Student loans: destroying them. Share your story.

[smaze]

As soon as I had student loans, I knew I didn't want them anymore. Yes they are a means to an end, but why keep them around? Here's my progress thus far, I'd love to hear how others are doing too!

Degree: Physical therapy grad 2014
Salary: ~ 65K

Loan balance:
June 2014: $92,000
June 2015: $70,000
June 2016: $46,500
March 2017: $27,000

How am I doing it? - cheap cheap rent including house sitting when possible. $2500 subaru outback with 100k miles.  no kids. hiking for fun. still have a flip phone - ha! but I'm weird like that I would still have it regardless of loan situation.

My motivation: All i have to do is calculate daily interest paid. It makes me mad, and then I just want to save more!

[clarkfan1979]

Great story of paying off your student loans. What are the interest rates?

I actually took the opposite approach. I make somewhat minimal payments on my student loans and buy rental houses instead. I'm fairly conservative. However, real estate was so cheap during the recession, I couldn't pass it up. This meant extending my student loan payments.

My friend and I both graduated from grad school in 2011. He is a hard core Dave Ramsey fan and he paid off $90,000 of student loans in about two years with the help of his wife. They made around 100K combined and lived off of 50K. Then they spent the next 3 years saving for a 20% down payment on a house. They finally purchased a house in 2015 after the housing market had recovered. This is a great system for them. I am very happy of all of their successes. However, my story is much different.

My loans peaked at $56,500 in January 2012, the same month I closed on a house with 5% down. I bought it for 95K and it's currently worth about 225K. I also have another house that I bought in grad school for 182K in 2007 and it's now worth about 330K. I have about 350K of real estate equity across the two rentals. They generate $2,100/month more than the total mortgage. After repairs it's about 1,600/month. My friend probably has around 75K of house equity and no rental income.

My student loan balance today $34,000. I pay around $2,000/year in interest. The first year it was around $3,000.

My friend gets to brag about being student loan debt free, which he should. However, he gave up the opportunity cost of buying real estate during the recession when he decided to plow through his student loans. I chose a different path and I am very happy with the results. 

[runewell]

Right, if the interest rate on your student loans is low (<4%) it might be more advantageous to retain them in favor or potentially higher long-term stock market returns.

[smaze]

The interest rates ranged from 5.15% - 7.9%. It was the 7.9% that really freaked me out in the first place. Anyway, all that's left now is the 5.15% and even though I could ride it out I still think there's a chance I'd do better than the stock market. And I can absolutely guarantee I'll feel awesome when I'm done :)

I just don't know if I'm the type to want tenants, but that sure is a sweet story on your rental houses!

[Capt j-rod]

I've plowed through my wife and my student loan debt at a rapid pace... AFTER I maxed out retirements, invested in rentals, and paid off everything else other than my primary mortgage. I still look at interest rates, but I almost value the amount of cash at the end of the month more... It is against the grain, but more cash = more opportunity. I can write a check and pay off the student loans tomorrow, or I can buy another house, and get $700/month in rent and add that to the payment. Long term I continue to get the rent. I know it's kinda backwards, but once you have the money you can literally do no wrong. If I don't have the cash, the bank won't generally lend out on the properties that I buy. I often get my head all screwed up in this. I then remind myself to step back, drink a glass of beer, and enjoy the progress and freedom that I already have. The games we are playing are a long haul slow grind. There are no scratch off lottery winners in mustachianism. I am way ahead of my friends and family. They all think I'm crazy, but I own 2 houses outright, and two more with liens. They are upside down in one house and can't afford a new furnace. Come Friday night, they all go out to eat and "reward" themselves. I grill chicken, and drink a "good beer" on Friday, while eating produce from my garden. I vacation with a tent and a canoe, they go to Disney. Remember to put money into a money making machine that will work for you, while paying off debt that is working against you. The longer that money has to grow the more it will produce.

[lchu]

I paid the minimum monthly payment on my student loans for four years after graduating, swearing I would put in more money when I could, but never managing to "find the money" to actually do it.  My total loans were around 60% of my salary, which felt pretty scary, and the monthly payment was easily the largest line-item in my budget.

A year and a half ago, I read the "Your Debt is an Emergency" blog post and saw the light.  Pre-Mustache me was saving $50/month as a "travel fund" in a 0.5% checking account while paying 6.8% on student loans and whining that I was trapped by my student loans.  Sigh.

