In 2010, I graduated college with over $60,000 in student debt. By 2015, due to interest and only making minimum monthly payments, I still owed a whopping $48k.
I felt trapped by my debt. I had a little voice whispering to me, “Pff you’ll never afford a house…..You’re an idiot for taking on that much debt…You’re way behind in life…In ten years the only girl you’ll be in a relationship with is Sallie Mae!”
Then in early 2016 everything changed. I made a declaration that I was getting myself out of debt, in one year, no matter what. I took on an array of side gigs (dog sitter, security guard, deliveries), got a higher paying main job, worked as many hours possible, cut back drastically on expenses, and put all the money I could towards my loans.
After nearly a year, 3 of my 4 student loans were wiped out, and the final loan was standing on its last legs. All the weekends, holidays, and late nights spent working had paid off. Then on December 2nd, 2016, the day after my 29th birthday, I did it. I paid off my final loan. I was free.
I learned many lessons along my journey to debt freedom (including don’t board two giant Great Danes when you live in an apartment). However, there are 5 tips I’d like to pass onto anyone struggling with student loans.
1. You Have to Attack the Principal
According to my daydreams, my student loans were not long for this world. Congress would forgive them, Tyler Durden (Fight Club) would execute Project Mayhem and free me, or my go to…I was going to win the lottery! But after 5 years and no magical cure, I knew I was on my own.
I took stock of my loans and had a startling realization. I was paying $670 towards my loans a month, but most of it was just going towards interest. Barely any was going towards the principal (the actual loan). I was chipping flakes off a growing iceberg.
I needed to attack the principal of my loans. I increased the amount and the frequency of my payments and this led to actual progress. My loans started to decrease and I escaped the trap of just paying off increasing interest. I realized the cure to my debt was simple: make big hairy payments to the principal as frequent as possible.
Lesson: In order to make a significant dent in your debt, you have to make large payments that reduce the principal of your loan.
2. Additional Revenue Can Solve a lot of Problems
I knew I wanted to pay off my loans, but I struggled with how? Even if I tightened up on expenses, the additional money from my paycheck would only go so far. Then at a random work event, I heard a panelist say, “As I tell my clients, additional revenue can solve a lot of problems.”
A light bulb went off in my head. There was no law that said I had to rely on one job. I started to take on as many side jobs as I could find. I became a dog sitter, private security guard and whatever I could find to pour additional funds onto my loans. I also landed a new higher paying main job, which freed up more funds to throw at Sallie Mae.
With the additional streams of income and my new higher paying job, paying off my loans in one year became possible.
Think it can’t work for you? Let’s say you only pull in an additional $250 a week with a side job working a few nights or on the weekends. That’s an extra $1,000 a month you can huck at your loans. Not too shabby.
Lesson: More money, more ability to attack your debt. * **
* I recommend finding a side gig you enjoy or at least pays you decently enough to be worth the pains. I regret working late nights for $10/hr at crappy bars with toxic people in my early twenties but certainly didn’t mind $25/hr hanging with friends making jokes while checking bags at comic book conventions. Make sure the juice is worth the squeeze.
**Also, for many side jobs you are 1099’d and will have to be responsible for keeping track of your taxes. Thankfully, (kind of) with the student loan interest deduction, there’s a high chance you won’t end up owing much, if any, on your taxes.
3. Swallow Your Pride, But Not Your Brain
I imagined a glorious journey when I started my year-long odyssey out of debt. I would pick up a few cool side gigs, have fun, and the year would fly by like an 80’s movie montage with all my friends carrying me off on their shoulders after I beat the final loan.
However, Instead of glory, I got dog poop, long hours, sleep deprivation, and often humiliated. I ran into people from high school & college while working menial labor and had awkward exchanges. My extended family even came to think my side jobs were my career and had an aunt ask at Easter, “How do you juggle your security career with your dog walking?”
But to tell the truth, I really didn’t give a damn. I made two agreements when I started my loan odyssey. One was that I wasn’t allowed to complain. No one forced me to take out the loans and no one was forcing me to work like a madman to pay them off. I wasn’t above any of the jobs I was working and to think any different would just make me a prick. It also wasn’t always a struggle. I often worked with really cool people (including a lot of vets with badass/ funny stories) and getting to experience a ton of different dog breeds was a dream come true.
The other agreement I made and stuck by, was my regular job, was my main job. I could not take on any side job that would interfere with my regular job. Oh a 12-hour $35/hr security shift at the hospital, but I have to call in sick to my regular job, would be awesome but sorry can’t swing it. I wouldn’t put my career in jeopardy for a few extra bucks.
I even tried to progress in my career while working side gigs. They left the Ipads on at the Apple Store while I worked overnight security on the weekends, so I used the time to take a few free online classes and gain certifications (I also did watch a lot of Netflix).
Lesson: You’re not above any job, but not every job is above your career.
4. Keep Yourself Motivated By Setting Smaller Goals
I made a google sheet (like excel) with my four loans, their amount, interest rates, and monthly payments. The total of $48,000 seemed like an impossible task, but I had learned a trick years ago while running track in high school.
My coach Joe would say (in a heavy Boston accent), “Today, we’re going to warm up with 3 miles then run 4 400’s (meters), 4 800’s, 4 400’s, and 6 200’s.” Hearing it all at once, I wanted to pass out. But if I just focused on the 400’s, I’d eventually get to the 800’s, then later the 200’s, and eventually make it to the end of the workout. The key was to break it down into manageable tasks and only worry about what was in front of me, not what I had left to do.
For my loans, I decided to attack the loan with the highest interest rate first. I spent months focused on decreasing that single number in the spreadsheet. Each week I would cackle as I made payments and got to decrease the total amount. Even if it was only $500 extra I would think, “That’s $500 they’ll never get to take from me again those expletive mother expletive expletive.”
Seeing the number decrease kept me motivated to keep grinding and not give up. It felt amazing every time I got to move one of the loans to the tab labeled “completed.”
Lesson: Make your seemingly impossible task manageable by breaking it down into smaller steps.
5. Grind, Grind, Grind
This section isn’t going to be like the others, although it may be the most important.
The overall key to my success with paying off my student loans was my ability to grind. I would work my ass off all week, keep it up on the weekends, and on Monday, do it again. I didn’t give up.
You don’t have to take on 30 side jobs and work crazy hours to pay off your loans. Maybe your path will be getting a much higher paying job or promotion. However, you’ve got to grind to get there. Will taking online courses (many are free), getting a few certifications, or even reading a few books from the library a week help you progress? Then do it!
Take ownership of your situation, devise a plan, and then relentlessly pursue it.
Lesson: Nothing will beat persistence.
Foreword: Now that I’m done with my loans, my new passion is retirement planning. I suggest everyone read The Bogleheads’ Guide to Investing and the Richest Man in Babylon. Retirement will be here before I know it (if I’m lucky) and I’m not going to leave myself in a rut like I did with student loans!