This is the story of how I went from $29,898 in student loans with a minimum monthly payment of $342 to a balance of $13,671 and a minimum payment of $182, all in 15 months.
In May of 2013 I graduated from the University of Connecticut with my Bachelors of Science in Biological Sciences. After 16 years of going to school, studying, and being a good student I was more than ready to move on to the next step of my life. I wanted the next challenge, and more than that, I wanted to succeed in the next challenge just as I had succeeded throughout my academic career.
Part of this, for me anyway, was that I wanted to pay off my student loans early. Call me a habitual over achiever, but paying a minimum payment of $342 (I graduated with close to $30k in loans, and those were just the ones that were in my name) for 10 years was not happening. I wanted to pay them off ASAP to avoid paying more in interest and also to free up a large chunk of monthly income. Well, at this point it was soon-to-be monthly income. I still needed to find a job.
I spent a month applying to job listings online and all I had to show for it was one measly phone interview with a recruiter. He said I seemed like a great candidate, but there were no positions available for someone with my level of experience.
No positions were available for people with essentially no experience, is what he meant. I had spent my college career tutoring basic chemistry and statistics, and working at the dining hall or mail room in order to earn money instead of signing up for independent research credits. I had spent the summers interning at my Dad’s bioinformatics company, which I thought would look great on my resume, but there was no lab experience there either; it had all been on the computer or secretarial work.
This hiccup in my grand life plan understandably induced panic. I had gotten too used to the world of academics. I had it engrained in my brain that if you put in the effort, you would do well. If I didn’t do well, I knew that it was because I didn’t put in the effort that was required to do so. That C I got in Basic Immunology? It was because I spent all lecture every lecture on my iPad looking at the most recent runway shows on Style.com. I knew it was my own fault for not paying attention, and I left that classroom not knowing as much as I should have about Immunology. It turns out senioritis is a highly contagious virus (ba dum bum tshhh).
But this was the first time I had put a lot of effort into something and was completely unsuccessful.
Feeling the tick tock of my student loan grace period coming to an end, I made a few tough decisions, but at the end of the day I’m happy I made them because of all that I’ve learned. They helped me pay off over half of my student loan balance and decrease my monthly payment to $182 instead of $342.
How To Pay Off Student Loans Fast
I adjusted my game plan
If I were to have had my way after graduation, I would have landed a job in New York City that paid enough for me to live comfortably with roommates. Ha! I’m sure anyone else who dreams of living in New York, and even the people who currently live in New York, will know that that’s a pretty big goal for a college graduate with a monthly loan payment of almost $350. Running the numbers at the time didn’t seem doable for me (I’m totally terrified of even the potential of credit card debt or being short on a bill or rent payment). So I needed to change my game plan and work on reducing that monthly payment, so I would be more capable of moving to a more expensive city in the future.
After about a month and a half of (unsuccessfully) looking for a job I accepted my Dad’s standing offer to come and work full time at his company, where I had interned during the summers. Again, not exactly my plan for post graduation; it stung that the only place I could get a job was with my Dad. Looking back now I can appreciate that I had a safety net like this in my field and the ability to get some more experience while earning a salary. It was a really tough job market and the majority of people don’t have that kind of opportunity. I was hired as a research assistant for the bioinformatics team. I made $38,500 and was the lowest paid full time employee at the company.
I also decided to live at my parent’s house for a while (it wound up being about a year). With the economy the way it was, and rent prices the way they were, I didn’t have enough to move out on my own and no one I knew had enough to move out with roommates. This was upsetting for me on a few different levels, because I felt like I wasn’t capable of being a fully independent adult, and therefore I was somehow failing. Looking back, though I wouldn’t move back in with my parents now (sorry, guys), I’m glad I had the opportunity to save on rent for a while.
I looked for literally any opportunity
After starting my full time job, I pretty much immediately wanted to be making more money. I know, I have no patience. Once I decided I was going to pay off my loans, I wanted to do it ASAP.