I set a then-ambitious goal that I wanted the loans gone by the end of 2017 -- and it blows my mind that I just made my final payment on them this evening, nine months ahead of schedule.  :-)

The destruction came from a combination of lowering my expenses and increasing my income:

* Deciding to prioritize repayment --> I can't even begin to explain the mental gymnastics I went through to convince myself of this priority.  At one point, I had this weird mental game of taking the "total amount saved from coupons" line from the bottom of my grocery receipts and paying that amount extra into my loans that week.  I would have spent the money anyway, but now it was going towards the loans?  Regardless, it worked, and after 4-5 months, it just became automatic that any "extra" money from the month or any "found" or "windfall" money was going into my loans.

* Eliminating shopping for fun and paid entertainment --> Amazing what can be done with things you already have or finding alternatives that are free.

* Optimizing expenses --> Lowering my electric, gas, internet, and cellphone bills turned into a game that beefed up my monthly payment.

* Windfall money --> I was fortunate to find a part time side job in my field that meshed well with my work schedule and all of those earnings went to directly to my loans.  This is really what made it so I paid them back so far ahead of my goal.


It feels stunning to see the steady increase in payments over the last year -- it's like you can see the mental changes unfolding.  Anyway, I can't wait to start making these kinds of monthly payments to myself and my newly opened retirement accounts instead of Sallie Mae!

[recklesslysober]

I paid the minimum monthly payment on my student loans for four years after graduating, swearing I would put in more money when I could, but never managing to "find the money" to actually do it.  My total loans were around 60% of my salary, which felt pretty scary, and the monthly payment was easily the largest line-item in my budget.

A year and a half ago, I read the "Your Debt is an Emergency" blog post and saw the light.  Pre-Mustache me was saving $50/month as a "travel fund" in a 0.5% checking account while paying 6.8% on student loans and whining that I was trapped by my student loans.  Sigh.

I set a then-ambitious goal that I wanted the loans gone by the end of 2017 -- and it blows my mind that I just made my final payment on them this evening, nine months ahead of schedule.  :-)

The destruction came from a combination of lowering my expenses and increasing my income:

* Deciding to prioritize repayment --> I can't even begin to explain the mental gymnastics I went through to convince myself of this priority.  At one point, I had this weird mental game of taking the "total amount saved from coupons" line from the bottom of my grocery receipts and paying that amount extra into my loans that week.  I would have spent the money anyway, but now it was going towards the loans?  Regardless, it worked, and after 4-5 months, it just became automatic that any "extra" money from the month or any "found" or "windfall" money was going into my loans.

* Eliminating shopping for fun and paid entertainment --> Amazing what can be done with things you already have or finding alternatives that are free.

* Optimizing expenses --> Lowering my electric, gas, internet, and cellphone bills turned into a game that beefed up my monthly payment.

* Windfall money --> I was fortunate to find a part time side job in my field that meshed well with my work schedule and all of those earnings went to directly to my loans.  This is really what made it so I paid them back so far ahead of my goal.

It feels stunning to see the steady increase in payments over the last year -- it's like you can see the mental changes unfolding.  Anyway, I can't wait to start making these kinds of monthly payments to myself and my newly opened retirement accounts instead of Sallie Mae!

Amazing story! Congratulations on paying them off! Crushing the retirement accounts instead of watching your money drift away is going to be fantastic, especially now that you've made saving money a habit. Awesome. :)

[TheInsuranceMan]

Paid $29k off when we sold our first house, which was about 13 months ago.  Kept enough from the equity in our first house to allow us to update the one we were buying with cash instead of going in debt.  Of the student loans I had at the time, the 29k paid off all the 6%+ interest rate ones, leaving me with one at 5.25% and the rest at 3.15% (or something like that).  I have 16k remaining to be paid off though   :(

[Steve Rogers]

I might as well chime in. I paid off 57k of student loans in 20.5 months. The 4 student loans interest rates ranged from 6.5% to 8.7%. I was able to accomplish this by living at home for a little and making about 6 figures last year. Now that they are gone its time for the real fun of wealth accumulation. 

[powskier]

My wife's grad school loans are at 2.25%, every time she mentions wanting to pay them down I tell her to transfer that money to her brokerage account instead.
So far the past 8 years have proved it is the better choice for us.

[MasterStache]

I was dumb and financially illiterate as I paid off several thousands in student loans with interest rates less than 1%.  This was about 7-8 years ago. I just hated being in debt. Thankfully my total loans only amounted to 20K. My GI Bill paid for about 80% of my tuition.

