with to see all of your finances in one place. If you’re not keen on connecting your banking and account information in one central location, then another site that I strongly recommend is Undebt.it.
Undebt.it is a free platform that allows you to track your debt payoff. Once you’ve entered your starting balances for all of your debt, you’ll be able to see how much you owe in total and leverage the tool to create a debt pay-off plan.
3. I created a budget
After figuring out how much debt I was in, the next thing that I did was create a budget to get more visibility to where my money was going.
Prior to starting my debt-free journey, I had no clue where my money was going every month. I just knew that my rent was covered, I could eat, I paid tithes, and I paid the minimum on my debt.
But the paycheck to paycheck lifestyle was getting old quickly and I had to get a handle on where my money was going if I was going to start paying more than the minimum on my debts.
I didn’t know how to create a proper budget until I read Dave Ramsey’s Total Money Makeover. This book introduced me to zero-based budgeting. It’s a form of budgeting where you allocate every penny of your income to something. In Dave’s word, “every dollar has an assignment.”
That something doesn’t have to be an expense, though. It can be to savings or to pay off debt. But, you won’t know what you can allocate until you have a budget.
To create my budget, I just listed out all of the expenses that I incurred monthly and took the average over 3 months. I knew that’s what I could expect to spend on those items going forward, therefore, that’s what I budgeted or planned for.
I deducted this number from my income to determine how much if any, I had left after paying for these things. If I didn’t have anything left, then that was a signal for me to cut something out. If there was money left, it would be allocated as extra money to put toward debt.
4. I eliminated & reduced expenses
After creating a budget, I was able to clearly see what I could reduce or eliminate to free up cash to put toward debt. In my case, it was hair, makeup, and getting my nails done. It was also downsizing to reduce living expenses.
Over the course of my 3-year debt-free journey, I also cut cable and stopped eating out as frequently. These were the two most significant things, along with moving, that impacted my ability to put more money toward paying off my debt.
On average, I would pay about $7 per day to eat at the cafeteria at work. Though convenient, it totaled around $1800 per year and lots of pounds on the scale. To put that money toward debt, I started meal planning, buying groceries, and prepping my meals to take to lunch.
Cable was also a significant cost saver. Before cutting the cord, I was paying over $100 per month for cable, internet, and a home phone that I only had for my security system. Once I moved I opted for just the internet and took advantage of the company’s introductory price until I couldn’t anymore. (Then I’d move and take advantage of it again 😬)
5. I stopped creating debt
I mentioned that I didn’t have any consumer debt. Well, although I never kept a balance, I did have a credit card that I acquired before I began paying off debt. I used this credit card on occasion, but always found a way to pay off the balance each month.
When I decided to go on my debt-free journey, all gloves came off and every debt had to go– including my credit card. I stopped believing the hype about credit scores and cut up my card.
I resolved that if I was going to be debt-free, then a credit card could no longer be a part of my financial picture. That meant no more trips financed through my credit card. Everything had to fit within my budget and be paid for with cash.
If you have consumer debt in addition to your student loan debt, it’s imperative for you to stop creating more debt. It’s impossible to climb out of a hole that you keep digging.
6. I called my lender & created a pay off plan
Tackling $78,000 in student loans felt like an overwhelming task, until I created a plan.
One of the first things that I did to help make this less daunting was to call my lender to break up my loans into smaller, more manageable chunks.
Prior to calling my lender, my smaller loans were lumped together so that I only had to make one payment. Even though it was convenient, it would take me much longer to get a quick payoff win than if they were separated into smaller loans.
So, I called my lender and had them separate those loans out, allowing me to make payments to each individual loan. Once they were separated, I started my debt snowball. This is essentially a plan to pay off my debt from smallest to largest, regardless of the interest rate.
To create my plan, I developed a robust excel sheet that calculated when I would be debt-free based on my payment schedule and additional payments. However, now there are tools like Undebt.it that will take your information and create a debt payoff plan for you. If you’re old school, I also have debt pay off printables that you can use to track your debt pay-off.
Tip: Some lenders will reduce your interest rate if you set up automatic payments. I did this as was able to save a bit on my loans.
7. I increased my income
Once I finished grad school, I took a job on a leadership development program with a Fortune 500 company. Though very competitive, I knew that if I had a chance to make more money, it would be within that organization.
