I’m No Dave Ramsey But… Student Loans 101

I’ve gotten many questions recently in regards to paying off student loans. There are a few different options that you can take when addressing this issue, but I will talk you through what I have been doing.

To give you some background, I had undergrad and grad school loans totaling about $160,000 after graduation. People always tell me, “Oh you should’ve gotten scholarships” or “You could’ve went to community college” – Yes, I get it. But the reason I chose my school was:

1) To get my Doctorate in 6 years at a 3+3 program – hellooo one less year of school

2) As long as I maintained my GPA, I wouldn’t have to take the GRE to get into grad school

3) I did get scholarships. Half-off tuition for my first 4 years, 1/3 off for my last 2 years. In addition to some amazing other scholarships (Huge thank you to Central Scholarship) for a few hundred to thousand each year. So yes, this debt is on TOP of those.

And if anyone says the whole “you should’ve worked while you were in school.” Yeah, not buying that either. I worked multiple jobs while in school, of course at a minimum wage rate. I did anything from help at athletic events to answering phones, and on holiday breaks and some weekends I was a cashier back in my hometown. Yes, this is in addition to playing a collegiate sport and being involved with just about every club on campus. As you can see, I was very busy.

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So back to the loans. In May 2015, I had about $100 to my name, $160,000 in student loan debt, and a brand new car loan (another $17,000). My car had been a run down car for years, literally car parts fell off on the road, and I had decided the safest/best thing for me was to invest in a car for the long haul. I knew I wasn’t going to end up living near my family, so knowing I had that for safety was comforting, even if it did add to my debt.

I moved to my first apartment in Virginia Beach in June 2015, all by my lonesome. I figured, I’m going to be a PT, I can afford this! Sure, I could, but not with much leftover. I immediately upped my credit card limit (I hadn’t done that since I was 18), and invested in a nice mattress and a $15 folding table from Craigslist. All I needed was a good night’s rest and a table to sit and study at (because yes, I started working before I took my licensing exam). I spent that first month working and studying just about every night until my boards came, luckily I passed.

I was able to start saving about $50/month to rebuild up my personal accounts. I saved a little more these first few months before my official loan payments started since I had my new “big girl” paychecks, but I also wanted to start adding a little furniture to my life. Maybe eat some food, ya know.

I have always been a frugal person, never really buying anything unless I needed it, so the need to save money came pretty easy to me. I learned to focus on things that meant a lot to me, spend a little on that to treat myself, but put a majority of my paycheck to getting out of debt.

First thing was first, my credit card.  This by far had the largest interest rate and the lowest amount of debt, so I wanted to tackle this first. All of my extra money (besides necessities and $50-$100 to savings) went to this initially. I wanted to get rid of it stat. To this day, I still use my credit card, but pay it off immediately. This way, I get the perks of having credit and getting points, but I don’t have to pay that crazy interest! This is important. I would recommend targeting whatever debt has the highest interest rate first!!

Once this was paid down a few months later, I began paying my student loans – only part of what my eventual monthly payment would be, but I wanted to start as early as possible because I knew it would benefit me in the long run. Every day that passes is just another day of interest accruing! So yes, I am also that weirdo who wants to pay the random $20 payments whenever I get it – even if that means I make 10 payments a month – JUST because that $20 could equal $30 next year.. and that’s $10 that I could’ve spent on cute lattes, just sayin.

When my loan payments were about to begin, I made sure I had the right plan. For me, the standard plan was not going to work the best. It was around $1600/month for 25 years (AHH). I could pay that, but I wanted to make sure that while I was starting my career and life, I had a little give just in case I needed it. Plus, my savings account still wasn’t looking great. I opted for the extended graduated plan, meaning I’d start around $600/month. This would then increase by 100-200 every 2 years. I figured I would still continue to pay as much as possible (sometimes the same as the standard amount), but like I said, I wanted to be able to have money just in case something happened!

About 2 months after I began my loan payments, I decided to get a PRN job. This was always on my mind, just because I had almost always worked a few jobs at a time. I just wanted to allow myself a few months to get adjusted to the real world. I already worked full time in an acute hospital, but I lucked out and found a PRN job that was perfect! A few hours here and there when I could, and my boss was super chill (yes, that can be hard to find). I decided that all of my PRN money would go straight to my loans. This could be anything from $50-$300 a paycheck

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This trend continued for a few months and I was eventually able to get my credit card payment down to 0, my car payment down a little bit, and still pay all of my other bills on time (loans, rent, etc). It was going well, BUT I will say one thing I don’t necessarily regret at all, but would advise, is that you do not live alone for a few years. I’m not saying you have to live with your parents, but at least have a roommate if you can tolerate it.