[NV Teacher]

When I was getting my undergraduate degree my dad died.  Since my mom still had three kids at home I decided to get loans to finish my schooling rather than help from my mom.  I took the loans out through my local bank not realizing that they in turn would be selling them to a loan financing company.  So I graduate, get a job and get ready to start paying back the loans.  Well about half of my loan had been sold to one company and half to another company.  The bank said that they had meant to sell them all to one company.  I tried to get each company to sell to the other one so that I had them all in one spot and would be able to make one payment.  Neither of them would sell.  I ended up making a payments to each company.  It was a challenge on a beginning school teacher salary but in the end I paid them off twice as fast as I would have it they had all been together.

[SomatoseVisions]

More of an overall college funding success story, but here goes. I have had the benefit of working for an employer who reimburses $5,000 a year in education expenses, helping my funding tremendously. I made the most of this by completing my bachelor's degree slowly, two credits at a time, and by first getting my associate's at a local community college. While the community college was affordable enough to be completely funded through my employer's tuition reimbursement policy, the college to which I transferred in order to complete my degree was not.

Over the next few years to pay my remaining tuition balance I took out a total of $10,000 in subsidized student loans. Using savings I had piled up, I paid off this balance in full the month after I graduated. Theoretical interest rate. 3.86% - 4.66%, actual interest paid - $0.00

[alewpanda]

My student loans were at 6.75%!  :( 

But, they are gone! :)

Really, though...the celebration was that my otherwise un-mustachian parents did teach me one thing, to not go into debt for school if you could at all help it.

Most of the siblings managed to work and save and pay for their state tuitions without any debt at all.  One even had enough cash leftover to buy herself an 11k car when she graduated!

I had 20,000 in the bank in staggered CDs when I was 19.  I had worked since I was old enough to, babysat before then, and took a year off in between high school and college to work two jobs. 
I went to an out-of-state private college out of my own desire, got a 1,000 a semester scholarship for grades, and 500.00 a semester grant. 

I wrote the other 4,500.00 check to my school the day of enrollment for my first semester.  I think the financial aid lady almost fell out of her chair. 

I continued to work, got married (a wedding we paid for ourselves), and only ended up taking out 7,000 work of student loans.  Husband had 12,000 from a previous school.


By the time I graduated, his were already paid off because we despised debt and each worked 3 jobs (I count full time school as one of mine...lol).  Mine were high interest, so those were the next to go! 

Be smart students! Then you don't have to crush the loans!  lol....


Good for you on your payoff though -- I can only dream of that kind of disposable income right now :D

[ingrownstudentloans]

When I was getting my undergraduate degree my dad died.  Since my mom still had three kids at home I decided to get loans to finish my schooling rather than help from my mom.  I took the loans out through my local bank not realizing that they in turn would be selling them to a loan financing company.  So I graduate, get a job and get ready to start paying back the loans.  Well about half of my loan had been sold to one company and half to another company.  The bank said that they had meant to sell them all to one company.  I tried to get each company to sell to the other one so that I had them all in one spot and would be able to make one payment.  Neither of them would sell.  I ended up making a payments to each company.  It was a challenge on a beginning school teacher salary but in the end I paid them off twice as fast as I would have it they had all been together.

I hope you aren't a math teacher....

[aaahhrealmarcus]

I used the "debt stacking/avalanche" method (I called it the "debt star" in a recent blog post, heh) to blow away my student loans.

http://www.minimallynerdy.com/2017/01/10/debt-star/

I didn't owe a HUGE amount to begin with, around 40k, but I was able to pay it off in around 4 years by targeting the loans with the highest interest rate and paying those off first. It wasn't long until the worst was behind me, and it was all downhill from there! Been student loan-free now for almost a year and it feels AWESOME!

[MM_MG]

~$60K remaining at 2%...I pay the minimum.  Every now and then I get the urge to just wipe out the balance as it is my only debt, but we just continue to invest the money elsewhere. 

[Bo-rrific G]

Well, I did it.  Managed to pay off my student loans AND my husband's student loans.  We owed just under 200k combined, and since my husband hasn't worked in 4.5 years, I feel particularly proud.  Now I have to figure out a way to convince my husband that moving is the right choice... I hope we can lower our monthly rent by half...   

[financial_muse]

I incurred about $30k in student loans for my accounting degree.  I kept the student loan costs low by going to a community college / state school.  Additionally I worked full time while attending school in the evening and weekends. 

I ended up graduating with only $12k in student loans with the rest paid off while attending.  I crushed the remaining balance by making large payments month to month and by using most of my tax returns to kill this debt. 

