I paid off my $80,000 student loan debt in 3 years. And so can you!
What’s up all you city loving, urban dwelling millennials?! Student loan payments got you down? Feel like you’re never going to pay them off? Student loans are no joke.
Success!
The average Millennial leaves college and enters the professional world with an average $27,000 of student loan debt. If you finished school in 2016, the average student loans debt was a whopping $37,172! Many private loans have high interest rates that are dangerous and very scary if you are not on top of them. Chances are, if you are trying to live in a city, you are struggling to make a dent.
After finishing a professional graduate school program in my early 20s I left with $80,000 in student loans debt.
I started my first job out of school that paid $40,000/year. I had no idea the magnitude of debt I was in, but I felt the pressure immediately once the loans started accruing interest. My monthly payments were $800 with an average 7% interest rate. I looked into the details of the payments and realized I was barely making a dent into the principle. With rent and student loans, there was no way to rock the lifestyle in the city I desired. I had a 15 year repayment period which would cost me $143,000 over the course of the loan.
Over the course of the student loans I would end up paying over $63,000 in interest!
That was not going to work for me. It was time to start getting serious about paying off the student loans, and fast. I set a goal of three years, and by the time I was 27, I was student debt free. I realize that everyone’s financial situation is different. In addition, I understand that everyone has different goals and limitations. The following are 4 ways found my student debt freedom.
1. Get serious about paying off your student loans!
Loans suck, and can haunt you for decades. I know it’s tough, but you need to make the decision to bite the bullet and get serious about paying off student loans. The first step is to get to know your financial picture so you know exactly where your money is coming and going. You can look into the details of your loan payments, your paycheck, how much you spend at the grocery store, and out in the evening. There’s a lot of data out there.
The best way to visualize the numbers is with Personal Capital. I learned that I could spend two less nights a week with friends and a solid amount saved towards the loan. This takes discipline, but when you are serious about your future, you need to make smart compromises. Pay off the loans with the highest interest first!!! There are pretty sweet refinance options these days. I cosigned my fiancee’s loan with Sofi and reduced her interest rate from 7% to 5%. In the long term, that is a $25,000 savings!
2. Work for a company that requires you to travel
Many Millennials have the flexibility to be highly mobile in their 20s. Those of us who live in cities are starting families well into our 30s, giving us the ability to pick up and leave for weeks on end. When I was 24, I worked as an ecologist on jobs that took me to Houston, New Orleans, Miami, Haiti, and this Middle East. There are many jobs like this out there.
Whether you are a lawyer, doctor, nurse, engineer, teacher, or anything in-between, you can find gigs that will pay you time and a half, plus per diem to travel. I traveled 2 weeks a month. The other 2 weeks, I rented my room out. It takes disciple and planning, but it works. Even though my salary was $40,000 per year, I pulled in nearly $100,000 that first year on the job. I put every penny on top of my salary towards my student loans.
3. Straight Time, Over Time
Ask your boss if the company you work for pays overtime, and then do it. We are young and vibrant, so bite the bullet and spend a few extra hours per week working over time. Not all jobs will have this option. Some will pay comp time which can either be used as paid time off, or paid out after you leave the company. Take the time off and focus on your side hustle! When I was paying off my student loans, I would work 14-16 hours a day for 7 days straight.
I would then use some comp hours to recuperate, and put the extra cash towards my loans. I would only go the extra mile a week or two a month, but this effort was recognized by supervisors, and lead to promotions. Your 20s and 30s are the decades to go all in. But make sure to have a little fun along the way! My favorite thing to do on my comp days off was to take long walk in the bustling city. There’s a calmness to it when you aren’t rushing to get somewhere.
4. Work overseas for a few years
Did you know that many companies will pay more than double your salary if you work overseas? Depending on your risk tolerance, some locations pay more than others. I found that the more desolate, the better! Just like that, I went from $40,000 salary my first year to $90,000. In addition, they paid for my house, car, travel, etc. This meant I could sublet my place (at more than I was paying), and earn passive income.
Furthermore, what was even more lucrative was taking advantage of the Foreign Earned Earned Income Exclusion tax credit. According to the IRS, if you were physically present in a foreign country for at least 330 full days during any period of 12 consecutive months you could exclude more than $100,000 from federal taxes. The U.S. government increased the Foreign Earned Income Exclusion for 2017 to $102,100, up from $101,300 in 2016. This meant that my salary was completely tax exempt. I received ten’s of thousands of dollars as a refund each year and paid off my student loans. Please consult a tax expert.
4 additional strategies will be released in an upcoming newsletter. Please join our community and crush those student loans!
Success!