After a year on my own, I moved in with a roommate while my boyfriend (now husband) was over in Japan. By cutting my rent payment in half, I was able to put a solid extra $400 towards my car and student loans each month. I ended up prioritizing my private loan first (highest interest), the first federal loan I had (small but through a different company because my college switched after my first semester), then my car loan (2ndlargest chunk), and then my GIANT federal loan.

Certainly, the smartest thing is probably to pay off whatever has the most interest. Which is basically what I did. BUT my car definitely had a lower interest rate than my giant federal loans. That being said, I just wanted to get rid of it.

At one point, I ended up doing a travel job for 3 months while keeping my PRN jobs a few hours back. Yes, I traveled at least once a month to work at those jobs, meaning at times I’d work 12 days in a row. It sucked, but it was fine. I was alone in the mountains and had plenty of time to explore and hike. It was cool, but I could talk about travel therapy a different time.. Long story short of that snippet of life is that: I made a lot of money to put toward my loans. Definitely a perk of travel therapy.

The months to follow consisted of juggling multiple PRN jobs trying to get as many hours as I could before I decided to leave and live in Japan for a few months. While I knew my husband and I would have the funds to make ends meet, I wanted to know that I’d have enough money to put more towards my car and loans, if possible. EVEN if it was only $5 extra. I had saved up about $12,000 alone just to live off of. That sounds like a lot, but when you have to live off of it for 8 months and you have about $1,000 in bills alone (car+loans), it doesn’t get you very far.

In Japan, I super budgeted because I wanted to be able to travel as well. Yes, I EVEN traveled these last few years. I stayed in hostels and went to Malaysia, Thailand, Bali, and Singapore on my own. While I didn’t have to work when I returned to Japan, my husband and I both knew how much it meant to me to be able to pay for things myself. STRONG INDEPENDENT WOMAN YA HEARD. (of course, marriage is about give and take and this was definitely a moment where I had to learn that it was time to let my husband take care of me…again, another story).

I worked as an English tutor in a variety of ways. I taught conversational English, I edited translated papers prior to MDs presenting them in International conferences, I taught anatomy to Chinese Medicine lover, and I even taught English at adventure camps. I wanted to make money and make the most of this experience – my loans ALWAYS hovering over me in the back of my mind.

Flash forward to now, I’ve been in San Diego about a year and have had multiple different jobs. I have been out of school for almost 4 years, paying on my loans this whole time. I have gone from $160,000 in student loans to $99,000 (although my interest is still 5.3% which means I pay about $530 in interest only every month! So yes, think about all that interest I paid off already…). I have no credit card debt. My car is paid off.

Since I have been in San Diego, it has been incredibly helpful to live off of one income instead of two between my husband and me. All of my income goes to my student loans. I fully understand this is not a luxury that everyone has, but here are some things I can recommend knowing what I have been through and what I am still currently going through:

  • Live with a roommate. Your friend, a stranger, your boyfriend (if it’s the right time lol) – whatever. It will save you money.
  • If you qualify for loan forgiveness by working for a non-profit, apply for it, but don’t bank on it. That’s 10 years and I BET you could pay it off sooner if you really dedicate yourself.
  • Treat yourself, but don’t get crazy. Put that $5 towards your loans instead of that latte every once in awhile, that’s a treat in itself.
  • If it makes sense for you to consolidate, do it. But make sure it’s the right company and that you aren’t trying to get PSLF – because it may not qualify after you consolidate.
  • Pay off whatever interest is higher. I have my giant loan now and instead of paying towards all of it each time, I am paying directly towards my large, high interest (6.95%) loan. This means my interest that accrues each month drops since it is such an outlier. SUPER helpful!
  • If you can find a trustworthy company that can refinance your loans for a lower percentage, GO for it. I personally think I should but haven’t looked into it enough yet to do it. We will see!
  • COUPON!!! I use so many silly apps, answer surveys, watch random things for pennies -no joke, I wrote a blog on them here. And then I just put this $20 at a time to my loans. It’s simple and makes me happy 🙂
  • Breathe, try not to cry. But then if you do cry, remember you’re not alone. This sucks and I think everyday about what I could be doing with all my loan money. (Last year I paid $11,000 in interest ALONE on top of the $14,000 I paid to my principal balance. And yeah, we only get $2,500 deducted from taxes..)
  • Something else might work for you—I have heard of people investing instead and paying things off later. You do you, but don’t forget about your mental health! My anxiety about everything alone makes paying these silly things off SUPER worth it.

LennyLarryYou are NOT alone in this battle. I hope my journey has given you some insight!! I am super hoping to pay my loans off totally in the next 3-4 years. That’s my goal!! We got this!!

Feel free to email me, DM me, comment, whatever – if you have any questions/comments 🙂

Until next time,

Jen

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