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June 15th, 2021 at 05:14 pm
I paid off my student loan! I should receive an official letter within 20 days, but the payment has already been deducted from my account and the balance on the web portal is listed as zero. Somebody posted asking how I paid this off, so some reflections on the process:
First, I have been very lucky. My parents helped me with undergrad tuition and I have worked part time jobs for other spending money since high school, so I never had any other debt prior to entering professional school. I always knew I would be paying for that myself with student loans and spent years saving up. Growing up, my parents worked very hard and drilled into me that having debt is NOT a normal part of life and paying non-mortgage interest is a waste of money, so it never occurred to me to take a car loan for example. When I bought my used car I had X amount of money to spend on it and that was my budget, period. I was going to get the best used car I could with that amount of money, but ONLY as much car as I could with that money, no matter what a junker that might be. I know it’s a privilege to be able to operate that way since some people have to take a loan to be able to get any transportation at all to get to work, but I do think it helped me that my parents made it clear that as far as possible, if you can’t afford something you change your lifestyle BEFORE you change your budget. I did not have to help support my family financially, which is obviously also a huge advantage.
I am also lucky that I have not run into any major health emergencies, major car accidents, etc during this process. Everyone has car repairs, etc that pop up from time to time, but I have been able to direct most of my financial effort to loan paydown. My family members have also not needed any major financial assistance during this time. I don’t have any expensive chronic medical problems right now.
After 4 years of school I spent another 5 years in paid training, where I made between $48K-almost $60K by the end with yearly raises and some opportunity for limited moonlighting in the last few years. I was living in a medium cost of living city. That is not a bad salary, but definitely not enough to pay the full payment and interest on 200K+ in debt, so I was on income-based repayment during that time and my balance was actually increasing after my monthly payments due to the interest rates. All of my loans were federal. After building my emergency savings back up for a year or two, I moved to a place with cheaper rent to free up more of my budget for repayment, joined this website, and got more focused on paying down my smallest higher-interest grad plus loan by squeezing some extra money out of my budget categories every month.
A few years ago I fully finished training and received a huge salary jump with my new job (more than doubled), which is when I really started making progress. I moved to a new area but was able to keep my core living expenses, such as rent, essentially the same. I increased my personal budget a little, such as buying nicer gifts and pasture-raised eggs and springing for a WSJ subscription, and upped my charitable giving a little, but my monthly personal spending is overall pretty similar, under 50K a year before debt repayment. I drive the same used car (the blue book value is around $1300 now). Most of my furniture is from craigslist. I buy a lot of my clothing and household items used not just to save money, but because it seems better for the environment when there are so many perfectly good items already available without manufacturing more. I don’t eat meat and mostly cook at home, which keeps the food budget low. Possibly because I spend so much time working and spent so many years as a cheap student, I never really developed any expensive hobbies- I am happy just cooking at home for a date or going hiking, going to a museum, etc. Books mostly come from the library. I don't take expensive vacations. Basically, this allowed me to take my entire salary increase and direct it right to my loans every month. My increased salary also helped me qualify to refinance my student loans to get a lower interest rate. I had a very good experience going through CommonBond, but there are a lot of similar refinancing companies out there.
At my new job I have also had opportunities to pick up extra shifts for overtime, etc which went to my loans. This is the first job I have ever had that offered any retirement matching, so I did start contributing enough to get the full match.
I am very grateful to have paid this off. It will give me a lot more flexibility career-wise not to have to worry about how to make a huge loan payment every month, although I like my current job and don’t have any plans to leave right now. There’s still a big psychological benefit in knowing you don’t HAVE to stay if things change in the future. I am planning on using some of the money that is freed up to increase charitable giving and retirement savings. It is also a relief to know that if I do get married in the future, I won’t have to have the “guess how many hundreds of thousands of dollars of debt I have” talk!
Finally, I will say that although there are some things I would do differently ( refinancing earlier, etc), I would take out these loans again in a minute if I went back in time. Money isn't everything, and the experiences I have had because of my education and the ability to do a job I love for my entire life was totally worth the financial discipline of repayment. Realistically I would not have been able to do this career without taking out these loans for school. I know that is not true for everyone and many people regret their educational debt, but for me it was totally worth it.
March 21st, 2019 at 09:32 pm
Student loan updates:
It seemed like a good time to post a snapshot of my loan progress . For the paid off federal loans only principal is listed because it’s hard to tell the total interest paid on the website. As you can see, I owe Uncle Sam approximately a gazillion dollars.
