How I Became Debt Free in 3 Years
When I graduated 4 years ago I had no idea how I was going to pay back my student loans! The first time I logged onto Navient (federal loan provider) and Discoverstudentloans (private student loan provider) was the day after I graduated. When I added my 11 loans up I was in complete shock. I owed $83,000!
My heart sank and stressful thoughts started to fill my head. “How was I going to pay all this back when I didn’t even have a job?!” When I looked at my monthly payments I realized that I had to find a way to pay the minimum payment of $753 within 6 months after graduating, no exceptions.
After feeling very overwhelmed for a few days I decided to suck it up and get serious about how I was going to pay my loans back. Without a job, I had plenty of free time to educate myself on loan repayment and make a plan on how to get rid of them as soon as possible! The first thing I did to get a grasp on understanding debt repayment was to look into helpful resources.
One helpful resource was surprisingly Google! I searched for things like “how to pay your student loans back fast”. From there, I found websites like student loan hero and nerdwallet which share the best strategies on how to pay off your student loans.
After combing through dozens of articles over a few days I finally had a plan in place on how I was going to pay off my loans within 5 years! To start I linked all of my loan accounts to the budgeting app mint.com so I could easily access them in one place.
On mint.com I logged my goal to pay off my loans in 5 years. Mint kept track of how much money I needed to pay every month to meet my goal. If I didn’t make these monthly payments, mint would alert me and let me know how this affected the end date.
Once I had all of my loan information logged in to mint.com, I went back to Navient and Discover Student Loans to enroll in a monthly student loan auto-payment. Although I was not due to pay my first payment on my student loans, I set up auto-pay as soon as possible. I did this so I could hold myself accountable for making a monthly payment no matter what!
3 months after graduating and going on more than 50+ interviews, I finally, found my first job! Since I had no rent to pay every month I put 95% of my paycheck into my loans. I not only paid the minimum to my loans, but I also put a little extra into the two loans with the lowest interest rate.
After 6 months of making consecutive payments, I noticed that my loans weren’t decreasing and I hadn’t made a dent in the interest! So I went back to good ole’ Google to look for other debt repayment strategies.
I then came across an article about the debt avalanche method. In this method, one doesn’t put their excess payments to the loan with the lowest interest rate but instead puts it to the one with the highest interest rate. This saves you A LOT of money in the long run because you pay off the highest interest quicker. After I started using the avalanche method and finally paid off my two highest interest rate loans I saw my monthly payment go from $753 to $539!
When I saw this difference I put even more money into excess payment for my loans. Things were looking good for about 5 months, but then I was hit with a curveball. Due to downsizing in the company, I lost my job. Losing my job sucked and I began to think that paying off my loans in 5 years was now unattainable. Luckily, I had a small emergency fund to help keep my monthly student loan payments afloat.
During the few months that I was unemployed, all I did was apply to jobs and paid my student loans with the small savings I had.
Once I found a new job I was back on my feet. With a higher salary, I went right back to paying even more toward my student loans. By the end of the year I had paid off all interest on my student loan, $12,000 worth and I was finally able to start paying the actual loan amount back! If you didn’t know already, interest sucks. Another year went by and I paid my loans off.
I lost my job again due to company downsizing, but I quickly found a new one! Please note, this happens in my line of work a lot due to the natural ebbs and flow of business. Within a year and a half into my job, I was down to 3 loans! By January 2019 with all my federal loans paid off, I was down to one!!
Tax day was around the corner and I knew what I exactly wanted to use my refund on. When I received my refund check I put it all toward my last loan. On February 15, 2019, I made my last loan payment. In 24 hours my discover student loans account was updated with a message “Congratulations you paid your loans off in full”! I took a screenshot of the message on my phone as evidence (please see below) and then I celebrated!
Once I paid off my student loans, I felt relieved. I jumped for joy because I paid it off all by myself. With no loans or debt, I can now start my life! I can take more risks! I can save for retirement, the future, property, or a car. Whatever I want!!!!
For the past 3 years, I was weighed down with an enormous amount of debt, but I never gave up hope. My story and situation aren’t the same as everyone’s so I can not speak for everyone. There are hundreds of people who have debt just like I did and who are struggling.
Although the journey is hard, stressful, and makes you want to give up almost every day you have to be disciplined and believe that you can reach your goal of debt freedom. I hope this story helps anyone who may be suffering from student loan debt and I hope this can give them the courage to pay them off.