December 29, 2018Are We Adults Yet

How I Paid off My Student Loan Debt by Age 25

Paying off our student loans was our biggest goal in our early 20s. It was before we started the blog, so we realized we haven’t written about it yet and it was so huge for both of us that we decided to do a post all about how we did it and what advice we’d give anyone with the same goal.

Stella’s Story

My parents really wanted me to take charge of my financial life early on. They wanted to help as much as they could but I chose an expensive school, Emerson in Boston, (which they supported) and I felt informed about how much it meant I’d be taking on myself as I started the journey. The problem is, even if someone tells you something costs $40k a year, at 18 years old that number just does not have the same meaning as it does once you’ve been earning a salary and paying for your own expenses/living on your own. In high school, my mom encouraged me to not get a job but instead to apply for scholarships. I took it to heart and earned almost a full year of school tuition in scholarship money. That jump-started me feeling like I needed to be part of getting rid of the debt from the beginning. My dad sat down with me and worked out a budget based on what I had from family, scholarships, financial aid, and grants. I still had a long way to go. I qualified for work study and got a job my first semester in the institutional advancement office (which is especially cool since now I work in Development for a college). I was making a very small income but having that first job not only helped me contribute to my life and college expenses but also gave me a huge amount of work experience in an office which greatly helped me become employed post-college. I worked three different on-campus jobs during my time at Emerson and spent the summers working at a day camp. I also picked up a few babysitting gigs through camp families and, in my final semester, a paid internship. It was a lot of work but since I started working when I first started school, it just felt normal to work that much and it helped get me ready for the real world. I spent a good amount of time talking to the financial aid office and paid off my only unsubsidized (earns interest while you are in school) loan before I graduated.

Once I graduated, I moved to LA and got a low paying job at a startup. After 6 months in the working world, I really tuned into my loans. I set up auto payments for a little more than the minimums and put every ounce of my side hustle money into paying down the principle. I was used to working multiple jobs so having things outside of my full-time gig felt normal. It was mostly babysitting at first but then I started volunteering for event companies, proving myself and then getting paid event gigs. The most important thing I did was to put any extra money automatically toward the loans. I already had the auto payments in place and budgeted that into my monthly salary but the extra stuff just kept bringing it down. I focused on the loans that had the highest interest rate and made sure my extra money was all going towards those rather than spread out over all of the loans (the default). Once a loan was paid off, rather than taking the minimum payment that I was used to paying for normal expenses, I just redirected that amount to the next highest interest loan. I didn’t feel the change because I was used to paying it and the loans started to disappear.

When I finally paid them off at age 25, my now husband and I got engaged. He paid off his loans at the same time so we redirected the money we were used to paying toward loans to paying for our wedding. A month after our wedding we finally realized how much money we actually have every month. We’d set everything up so automatically that it just felt like we’d been making a lot less than we actually were. We’ve used this tactic now to save for trips we want to take or the house we’d like to buy. If you like this tactic for outside of loans, I highly recommend listening to this podcast episode about sinking funds And for paying off debt, I love this episode about the snowball vs. avalanche tactics.

Laura’s Story

Similarly to Stella’s upbringing, my parents were very proactive about my gaining some independence when it came to money. Particularly early on, my mother opened savings and checking accounts for me and I was in charge of deposits, balancing everything, and keeping track of how my money was growing. With that in mind it was par for the course when she and I started having in depth conversations about how college was going to get paid for early on in my high school years. She was always upfront about how much she and my step-father could contribute, as were my father and step-mother; so then it was up to me to either apply to and attend a school below that number, or personally make up the difference. I ended up choosing the latter route, and for better or worse I’m very glad at the outcome. I attended Emerson in Boston (with Stella!) which is definitely a pricier option. I had started working summers in high school, and that saved income combined with some graduation gifts was a good head start, but I still had a long ways to go. I applied for both unsubsidized and subsidized loans, receiving enough financial aid to almost cover my portion of education expenses. Then it was a matter of continuing to work throughout college to cover school, rent, and other living expenses. I worked for my first year and a half at an upscale shoe store on Newbury Street in Boston, and then worked for another two years at a nearby restaurant. At the shoe store I started out part time at about 20 hours a week, but quickly worked up to 40 and then was promoted to assistant manager. Once I changed jobs, I continued to work 40 hours a week (if not more) at the restaurant, always covering any shifts I could pick up, as well as getting trained on both front and back of house operations so that I could step in for any bartender, server, or line cook that called out last minute. I was very aware of my finances and the return on the number of hours I worked, which incentivized how many I could squeeze into any given week. It was definitely stressful at points (scheduling all of my classes on two days so I could have the other five available to work was always a calendar game of jenga) but upon graduating and only having to worry about a 9-to-5, I was surprised at how much free time I suddenly had!

Because of my vigorous work schedule I was able to start paying off my loans before graduation, which definitely gave me a jump on “adult” finances. As Stella said in her story, I agree that $40,000 a year to an 18 year-old really doesn’t mean much when you’re not fully entrenched in what that means for an overall budget. Once I graduated and started working with an annual salary, I hunkered down and tried to keep my living expenses as low as possible to throw any excess money towards my loans. I also started freelancing as a social media and marketing operative, picking up 10- or 15-hour per week contracts on top of my day job to supplement my income. Coupled with tagging along to some of Stella’s freelance gigs, I also took the strategy of sending all of my “extra” paychecks towards my loans.

At some point a year or two out of college I discovered the world of personal finance blogs and was immediately hooked. I started reading and researching as much as possible to see how I could pay my loans down faster by cutting my budget, side hustling, and doubling up on payments to avoid any excess interest. I was an early adopter of LearnVest’s original platform that helped track your spending, plan for future budget goals, and provided an all-in-one place to access finances. I eventually “graduated” to using Personal Capital (check out my guide on using PC to track your spending here and some more tips here) and watching my loan balance plummet was a joy I rode to the very end. Upon reaching that goal, I started funneling my (now excess) money into investments, which was been a whole other world to learn about and live in for the past few years. Moral of the story for personal finance is that no matter your age or life stage, always be learning!

Podcasts/Bloggers/Books About Student Loan Debt We Recommend

As we both mentioned, there are numerous books, podcasts, and personal finance blogs out there with a plethora of posts geared toward paying down student loan debt. Here are some of our favorites!

Is anyone still working towards the debt-free moniker? What are your tactics and strategies for staying the course?? Have any student loan resources you use that we didn’t mention? Let us know in the comments!

P.S. this post is part of our 30 Blog Post Goals for 2018, check out the full list!

Let us know what you think!