I applied at the local outlet mall for a position at Michael Kors, my favorite designer at the time (I hate to sound hipster, but I loved him before he was cool). Luckily a friend of mine from high school already worked there, and I was able to list her as a reference. Thanks to her I got an interview! And then a second one! Then I got a call saying they wanted to hire me! That was super exciting. I was going to earn extra money talking about fashion; one of my favorite pastimes. This was great.
Then, right before my second interview at Michael Kors, I attended a work event where a Chemistry teacher from the University of Rhode Island said he was looking for TAs for his Chem 101 lab. Obviously, with my experience tutoring Chem 101 at UConn, I immediately applied and was also hired there.
I accepted both jobs. I made an extra $10/hour at Michael Kors (working roughly 10-20 hours a week), and an extra $1000 for each class I chose to TA at URI (which was one in the Fall and two in the Spring, for 2 years).
I don’t work these other jobs anymore because 60 hour work weeks across three different locations eventually burnt me out. At one point, I had not had a day off in over 6 weeks. After paying off half of my loans and decreasing my minimum monthly payment to $182, the cost became more than the benefit and I left the two part time jobs.
I chose where to be frugal
The thing about having extra money, is that it’s really easy to spend it. You think: I have a balance in my bank account, and as long as it’s above X dollars, I feel comfortable. So if my balance goes above X, why not treat myself?
I’m all for treating yo self every now and again, but it shouldn’t be a spontaneous and/or sporadic habit. You need to budget or you’re always going to have a budgeting problem. I created a Mint account pretty early on and I still use it obsessively. Then I identified what I did and didn’t care about, and then cut my budget for the “don’t care” list to essentially zero. Why would I waste my money on things I don’t care for or enjoy? I still follow these lists pretty closely and use them as a guide on what to spend my money on and where to be thrifty:
Things I care about
- Fashion and accessories, skincare, beauty products – Hey, if you have to get up and get dressed and go to work, you might as well put on clothes you like and invest in beauty products that make you feel confident, right?
- Travel – On the cheap when I can, and only occasionally since this is inherently an expensive category. I currently have a separate savings account that I transfer a small amount of money to every month in order to save up for future trips.
- Food – I don’t go out to eat a lot, but when I do I like it to be at a nice place (it gives me an excuse to dress up).
Things I don’t care about
- Alcohol – the mark up at bars and restaurants is ridiculous, so I’m okay with either drinking my own at my place before going out or just having water with dinner
- Movies – It’s just cheaper to wait until it’s on TV or On Demand, tickets are expensive and so are the snacks there. Not worth it.
- Temporary indulgences (like manicures or hair coloring) – Either I can do it myself or the constant maintenance fee is something I don’t want to deal with.
- Apartment and Car – These are huge expenses, and once you move up it is really difficult to let yourself move down again, so I am keeping these as cheap as possible for as long as possible. I live in the least expensive apartments I can find, with roommate(s), and I drove my 1999 Mazda 626 into the ground before recently buying another used Mazda.
I’m sure there are a million different variations of these priorities. What’s important is that you take the time to think about what you actually want to spend your money on, and what you can live without.
Once I had these lists and my budget in place, it was really just a matter of sticking to it.
Over the next 15 months the money piled up, literally. At one point I had over $14k in my checking account, which was a huge amount of money for someone who had only ever worked seasonally or hourly. I even got to go to Monaco for a long weekend to visit my college roommate, who was getting her Masters there (the free apartment to crash at made it doable). But I used most of it to pay off 2 of my 4 student loans, establish an emergency fund, be able to move out of my parents’ house, and only have to work one job to support myself comfortably.
This was a pretty exhausting year or so for me, but I wouldn’t change it for the world, because I learned so much along the way. Even so, this was hard guys. I was exhausted. I lived with my parents. I had almost no social life outside of my various jobs. I didn’t date. It was a big sacrifice in a few different ways, but it was worth it to me.
What have you guys done to pay down your student loans faster? I want to hear stories!