I’ll be honest, though. I absolutely hated my job. Quite frankly, there were many nights that I contemplated quitting and joining the military. Combat seemed far less daunting than what I was doing.
With the help of some concerned and convincing voices in my life, I stuck it out and did what was necessary to increase my income.
Here are a few things that allowed me to increase my income in my career:
Performance. The company that I worked for was a meritocracy– meaning they rewarded people based on their work. Although I didn’t care for my job, I did it well and made sure that the right people knew it. I solicited constant feedback from my managers to ensure that what I was doing would get me the highest rating among my peers.
Network. I used every available opportunity to network with influential people within my organization. These people may not have set my salary, but they had the ear of the people who did. I made sure that I was also an asset to them by helping them solve a problem within their job.
Tip: Solve a problem for someone outside of your organization and/or in leadership. Everyone in the organization should know who you are even if you don’t work directly with or for them. One of my biggest (and unexpected) bonuses during that time came from an executive that I never met but solved a tremendous problem for.
Worked Overtime. Because I was a manager in a manufacturing facility, I was allowed to work overtime. Even though I absolutely dreaded coming in outside of normal hours, I sacrificed many weekends in order to get an extra few hundred dollars to put toward debt. I knew what my goal was and sucked it up. If you’re in a position to work overtime, take it while you can to reach your financial goals.
Note: I still leverage many of these approaches within my career. More recently, I’ve also worked with Career Coach, Danielle Ayodele on negotiating my salary. With her help, I successfully negotiated a 15% salary increase.
I sold things
In addition to increasing my income from my job, I also worked to bring in other streams of income. To do this, I sold things.
Before the likes of Poshmark and Facebook Marketplace, there was just a picture on Instagram with a PayPal email address. I leveraged my social media to sell items within my house that I was no longer using or needed.
I sold clothes, handbags, shoes, and anything else that could go. Not only was it a way to make money, but it was also a great way to declutter my space. This came in handy when I downsized into a smaller living space and had to move.
Today, it’s easier than ever to sell things online. This is a quick way that I’d recommend for making some extra cash that you can put toward paying off your debt. You can literally make a career out of flipping and reselling clothes.
I stopped my retirement
Another way that I increased my income was by pausing my retirement savings. Prior to my debt payoff journey, I was putting between 4-8% of my gross income into my 401K to take advantage of my company’s match.
Once I began my debt-free journey, I opted to no longer contribute and use that money to put toward debt. Fortunately, my company still contributed to my retirement so that I didn’t completely miss out on retirement savings.
There are different schools of thought on this concept. Some people may recommend just putting enough to get the match and not stopping it altogether. For me, I knew that I’d only be losing out for a maximum of 5 years, based on my goal. After that point, I could also put more money toward my retirement because I no longer would have debt.
I paused my retirement for about 4 years before contributing at about 15%, where it currently is. Though I have no regrets, I would only recommend this if you’re going to pay off your debt quickly and begin saving aggressively once your debt is paid off.
I combined incomes with my husband
My husband and I got married about two and a half years into my debt-free journey. By this time, I had paid off around $31,000 of my debt in addition to cash flowing our wedding.
Before we got married, we discussed our finances and our plans for combining our income and tackling this debt. Shortly after returning from our honeymoon, we opened a joint account and began combining our finances.
Doing this had the most significant impact on the rate at which we were able to pay off the remainder of the debt. However, in addition to merely combining our incomes, we also made some other sacrifices.
Even though there were two incomes coming into the household, we didn’t increase our standard of living. We looked for the best deal on an apartment and found ways to save hundreds of dollars in comparison to the market rates.
We also maintained my limited dining out initiative, opting to cook 95% of our meals instead. My husband also reduced his retirement savings to free up cash to pay off debt. Lastly, the monies that we received as a wedding gift eventually went to paying off the last bit of debt that we had left.
By doing so, we were able to pay the last $47,000 in my student loan debt within a six-month time period. In total, we paid off $78K in student loans in less than 3 years.
Paying off student loan debt can seem like it’s impossible, but I hope that my story gave you some insight on how to get it done. Cheers to your journey of becoming debt-free! I hope that this post gave your the inspiration to buckle down and pay off your debt.