One of the downsides to going to an out-of-state private institution is the massive cost associated with it. While I received a degree from a top institution and credit my good starting salary to that degree, I still graduated with a seemingly insurmountable amount of debt that, looking back, is hard to justify taking on.
Alas I had made the choice, so when I began my new job out of college, I decided to create a student loan payoff plan that would help me get rid of my loans as quickly as possible.
Faced with such a big hurdle, I began devoting as much of my income as possible towards my student loans. As of January 2014, about a year a half later, my student loan debt stands at $35,041, with over $60,000 in payments made.
How can you pay off your student loans quickly as well? My $90,000 student loan payoff plan:
When I started working, I quickly got swept up in the consumerist lifestyle and put my student loans on the back burner. I figured as most Americans do that I was working hard so I deserved to spend my money. And spend I did: eating out every weekend, buying fancy clothes, spending lots of money on entertainment, groceries and other things. I quickly found myself spending over $2000/month. Some of you might be saying, that’s not bad at all. But my rent was only $450/month, I didn’t own a car and I had over $90,000 in student loans!
Luckily this phase only lasted for a few months before I realized I was being stupid with my money.
So, what changed? It first began when I started reading No More Harvard Debt which inspired me to get serious about my debt repayment. I finally realized that I was in the perfect situation to knock out my loans extremely quickly. And it was enlightening to see someone that actually found more fulfillment and enjoyment out of life by spending less money.
Another great thing that came from that blog was a link to another site called Mr. Money Mustache, written by some guy who retired at 30 with a wife and kid and claimed he had the answers to everyone’s money problems. Boy, was I lucky to have clicked through to that site.
After reading all of his blog posts in the matter of two days, I quickly realized the stupidity of my spending habits and resolved to get more serious about paying off my student loans by eliminating all of my wasteful spending. Everything that MMM preached about rejecting consumerism made so much sense to me, and seeing it in words was finally the kick in the pants I needed to get serious about saving. I ran the numbers and realized that I could be financially independent at some point in my late twenties!
I realized that budgeting wasn’t working for me (If I have $100 buckets budgeted for entertainment, I would spend that full $100 each month) so I decided to start tracking every expense and categorizing it so I could see the expenses over time. I quickly plugged the huge holes in my spending, optimized my expenses and got my spending down to under $800/month (which is hovering closer to $1000/month now), devoting the rest of my income to my student loans.
Earn more income
While expenses are the best place to start for most people because they can lead to quick and immediate savings, the more income you can pull in, the faster you can pay off your debts.
The first place you can start is your job. During my first year at my job, I worked extremely hard to prove myself, consistently delivering good work and was recognized for my effort. With my raise and bonus, I received about a 50% pay increase. I know this sounds too good to be true, but if you are single and without a family, working extremely hard now will pay off major dividends in the future, as you can set yourself up for big pay increases earlier in your career, which will carry over into huge savings over time.
I picked up blogging in college as a hobby. While I earned a little income, I treated it very much like a hobby and didn’t devote all that much time to it. Before I began my full-time job, I tried to develop some diversified income streams to quicken my student loan payoffs and help me achieve financial goals that I had even quicker.
I devoted a lot of time and effort into learning about blogging and everything that goes into making a blog successful which was how I was able to make a little over $10,000 in my first year of work just from blogging, all of which I was able to put completely towards my student loans. This is an area I have very much let slip with my full-time job, only earning about 60% of that last year, and I plan to start dedicating a lot more time to diversifying my income sources over the coming years to try to increase this number.
I sit here with a little over $30,000 in student loans. While I still have a long journey to pay them off, it is still a far cry from the $90,000 I began with. Over the last year and a half, I have tried to put every bit of extra income towards my loans and it has paid off in major ways.
No matter what your situation is in life, there are always ways to optimize your expenses to help you get out of debt. While the journey may be long and difficult, the freedom and relief that will come from being debt-free will be an enormous leap towards achieving whatever financial goals you have in life.