Got this note this morning and had to share it ;)
Not every day you accomplish something so big like this!
MWAHAHAHAHAHAHA WE’RE DONE WITH OUR STUDENT LOANS!!!!!!!
My husband and I finished grad school with something like a combined $330k… and today, I hit the button to pay off the last of them. I could not be more excited!!! Also, to be truly honest, I kinda teared up when I clicked it. After 9 years (for me) and 10 years (for him), we’re finally done.
I started getting serious about paying down the loans at the end of 2015 (December 28, to be exact), with a grand total of $246,301.18. I finally got sick of having this debt hanging over my head and calculated that if we lived cheaply, we could seriously be done with them after 5 years or so. We figured out a way to live off one income and basically put the other into loans. After almost 3.5 years of paying over $5000 a month into loans…we’re done ahead of schedule!
Please excuse me while I go cry and laugh and force-hug my cat. :D
Humor and debt-freedom, how does it get better? :)
I had to follow up with a “HOWWW??” though and pry a little further, and our friend here was kind enough to oblige and recap their journey for us…
I’m sure some people will write it off the second they see “6 figure incomes”, but remember that it takes a lot more than just money to tackle such things, and it was all those 6 figure *loans* that got them to this level to begin with!
So way to go, Jana & husband! Enjoy this next chapter of your lives, and congrats on your new found freedom!!
The 10 year journey:
- We graduated pharmacy school 1 year apart from each other, with a combined total of around $330k. Both of us were in denial (and for pharmacy school kids, this is apparently normal), so we blissfully paid the minimums and went about our lives, buying $7 cereal in Hawaii and eating out almost daily.
- End of 2012: We moved to Seattle from Hawaii, reducing our tax burden (due to lack of state tax in Washington state). We moved, deciding to live off of 1 salary and put the rest towards the loans – this was simple to do as we both made in the low 6 figures, but it was an adjustment for me to be given an “allowance” each month. Luckily my pride got in the way of asking myself for more money, so no matter how hard that last week of the month got, I refused to go over budget!
- A year and a half after this decision, we decided to buy a condo due to rising rent prices in Seattle. We paused the loans for 3 months to save up a down payment and revamp our financial duties (made possible due to our early payments pushing out our next due dates), but our 3 month pause really turned into 6 months as we bought furniture for the condo, etc etc. In December of 2015, I decided to add up all the loans…
- December 28, 2015: I added our loans up and wanted to cry. $248,301.18 to pay off. We decided to really focus. And by we, I mean *I* got super anal about it and put myself on a strict budget!
- Many (OMG MANY) spreadsheets were made. And sure, I went over budget a number of times, but the focus was always on the loans. I made sure that I paid the loans on payday so I couldn’t give myself an excuse to put less into it, but always made sure to keep a $500 buffer in my checking account in case of forgotten auto-debited items (in addition to my emergency fund in savings).
- I refinanced with Sofi, bringing my interest down from 6.8% to 3.75%. Why didn’t I do this earlier?!
- I got a raise in 2016, letting me put even more into the loans (from $6k/month to about $8k/month), until 2018 when I decided to change jobs (and take a $33k pay decrease for better quality of life). I cashed out my vacation from the old job and dumped an $8k lump sum into the loans. I was still able to spend about $1.5k on stuff outside of these payments (not including the HOA), so I didn’t really feel deprived. I got addicted to watching the principle drop on my loans every payday!
- A few of my friends definitely felt weird about me making 6 figures and living off what amounted to about $18k a year, but they soon learned that I would come and hang out, but would decline pricey meals out… Unless it was the beginning of the month. Please keep in mind that when I took the $33k drop in pay, I still ended up in the low 6 figures. We still put 4% (for him) and $530/month (for me) into our respective 401k/403b plans.
- We picked a combination of the avalanche and snowball methods. We started the pay down process before we were married, but we’d also been together for about 8 years by then. We figured we were in it for the long haul. To make it fair, I planned it out so that we would alternate paying on our loans, but I had consolidated a number of mine so by far mine were the biggest chunk. We combined methods for 1) practicality and 2) positive reinforcement to help fuel our (read: my) obsession.
- We were due to be done originally in December 2019… then extra payments were made (from taxes, vacation payouts, holiday and/or OT pay) and it moved slowly to September. Then August. Then July. Finally, we were to be done in June… until I said “I’M DONE WITH THESE LOANS” and raided my emergency fund to pay off the last $6k. I’m losing 2.2% interest on that $6k (thanks, Barclay’s!) but am gaining wayyyyyy more peace of mind!
- Next goal…RETIREMENT! We are planning to max out all plans and contribute to a taxable account so we can retire early… And I’ve already got the spreadsheets made ;)
And that’s how the sausage is made!
It looks so easy when you bullet point it all out like that, and when someone ELSE is doing all the sacrificing, haha… But we all know it’s a bit more involved than that, and it surely doesn’t happen overnight.
But boy do things speed up when you FOCUS LIKE MAD! They went from $80,000 paid off in 5 years going with the flow (and a decent feat in itself!), and then hit *turbocharge* and tripled their payments in well under the same amount of time…
Now of course we ALL can’t duplicate such drastic comebacks unfortunately, however we can take charge of the key ingredients here that works wonders in any journey:
- Making things a *top* priority
- Living on LESS than you’re bringing in
- Trying out different payoff methods
- Refinancing whenever you’re able to/it makes sense
- Automatically sending in payments on paydays!!
- Keeping a buffer zone in case you screw up
- Tracking your progress however motivates you (coloring charts? :))
- Throwing in as much of your *extra* money as you can get (raises/bonuses/overtime)
- And then of course doing whatever it takes to stick to it until the bitter end…
Not exactly easy, but pretty straightforward once you make the commitment to yourself. (And barring any unfortunate events)
So well done again, guys… Thanks for taking the time to share with us today, and tonight I shall raise a cold one in your honor! Cheers!
More debt loving articles you might like:
- 4 Tricks to Save More, Spend Less, and Pay Off Debt
- Proof That Getting Out of Debt is VERY Possible
- The 15 Questions of Debtors Anonymous
- Resource of The Month: Debt Free Coloring Charts!