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. Let’s start from the beginning shall we?
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, getting A’s (okay… not always A’s), 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 are just the ones that are 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 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.
Panic mode. 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.
Fact: Senioritis is a highly contagious virus.
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 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.
Let’s get this out of the way now: this is not an article about how I skipped my 2pm latte at Starbucks and suddenly had piles of cash to throw at my loans. It’s definitely not that easy. I also didn’t have a 2pm latte to cut.
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, but I appreciated the opportunity and the ability to get some more experience while earning a salary. 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’m also glad I took advantage of it while I was still fresh out of college, because if there’s any time to live at home, that’s it.
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. Ok, let’s not kid ourselves, it’s pretty much my only pastime.
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 I immediately applied and was also hired there.
And I accepted both jobs. I would be making 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. Although, honestly, I would probably pick up another retail job in the future if I needed to because it was just fun.
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 for things or you’re always going to have a budgeting problem. I created a Mint account pretty early on and I use it obsessively. I also identified things in my life that I cared about, and the things I didn’t care about, and then I basically eliminated those things from my budget (or at least reduced them significantly). Why waste my money on things I didn’t care about? My lists look like this:
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).
I gave myself a monthly budget for these categories and did my best to stick with it.
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 my car is from 1999.
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.
And then I kept up with this schedule and budget for over a year.
And the money piled up, literally. At one point I had over $14k in my checking account. I even got to go to Monaco for a long weekend to visit my college roommate, who was getting her Masters there (hello free apartment to crash at). But I used most of it to pay off 2 of my 4 student loans, establish an emergency fund, and be able to move out of my parents’ house and only have to work one job.
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. I’d like to do a post on just how much I learned at each of these jobs and how that has helped develop my world view, given me more confidence and know-how, and prepared me for the next steps in my life.
Even though I wouldn’t change it, I definitely don’t want to repeat it. Guys, this was hard. I was exhausted. I lived with my parents. I had almost no social life outside of my various jobs. I didn’t date.
Still want to pay off $15k in 15 months? =p
What have you guys done to pay down your student loans faster? I want to hear stories!