It is a new year, which means I have yet again put a dent into my student loan debt. I’ve been sharing my journey to being debt free for about two years now, and I’m always very transparent with the steps I take to do so. There is nothing I hate more when people “tell you” how to get something done without really every telling you the honest truth, or how to really get it done. That is not the case here. There is nothing I hate more than student loans and if you know me personally you know that I talk about it all the time. Why? It is not that I’m constantly complaining about, instead I like to educate people (I’m a teacher after all) about the pros and cons of taking on student debt and what it is going to happen when it is time to pay back Sallie Mae her money.
This year I brought my student debt down another 11,000 dollars. I’m rounding numbers a bit just for sake of the post to be easy to read but it was a bit closer to 12,000 than 11,000. Also coming clean a bit more… I’ve actually paid 40,000 dollars in student debt in two years, however the extra 5,000 came from my completion of 5 years teaching in a Title I school. The government saw it fit to “gift” me with 5,000 dollars towards my federal debt bringing my total paid amount to 40,000 dollars. However I’ll be sticking to telling you how I paid off the portion that actually came from my own pockets.
How I Paid 35000 In Student Debt In Two Years
So I’m still doing pretty much the same things I mentioned in my previous post from last year (how I paid Sallie Mae 24,000 in one year on a teacher salary) with a few tweaks and minor changes.
1. Pay Your Debt With Your Extra Money: So for the past 6 years I’ve been saving 12,000 a year. I put aside 1,000 a month in order to make one large lump sum payment at the end of each calendar year towards the principal of my student debt. This year I saved 17,000 dollars by continuing to save the staple 1,000 a month, and I followed a social media image that helped me save an extra 5,000 of the course of the year. Each month pretty much added up to adding in an extra 2-400 dollars to a separate saving account I created to see my total grow. I used part of that 5,000 dollars to pay off my car payment. With the extra money I had, from no longer having a car payment I sent that payment towards my principal. So not only did I pay a large lump sum at the end of the year, I also was paying an extra 150.00 a month from August- December towards the principal. This feat isn’t always possible for people due to their individual circumstances, but it is important that once you pay off one of your bills that you use that extra money to pay off another bill instead of spending it. The alternative is to put that extra money into a savings account and leave it untouched.
2. Down Size On Things You Don’t Really Need: Sit down and really calculate what you need and what you want. I know that what I want is to pay off my debt, and that is at the top of my list all day every day! So what did I do? I spent tons of money this year… not going to even lie or sugar coat it in anyway. I spent way more than I anticipated and actually made less money than last year due to a school change and lack of overtime opportunity. With that being said, I cut cable and Netflix from my life. It was tough, but it wasn’t as difficult a transition. It’s been about three months since I’ve cut cable off, and five months since I cut Netflix. With that money that I’m saving I can spend it on other things and feel less guilty, or save it. Really sit down and think about where can you cut some corners without making your life truly miserable.
3. Pay Down Your Principal: This step is a must for me. Every year I pay off one loan in its entirety. I’m on a payment plan that gradually increases every two years. I pay off the loan with the highest interest because I know that at the next payment increase that payment will increase the most. It has been such a pleasure seeing my total principal decrease instead of paying 6-8 thousand dollars in interest a year, and seeing absolutely no movement! At this pace I’m hoping to be completely student debt free by 2020. I will be done (God willing) with my private loans by 2018 as I have only two loans left.
Many people have asked since I am a teacher why don’t I just wait for the loan to disappear or go on a income based repayment plan. The simple answer is: I oddly make too much money to be on an income based repayment plan, so instead I am on the graduated repayment plan that increases gradually. As a teacher after you make 120 payments whatever is left will be forgiven. My 120th payment will be in 2020 and at that time I will also hit my tenth year of teaching. So… whatever is left over/hasn’t been paid which won’t be much will be forgiven when the time is right!
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