It’s true. I’m going to tell you my secret for how I paid off $25,000 in loans in a mere 15 years. I hope you detect the sarcasm. When I graduated college in 2002, I walked away with a degree and student loan debt totaling $25,000. I made most of the right moves when it came to getting my undergrad degree by paying out of pocket for a community college and transferring to a private school that offered me one heck of a scholarship to finish up. All told, I borrowed only $14,000 to complete the entirety of my education. The bump up to $25,000 happened because I borrowed extra money to live on during my higher ed tenure. And with that, I’d love to tell you a story about how I paid off $25,000 in student loans in 15 ridiculous years.
Let me start by saying that you shouldn’t be impressed with my achievement. 15 years is way too long to carry student loan debt with such a paltry balance. I’ll go ahead and put it into perspective for you. Yes, I walked away with $25,000 in student loans and an additional $12,000 in credit card debt. Because I got a high-paying job right out of the gate, I concentrated all of my efforts on eliminating that credit card debt – since credit card debt is bad debt and all. I annihilated it in 6 months. Yes, 6 months. Now, if I could eliminate a balance of $12,000 in 6 months, why on earth did it take me 15 LONG years to knock out my $25,000 in student loan debt? The answer: It was good debt, so I didn’t make it a priority.
We Didn’t Do Everything Right
Like most people out there, we didn’t do everything right when it came to our money. Shocker, I know. In fact, not only did we not do everything right, we screwed up. A lot. So, if you’re beating yourself up because everyone else seems to make perfect decisions – Stop It. It’s not too late to start on your own remarkable financial journey. Remember, the social media accounts of your friends, The Joneses, is probably not an accurate portrayal of their actual life.
Off-Topic Rant (Enjoy)
The great thing about reading personal finance blogs (like this one) is that they’re motivating. The crappy part about reading personal finance blogs is that they can make you feel like you’re the only person in the world who made money mistakes. I want you to know you’re not!
And, our blog is not one of those blogs. Our blog is chronicling our journey from rags to riches, with plenty of errors in the bag along the way. We want you to know you’re not alone, it’s not too late, and that you, too, can reach financial independence after the age of 30, 40, or even 50! Trust me, no one around here will be retiring before 30! Unfortunately, we will never qualify for that Yahoo headline. And that’s okay. We’re still going to retire a decade or two ahead of schedule. And I’d say that’s one hell of an accomplishment!
Student Loans Are Good Debt
Let’s get back to my most ridiculous money story that allowed me to pay off $25,000 in student loans in 15 years. By the way, I was single when I accrued this debt, so there’s no dragging Mr. MMM into this mess. Nope, this is all on me.
First, let me explain that I took on an additional $11,000 of debt because I didn’t want to work during those last two years so I could concentrate on maintaining my near-perfect GPA. This was important to me because I was still on the med school tract. Hence, I borrowed the extra money to free up my time to study and to subsidize my living expenses those last two years. Granted, even with the additional money I borrowed, I still escaped higher ed with a tiny loan amount, compared to some of the extraordinarily high balances I read about these days. Two thumbs up on that one.
Thankfully, yours truly was awesome enough (joking) to receive an academic scholarship to finish my undergrad at a private school after the community college. The scholarship required me to only pay $7,000/year. Wow! That was quite a discount off their then $35,000/year price tag. I jumped at the chance. So far, so good, right? Right.
Don’t ask me what I used that extra $11,000 for. At the time, I was living with my boyfriend, so I can’t even blame it on rent or anything super important.
Things I used that extra $11,000 on:
- Car Repairs
- Mobile Phone
- Hair Highlights
- Beer – Ha! Just kidding. I wasn’t a beer drinker. I bought Wine 🙂
Despite having borrowed a total of $25,000, as I’ve already stated, it really wasn’t that much money. And, there is no way I couldn’t have paid it off within a year or two, post graduation.
After a few years of paying several student loans that equated to just under $600 EVERY month, I decided to consolidate to one payment. I went through Sallie Mae. I’m sure you know her 😉 Not only was I able to consolidate, but they also gave me the option to stretch out my payments (so nice of them) so that my monthly bill would hover around $200 for all the loans! Obviously, as a young and dumb grad (again, this isn’t one of those ‘we did everything right blogs’), I went ahead and signed on the dotted line. Needless to say, I was ecstatic with my new payment schedule and just kinda ignored HOW FAR those loans were going to stretch into my future.
Well, we got this far together, so I might as well go ahead and tell you how far those loans stretched. Drum roll…
The Final Payment
Ever since Mr. MMM and I started our financial independence adventure, we set out to eliminate ALL debt – including those pesky consolidated student loans I had sitting around. At the start of 2016, those loan balances still totaled $10,000. I’m happy to say that those current balances are Paid In Full. No way were we going to have that debt lingering around until the year 2028. No way.
What about you? Did you attack your student loan debt right after graduation? Or, did you let it linger for way too long?