My student loan journey started when I was in undergrad studying business. I knew I was getting loans and even my parents were getting loans, but I just didn’t know or care to know about the payback process at the time that I was initially signing for and receiving the loans. I attended a state university where the tuition was only about $12,000 a year. So I figured I was in good shape. My first year of school, my parents paid my tuition outright and we didn’t get any loans, but my sophomore through senior year was funded primarily through loans.
Paying Back the Loans
I received my first bill for loans about six months following my graduation. My loans were done through Direct Loans and they didn’t offer much in the way of incentives at that time for paying on time or ahead of schedule or anything like that. I didn’t know much about interest when I began repaying the loans, I say loans because I had about 6 of them, one for each semester of school between my 2 and 4th year of undergraduate studies. I don’t know how much my parents were paying in their parent plus loans, but my loans were totaling around $28,000. Each month that I received the loans, I just made sure to pay my balance by check or money order, I didn’t even check the balance each month to see how I was doing with the repayment. Each month I just kept paying and paying. It took me about 4 years to look at my balance one day and realize that I wasn’t making any type of headway in paying down the principle balance. I had only decided to start taking a closer look at my finances, when I decided that I wanted to go to graduate school for business and I wanted to take some time off of work, so I figured I needed to evaluate how much money I was paying out every month. I got really afraid when I realized what was happening.
Refinancing Student Loans
I decided I had too many loans and that’s why my repayment process wasn’t making any dents in the principle balance. I decided to call my student loan provider and try to figure out how to refinance, they told me they I couldn’t refinance but I could get a drop in my interest rate if I did an automatic withdrawal from my account each month and for a certain number of consecutive on time payments. I was pleased with this small victory, but each month I continued to see all of my money going toward my interest on the loan and not much going toward the principal. This went on for another year or so until Direct Loans allowed me to consolidate my loans into one loan. This was very empowering and I felt like I had more control over my life. I really wanted to buckle down and had already started applying to grad schools, so it was really important that I get these balances down. I got really serious and sold my SUV and began taking the bus to work. I had also been putting money into my savings every month, with the hopes of making a big payment to Direct Loans at least once a year. After selling my car, I was able to save more money all around. I was making about $47,000 a year and my rent was only $499.00 a month and my car loan had been $540/month. Now, with the extra $540, I started putting the $540 towards my student loans. I also began cooking at home and without my car, I couldn’t do as much aimless shopping as I had become accustomed to doing. The experience allowed me to really push forward and pay off my student loans in about 3 short years following my changes. I was proud of myself, but when I went to graduate school, I picked up $30,000 of debt there, too. But this time I knew how the interest game worked and I had a game plan to pay off those loans as quickly as possible. I graduated with my master’s in business in 2010 and paid off the $30,000 in student loan debt in 6 years. I wish I could have paid off the debt faster, but during this time I had the opportunity to buy a really nice condo in Washington, DC, so it slowed my repayment process a bit but it was well worth it to live in the city. I hope my experience inspires you to take a closer look at your finances and make adjustments to pay any loans that may be holding you back or even just push you to meet whatever your financial goals may be. I recommend Credit Karma for tracking your credit, as I have used them for years with no problems, they even alert you to data breaches and inquiries to your account.
Here are a few points that really helped me:
Get Organized
One of the things that’s really helped me over the years, is tracking my expenses every day. I used Microsoft’s Excel, as Excel has a lot of templates for budgeting that are useful. Well, each day I plugged in my daily expenses for breakfast, bills and any and everything I was spending money on. This really let me know what I was buying and helped me budget more efficiently as well. The one I used was called “Personal Monthly Budget”. This one helps you track your actual vs your budgeted expenses. There are plenty of apps that do this as well, there’s one called “Mint”, “Every Dollar” and Wells Fargo and other banks also have apps and features online to help you keep a budget, too.
Side Hustle Time
During the height of my payoff, I worked my regular 9 to 5, but I also did side jobs. I’m not talking a part-time mall job, although I did try that but it worked against me since I shopped more than I saved. For my side hustle, I signed up with a promotion company, actually several of them and I did promotions after work or on Saturday mornings. I did everything from handing out samples at CVS and Walmart to wine tastings and modeling at in store promotions. Many of the companies that I worked are doing different kinds of work now, but Big Orange and CMT Talent are some great companies that are still heavy into promotions and pay anywhere from $25-45 an hour depending on whether you are working a small event or doing a big Convention Center event.
Tax Season is Pay Off Season
I think this goes without saying, but some of my biggest pushes have come from tax return checks that have allowed me to just make lump sum payments to get down credit card debt and make huge dents in my student loans that really kept me motivated to save. If you are lucky enough to get a tax return, take it and immediately use it to pay off high interest loans or credit cards or at least put it in a high yield savings account for future unforeseen expenses.
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