Hope this gives some inspiration to everyone out there weighed down by student loan debt!

[YoungGranny]

I'm actually starting a podcast about financial topics and my first recording was about student loans. I killed mine in a year, they were right around $18k in total. I actually lived in a higher cost of living area at the time (Chicago) and was not super mustachian at the time so I lived in a 1bd apt for $1k a month. I was making right around $55-60k and did it by keeping transportation cost low (car-free, $85 CTA pass got me everywhere I needed to go). I also still enjoyed life but when I went to happy hour with co-workers which was common since I was in consulting I would get 1 drink and since they had happy hour specials it was usually $2-4 and then I'd wait to eat until I got home. I also enjoyed loads of free festivals throughout the summer with free music and stuff and just didn't get suckered into buying the overpriced food and drinks. I only lived there for a year but I truly enjoyed life while paying off my loans. I think it's important to remind non-mustachians that you don't have to be a hermit to achieve big goals you just need to have a little more planning than usual.

Fastforward 4 years since my last payment and I am so happy I'm not still paying on them. I had 6.8% interest but more importantly I don't feel like I have a burden hanging over my head. Plus since I got into the habit of saving early I've been able to own a car with no payment, put 20% down on a house, and buy a cheap condo to use as a rental unit with cash. I mention all this not to brag but to help people in the struggle realize it's SO WORTH IT.

[BabyShark]

This isn't a huge thing and it's mostly because we're very lucky and in great circumstances but we were able to pay off my husband's $68,000 student loan this month using proceeds from our first home sale!  Don't have anywhere else to really share it but I'm thrilled!

[EricL]

tl;dr version: Face punch worthy college debts + face punch worthy credit card debts worked off by paying half my Army officer paycheck.  Then paid using all of the paycheck thanks to wartime deployment.  Lessons learned helped me fumble to FIRE.


I left the Army after 4 years and went to college.  I graduated realizing my degree wasn't worth anything except as a road to a higher degree with more debt.  (face punch.)  I'd also used credit cards for several face punch worthy purchases and at an ugly interest rate. The GI Bill covered living expenses but tuition exploded more than the Army anticipated.  (Millennials note: This was in the mid 90s.)  Fortunately, I had attended ROTC.  So instead of going into the reserves I went active duty, forwarding a fake address to creditors.  If they found out I was in the Army they'd hassle my commanders mercilessly and through them, me. 

I survived training at Fort Suck until my first paycheck. Though so broke I didn't have a car and went to church in jeans in a t-shirt.  This prompted the chaplain to write an article in the Fort Suck Times about inappropriate church attire.

After a few months I got a few paychecks under me and I called my creditors.  I worked out I'd them pay half my paycheck.  It sucked.  But the upside was they wouldn't hassle me or my commanders.  And half a lieutenant's pay ~= a senior enlisted man's pay (E4) which I already knew how to live on.  Not having a spouse proved a big plus. 

Even at half pay credit card interest debt would've kept me in debt for my entire term of service and then some.  But then a stroke of luck occurred.  It was good luck for me and the pricks at Haliburton, bad for, well, almost everyone else.  The Global War on Terrorism kicked off.  I got deployed to Iraq for a year.  With nothing to buy more exciting than toothpaste, I piled 99% of my pay into the debts.  The good luck - for me - held. I survived with nothing but HQ sausage factory tales. The debts, I'm happy to say, did not. 

Because I'd lived lean for so long it was nothing for me to put half my paycheck into assorted investments and build a 'stache.  I wish I'd have heard about MMM earlier.  I could easily have invested more money and left the Army before formal retirement.

I don't always feel the MMM way is something that can happen because people are smart.  I think that if I, not the brightest spoon in the drawer can do it, than anyone can.

[zoomzip]

DW and I had an enormous amount of student loan debt when we graduated 10 and 12 years ago respectively - mine was about 180K at its peak (10K from undergrad, 170K from private law school), and DW was about 200K (nursing school and law school).  I completely paid off my 180K in 5 years and my wife has hers down to about 35K.  In the meantime we've managed to acquire a substantial seven figure net worth. 

For us it was a matter of luck, focus, and living below our means.  I only found FIRE about 2 years ago but I've always hated being in debt and had a frugal nature. I didn't build up too much cushion, didn't buy anything too silly, lived within walking distance of work, and just put every penny I could towards the debt.  It delayed our wedding and kids a bit and while I regret taking on as much debt as I did, things have worked out.