Author Topic: Paying down 75,000$ student loan debt in less than 2 years!  (Read 6132 times)

summersundries

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Paying down 75,000$ student loan debt in less than 2 years!
« on: November 15, 2013, 07:28:04 PM »
Hi, I have read MMM for a few months but never posted in the threads.  I just wanted to say hi, and let you in on some of the mustachian goodness I've been up to while lurking on the website. Hopefully this doesn't come across as being a braggy pants.  I'm really hoping you'll tell me something new I didn't know.  Honestly that's how I've gotten where I am, by asking every person I meet to tell me what they know about money.  Even if they are a complete anti-mustachian there is a lot to learn about how NOT to do things too!

Ok so I graduated after 7 years and 2 university degrees in May 2012.  I knew I wanted to kill my student loan debts and fast.  I also realized even under ideal conditions, if nothing ever rose (prime remains fixed at record lows for 10 years, yeah right) I would pay 26500$ in interest, just for the right to be in debt until I turned 35 years old.  No thank you. 
I went to a financial planner who told me A.)I was paying just the right amount to my debt with the minimal payments (using those useless pie chart things) and B) when I told her that simply wouldn't be good enough she said if I threw everything at it I might be able to do it in 3 years... maybe.  So I left the meeting and vowed to do it in 1.5 years.  I never went back to the financial planner.

So the math stuff.  I graduated with 2 loans as of Nov, 2012 when they reentered payment:

Government SL: 51660 at 5.5% variable (this is with prime at all time low)
provincial SL: 25133 at 0% (yay!)

I immediately looked to see if I could get any of this forgiven.  I found a program with the provincial loan that would forgive part of it if I could prove I had a very high government loan.  I consider 51000$ a very high sum of money, so  I did the paperwork and they forgave 8000$, cutting my provincial loan down to 17133.  It took me 30 minutes to find the form and 30 minutes to fill it out and go to the post office and mail it, so I paid myself 8000$/hr that day!

Then I started hacking away at the government loan like some beserker.  I found the cheapest place I could live, I choose the highest paying job I could find (moving away from friends and family to get it).  I offered to do all the overtime I could take.  I made a budget using the minimum wage in my area as a reference point. After all, whole families survive off this, why canít a single adult?
And I was a lot happier for it too!  I learned to cook, found all the coolest trails and mountains in my area.  I climbed my first mountain my first year.  I found cool friends who loved walking, beach days, movie nights in, potlucks, free social events held by local businesses.  Sometimes I would see my classmates buying big 1/4 million homes, or buying new cars (half my grad class bought themselves new cars with their first paycheque).  Sometimes I felt a bit jealous, but I only had to talk to them to realize they spend all their time whining about the new home or car, or how broke they were.  Or how trapped in their job they feel.

I plan to have the government loans paid for by December this year.  I only have 2500$ left as of right now.  Total interest paid: 1250$.  Interest saved over 10 years: 25,250$.  think what that money will make with compounding in investments by the 10 year date I would have paid off my student loans!

Obviously since my other loan is interest free I've been leaving it on autopilot.  I'm sure the right thing to do is to start saving for a downpayment on a home, or investing the money... but it is only interest free because the provincial government is trying to get itself re-elected, and they aren't doing too good of a job.  Rather than get side-swiped by a sudden surge in interest charges when they get booted in the next elections, I'm going to just pay it off.  Normally it would run >8% variable.   As of x-mas I'll have 14200$ left on it, and with my left over educations tax credits, Iíll comfortable wipe it out by March 2014.  Do you guys agree I should pay it off or should I see how long the interest free lasts?  I think I just want it gone for the psychological boost of being truly debt-free.  It sounds so cheesy but I totally picture saying to someone when they ask me about my loans "NO MAN OWNS ME!"  like some Hollywood character in a movie.

So yeah that was super long but pretty much explains how and what I am doing.  Do you guys have any thoughts, advice, ideas?  I am loving reading all your posts, especially all the other people also repaying SL like awesome crazy people.  IRL it is almost impossible to talk about finances so itís great to have a forum like this to read and talk on.  All my friends and family are super supportive, but most people look at me like I am insane.  So lets be insanely awesome together!

rollie

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Re: Paying down 75,000$ student loan debt in less than 2 years!
« Reply #1 on: November 15, 2013, 07:54:28 PM »
I don't know that I have any great advice that you don't already know, since I don't know your spending.

