Okay, I will give the exact numbers here. Here is my breakdown of student loan debt before I paid it all off. Whew, what a burden lifted? Debt really does make us endured to the lender. I am in no means special. This just made sense.
Below is a breakdown of my student loan amounts and the associated interest with those student loans. I will give the original amounts and the amount of the loans with the interest added. These are the actual numbers at time of payoff.
Student Loan #1: $79,716 — With interest: $112,357
Student Loan #2: $10,215 — With interest $15,490
Student Loan #3: $18,850 — With Interest $24,021
Student Loan #4: $13,414 — With Interest $15,619
Student Loan #5: $19,069- With Interest $22,405
The total of the principal of the loans were $141,364 however I ended up paying $189,892. I actually paid $48,528 in interest that could have been in my own pocket or saving to send my kids to school But, here is how I did it.
Before I jumped into repaying this amount fully, I needed to have a clear picture of my financial predicament. I realized that I would never pay this amount off by paying the standard monthly payments. This was the original reason I purchased a second home. This was only to pay loan payments the student loan.
With that amount of debt in student loans at 5.5% to 6.5% interest currently, I was paying the loan well over $10,000 a year in interest. And, if I deferred it as I did many times, during times I didn’t have a renter, or during times or renovation, the total amount only continued to grow. So, by listing all of my debts including auto other debts, this helped to give me clear picture.
Then I listed my monthly income and essential expenses. I work in the area of data and IT some I make a relatively decent income comparably to some other fields that I could work in or have worked in the past. I work from home for the most part so many times my time is flexible. I work as an instructor and create courses for many universities and schools. That helped some but my biggest breakthrough was growing real estate assets to reduce debts. You can do this with digital assets or physical assets. In my case I did both, but I had a home that I was renting out to pay the payments for these student loans. During the pandemic, this particular home grew in value to the point I was able to pay off that debt and other debts also.
I don’t like debt in itself because with debt you are essentially working for someone else and this takes some of the enjoyment out of life itself.
With this and other loan payments, I created a realistic budget that would allow me to maximize my loan payments. I also paid of my vehicle which was $35,195. I didn’t purchase another.
- I cut non-essential spending
- I allocated a fixed amount to living expenses and stuck to it. (This can be difficult with kids, but you have to stick to it)
- I used any surplus to pay off debt (no one could understand this but you have to stick to it)
Paying off nearly $190,000 in a year required more than frugality; it demanded an increase in come, funds from side digital products and writing, and some luck in the realty market. I had to watch for opportunities in the market and in home prices.
- I took on multiple side gigs: i.e. freelance writing, tutoring, and home repair.
- I fixed up the home I was renting out to add value (this was during the pandemic)
- I asked for a raise at my primary job.
With the higher income and lower expenses, I set an aggressive goal to pay it off in 24 months.
- I targeted high-interest loans first to reduce the overall interest paid on all loans.
- I make payments 4 times a month instead of once to decrease the principal faster.
- I used bonuses exclusive for loan payments and then the sale of a home that was bought strictly for that purpose of repaying the loans.
Maintaining motivation for such an aggressive goal is challenging. Friends may want you to take those proceeds to use towards other things purchases. To stay on track, I:
- Joined online communities and forums for people with similar goals
- Shared my goals with likeminded friends and family who provided support and encouragement.
- Used financial apps to track progress and celebrate milestones
A significant part of my strategy was living below my means and adjusting my lifestyle.
- I paid off my vehicles and drove them instead up upgrading
- I cooked meals at home instead of dining out
- I created a small budget for entertainment each month
Throughout the process, keeping a positive mindset is crucial
- Visualizing a debt-future kept me going and motivated.
- I rewarded myself for meeting monthly targets in small budget-friendly ways
- I focused on the progress versus the remaining balance
- I was able to also think outside of the box of conventional thought.
Paying off $189,381 in student loan debt within a year was not easy as it required discipline, hard work, and sacrifices. However, the financial freedom achieved was well worth the effort.
Also, remember assets can grow quicker than efforts. I take this into consideration when trying to reach many of my financial goals.
