millennial in debt

Student loans suck… we all know that. And if you don’t know that… you should consider yourself lucky. While millenials get a constant bad rap for not being able to do all the things that generations before us could do with ease…we have good reason. Student debt is higher than it has ever been and at this rate us “millennials” won’t be able to make actual real substantial purchases any time soon. Don’t get me wrong, some of us do figure out how to get through this crazy debt phase faster than others, while the other half of us are out here buying new iPhones every five minutes. You call it irresponsibility, I call it balance.

However easy it is to point out our flaws when it comes to real estate and school loans, it is not as easy to find solutions to this ever growing problem. The truth remains that it is not the same as it was, it is no where near as simple to obtain a college degree and come out of school excelling in your career path. The crippling school debt situation is REAL AF and it is through great struggle and teaching myself I’ve made any huge dents into paying off the principle of my student loans.

Thankfully I have had several small breaks that have helped the process and I’ll talk about those in detail below, so you don’t think I’m offering advice on something I know nothing about. I graduated college with almost 100,00 dollars in debt. Pay attention though, because I didn’t borrow any where near 100,000 dollars. But when all is said and done, I will have paid back approximately 100,000 (yeah… my bank account is crying too).

paying off the principle

Student Loans 101: Paying Off The Principle

I graduated in 2010 with my Bachelors and Masters Degree (yes I’ve always been an over achiever). In doing so I racked up quite a bit of debt attending a private university in Long Island, New York. Now this isn’t going to be a long post detailing all of the monetary mistakes I’ve made, or why did it take me this long to realize I had to do certain things, because at the end of the day none of that really even matters does it? I have debt… I have to pay said debt… end of story. I’m here to tell you how I did it on a teacher salary, and still lived some sort of normal life.

1. Stop Making Interest Only Payments: Easier said than done right? Not quite. For my first four years out of college eI was paying interest only payments. Which means I was paying about 6,000 dollars a year to my school loans without ever making a single payment towards the principle. I was on a graduated repayment plan for 9 months which helped a bit, but once I started making “too much money” according to the government I was kicked out of that payment plan and offered two options: Pay 1300 dollars a month (including principle payment) or pay 400 dollars a month (interest only payments). Obviously I chose the 400 dollar payment and made those payments religiously for 4 years. MISTAKE!

There’s nothing wrong with choosing interest only payments if you have a master plan. So I created one. I would pay my monthly interest only payments and at the end of the year I would PAY OFF one entire loan. (I had about 12 separate loans). This way I was off setting the interest payment loans I was making all year by completely taking care of the balance on one entire loan. So when my payments would increase yearly my monthly payments would decrease because I had gotten rid of loan in its entirety.


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2. Don’t Spend Found Money on fun: Found money is money you didn’t expect to have. So if you get a refund check, or do some over time…etc that is found money. It is money that you technically can survive without because you weren’t expecting to get. Many of us (including myself from time to time) use found money for fun. And while that’s great in the moment, it is best to use found money towards  your principle payment. For example when ever I pay off a loan in its entirety instead of using the extra money on clothes, I instead put the extra money towards another loan’s principle. This way I’m actively paying the principle during the year (even if its just an extra 15-20 dollars it makes a difference) and not wasting the extra money.

It can be hard to do this because we want to spend that extra money that we have acquired. The only other acceptable use for found money is to put it into a savings account. Trust me you will be much happier seeing a savings account with an extra 1-2 thousand at the end of the year that you can use towards a loan payment, or treat you self with a vacation. I rather pay for experience than things TBH!

3. Cut Corners: This is the hardest and most difficult part about sticking to your payment plan. I save between 12-17,000 dollars a year. That saved money I use to pay off large amounts of debt and to go on vacations. If I spend a few hundred here and there on food, clothes, and things I’m always upset with myself but  don’t be. You will always desire to buy yourself things, and you work hard so you definitely deserve it. But trust me there will be no better feeling than walking into your own home, or getting that Sallie Mae letter saying your debt is pad in FULL! So hang in there…

Cutting corners means, cancelling cable ( trust me I thought I couldn’t do it.. but I’ve been cable free since September 2016 and it has been extremely easy). You are going to have to limit your going out fund. I have a very very small fund (almost minimal) that I keep to the side when I know I may want to go have a drink or two with friends. Eating out is expensive, instead I go food shopping every week and meal plan. Going out is only for special occasions and once I’ve used my going out fund… I’m NOT going out.

Besides cancelling cable and limiting your eating out experiences, you also want to cut corners when it comes to bills and activities. I have gym membership, and Apple music which I was dead set against. And my cellphone bill has gone up in the last few months. These are all things you can cancel or limit. I cancelled Netflix, removed nail salon visits, and monthly waxing from my lifestyle equation (I did get laser though… so I cheated) and will be removing some elements off of my cellphone bill as well. The luxuries you think you can’t live without are the ones you won’t even think about or remember when you pay off your loans. Instead use those extra 20 dollars a month towards your principle.

4. Stay home: This isn’t always possible for everyone but luckily it has been possible for me. Let me reiterate something… I’m not a huge fan of staying at home. I’m turning 29 this year and I still live with my parents. Why? Because the rant is TOO damn high in NYC and I also really don’t want to pay rent. I’d rather own a piece of property and be enslaved to that mortgage debt than to help someone else pay their mortgage. Besides that, if I moved out on my own I wouldn’t be able to excessively save and travel. Traveling is one of my fave past times. If I am unable to save or travel I’ll be living an extremely dull life of simply working and paying bills.

It is difficult, but if you have the chance/ opportunity to live at home, I suggest you take it. It is a temporary inconvenience that leads to a lifetime of financial freedom. The money you are saving on not having to pay rent (though I do pay the utilities) will help you become one step closer to paying off that principle.

In following these methods I will be debt free in a little under 2 years. I’ve got two more large principle payments to make, and I can say peace out to Sallie Mae. I do have to add that I was able to get a 5,000 decrease on my loans because I work for the city. I‘ve detailed that process here!

What are some methods you have used to pay off your student loans? Share with us in the comment box below.