But what I can say is Awesome Work! You rock! And I was so very happy to read your inspirational story, and am totally impressed by how fast you have demolished that student loan. Keep at it! And even better, share with us how you did it--what did you save on that you didn't before, besides home and car?

All the best.


Charlotte

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Re: Paying down 75,000$ student loan debt in less than 2 years!
« Reply #2 on: November 16, 2013, 03:31:42 AM »
I would also want to pay off the second loan. But my husband would stop me and remind me that cash is king.

So I would suggest that you save up the cash and then just keep on saving. Maybe pay it off sometime next year, but in one fell swoop. (Or smaller chunks). My husband would want to use half of our stash to do it -- ie, if the balance is 14k, pay it of when your stash is 28k. In the meantime, start increasing retirement contributions or researching index funds or whatever plan works best for you and your stash!

Just my 2 cents! Congrats and great job!

Nancy

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Re: Paying down 75,000$ student loan debt in less than 2 years!
« Reply #3 on: November 16, 2013, 08:09:24 AM »
Congrats on being ultra badass! Your positive attitude rocks. I'm not familiar with your government/provincial loan system, so I can't help you there. If it were me, once I only had the 0% loan left, I would pay the minimum on the 0% loan and invest/save the rest. When I knew for sure that interest rates were changing, I'd switch back to aggressively paying off the loan if the interest rate jumped high enough. Once you get to the point of only having that 0% loan, you could try switching to aggressive savings and investing. You may get as much of a psychological boost from seeing those accounts grow as you do from paying off debt. YMMV, but it worked for me. In any case, well done so far! You're totally awesome.

Rebecca Stapler

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Re: Paying down 75,000$ student loan debt in less than 2 years!
« Reply #4 on: November 16, 2013, 04:26:25 PM »
Nice! Keep up the good work!

I'm right there on the SL debt payoff journey with you. We're stalled right now, due to unemployment and taking on a new business venture, but I still feel like I'm on the debt payoff journey. Just taking a short vacation from it while we make ends meet for now.

summersundries

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Re: Paying down 75,000$ student loan debt in less than 2 years!
« Reply #5 on: November 17, 2013, 10:43:46 AM »
Hey gang.  Thanks for the advice.  Charlotte you have a good point.  I actually do need to save myself up some more cash.  My ER fund is a bit... nonexistent as of late.  I know, not cool.  I've got like a grand in there.  When I pay off the first loan I think the first thing I'm going to do is beef that up to 10,000$ (6-8 months expenses, depending on how pear-shaped things go).  Your husband has a point.  I guess I got so tunnel visioned on debt-freedom I kinda lost sight of the ER fund.  It used to be 5,000$ but several unlucky months, and a pig-headed refusal to lower my payments to the SL have sunk it that low.  Time to build back up my safety net.  It is just infuriating to watch money sit their idle while you could be completely free of debt.

And Stan, don't despair.  We're all on that road, and sometime you've got to stop for gas.  I have literally had some flat tires and engine meltdowns along the way!  One month my dog got seriously sick (like 3000$ and a specialist veterinarian 3 hours away sick).  That month I felt pretty blue.  There have been whole months I made no payments, or really piddling payments.  For either good reasons (see above) or bad reasons (on vacation with sister, just stopped keeping track and went crazy with the $$$).  All you can do is dust off, and keep going.  I also find if I calculated I could afford to send them even like 75$ extra that month I would, just to know I was still actively involved.  Any extra payment is better than no extra payment.  Remember that while you may be held up for a month, or 6 months or a year, there are people out there perfectly happy to take 10+ years to achieve the same end. At least your doing better than them!  And you'll save a lot more $$$ too in the long run! 

I plan to try and mark in some way the date when my last payment would have been 8 years from now.  I think I should have a little party with friends and family to celebrate all the difference that not having these loans made over an 8 year period.  When I think forward to myself looking back like that I am really inspired and excited to find out what difference that 25,000$ will have made.  I can't wait to find out.  I be it's going to be awesome though.