Student loans suck. However, with how much higher education cost these days, along with the fact that most employers want to see a Master’s degree, most people have them. And they suck. Here’s my story with student loans:
I got married to my beautiful wife in November of 2014. She was a teaching assistant/teacher and I was in public accounting. Together we had approximately $22,000-$23,000 in federal student loans with an interest rate of approximately 6.5%. We really wanted to get rid of this quickly. So we made a plan:
- Refinance the loan to a lower interest rate (We used SOFI for this).
- Put my wife’s entire salary towards the student loans and just live off of my salary.
- Cut back on unnecessary expenses and stop caring what people thought about us.
And so that’s what we did. We put almost every extra dollar we had toward those darn student loans (a little went to travel savings because we love to see new places). Even when I got a $5k bonus for passing the CPA exam, we put about 75% of that towards the loans. As I mentioned in my Setting Financial Goals post, we won in the short-term so we could win in the long-term. And sure enough, by November of 2015 we paid off the entire balance. DEBT FREE. And boy was it amazing. We celebrated with a nicer-than-usual bottle of wine. And boy was that amazing too.
But setting this goal didn’t come without it’s sacrifices. We didn’t go out to dinner but once a week as we tried to cook at home to save money. Turns out, we really love cooking, and doing this allowed us to spend time with each other and really explore new foods. We lived in a cheaper apartment away from our friends and further from the cool bar scene was. We found free activities for date nights. We always thought about purchases for a couple days before we actually bought something. Little things like this added up and we were finally able to pay off 22-some-odd thousand dollars in about 12 months.
We had to put aside what people thought about us and stick to our plan. While debt is no fun, we learned a lot about ourselves and our goals in the process.
Student loans suck. But don’t let them ruin your goals. Remember, debt elimination is still increasing your net worth.
How have you tackled debt in your life? Was it successful?