Private loan: $19,612.46 principal and $454.07 interest – PAID OFF
Grad plus loan: $9,546 principal – PAID OFF
Stafford loan #1: $8,500 principal – PAID OFF
Stafford loan #2: $8,500 principal- PAID OFF
Stafford loan #3: $8,500 principal and $1,399.20 interest: Balance: $9,899.20
Stafford loan #4: $43, 595.23 principal and $10,794.81 interest: Balance $54,390.04
Stafford loan #5: $43,952.80 principal and $10,882.72 interest: Balance $54,835.52
Stafford loan #6: $44,013.66 principal and $10,898.01 interest: Balance $54,911.67
Stafford loan #7: $48,070.76 principal and $11,902.37 interest: Balance $59,973.13
March 18th, 2018 at 10:49 pm
I’m still here and reading the blogs, but took a break from posting for a while because my current job will be ending this summer and I’ve been job hunting. Until I have a new contract, I decided to slow down the extra payments to my student loans and to stockpile some extra cash on top of my current emergency fund instead.
There have been a few expenses related to this -got a new interview outfit and shoes, since I hadn’t bought a suit in years and they were looking a little dated. Looking professional and feeling confident was definitely a good investment though, and I did get it on sale! I’ve also paid $2230 in professional and licensing fees so far this year, which are not negotiable for my position and are required for any future jobs as well. A tax refund of $500 went toward these fees.
January 3rd, 2018 at 12:08 pm
Yesterday was a no spend day. I was going to stop for some over the counter medication, but traffic and parking were terrible, so I came straight home after work and found a little bit left in my medicine cabinet! Brought food and coffee to work.
I also got a check for some previous overtime in December- $260 for retirement savings. Current total before this deposit is $1535, with a goal of $3000. The plan is to switch back to paying down debt after meeting this goal.
Just to put things in perspective, I also have $3195 of unavoidable education expenses coming up in 2018 (required for my career), which I’ve had to save up for.
May 23rd, 2015 at 09:28 pm
Longtime reader, first time blogger. I love reading these blogs for inspiration, and I am hoping that starting one will be a way to hold myself accountable as I get serious about my debt repayment goals.
The situation: Graduated debt-free from undergrad thanks to generous help from my parents. Took out loans for professional school totaling about $240,000 (with the in-state discount!) and graduated a couple years ago. After graduation I started a training job that will last for several years at relatively modest pay, followed by a significant jump after all training is complete. I was hired at a good salary (a little under $50K/yr), but had to move for my job to an expensive city with high cost of living, where rent ate up a huge portion of my income. I totally deferred one small loan from a private group with a very low interest rate (this is allowed for up to 5 years) and put my federal loans into income-based repayment, which has kept them in good standing but isn’t touching the principle. I recently found a much cheaper (for the area) apartment and moved to free up some extra money each month.
This is the only debt I’ve ever had and it needs to go! I feel like it limits my retirement savings and my general sense of freedom. With no dependents to take care of right now, I have a great opportunity to buckle down and set myself up for a more secure future.
I currently have a paid-for car with over 100,000 miles on it that is thankfully still running well and a good emergency fund (can cover 6 months of expenses plus a small extra cushion to reflect the fact that my car is well over 10 years old with a ton of miles and you never know). I have a Roth IRA that I started with my very first summer job at age 15 but have not been funding it consistently since college, which also has to change! My employer does not offer any type of match for retirement savings and the investment vehicles they do offer for automatic withholdings for are significantly less attractive than a Roth IRA due to the management fees. They do offer health, dental, and vision benefits for a reasonable rate.
The ugly numbers:
Accrued interest: 13,266.37
Interest rate: 6.55%
Current monthly payments on IBR: 368.32
GradPlus: Total 13,671.78
Accrued interest: 1,086.20
Interest rate 7.65%
Current monthly payments on IBR: 17.14/month
Other private loan: 17,000 principle, deferred, lower interest rate (don’t recall offhand)
Roth IRA: 14,322
All payments are applied first to interest, then to principle, so my IBR payments are not making any headway on actually getting out of the hole. I also think the interest rates are a little shocking- this much educational debt is essentially a mortgage, and 7.5% seems a little harsh, Uncle Sam! Talking to older colleagues, many of them mentioned that their loan rates a couple decades ago were more like 2-3%. Feeling like you are being gouged is certainly more motivation to pay if off quickly, I guess.
My first goal is to make extra payments to the GradPlus loan, both because the rate is higher and because it is small enough I could realistically start seeing some progress in paying off the principle to keep me motivated. I also plan to start contributing to my Roth IRA again- it’s ridiculous not to when you consider the time value of money at my age (under 30).
I'm still tweaking my new budget and will probably post that at a later date.