After working for a couple of years as an educator in South Carolina, I headed back to graduate school to pursue a master’s degree. I graduated from the University of Georgia with an M.S. in 2012, but I left with more than a diploma. I had more than $50,000 in student loan debt and a 25-year repayment plan.
Sound familiar to you? Unfortunately, that’s the norm for many graduates.
Even after landing a six-figure salary as a supply chain analyst and project manager at a Fortune 500 company, I still felt like I was living paycheck to paycheck after paying for rent, student loans, and the almond butter I felt I finally deserved. And I was making only minimum payments on the student loan debt (which still added up to about $500 a month).
So I accepted that I’d have my debt for the next 25 years, and that I’d introduce it to my husband and children someday.
I avoided dealing with any details about my financial situation and assumed I couldn’t make more than minimum payments because I always felt broke. But when I actually took a hard look at my spending, I was shocked at how much I spent on everything from eating at restaurants to buying clothes and even dog toys.
It was exhausting, and I didn’t want to continue living that way.
My debt-free fiancé told me that when we got married, he’d use his savings to pay off my loans. There was no way I wanted him to use his savings to pay my debt, and it lit a fire under me to pay off as much as I could as soon as possible. My corporate job was another major catalyst to get moving — I wanted out, but I needed to pay off my debt before quitting a high-paying job.
So in December 2014, I made a decision to pay off my debt aggressively — seriously aggressively. I had more than $48,000 left to pay off spread across six loans, all with interest rates between 6.8 and 7.1 percent.
As unbelievable as it may sound, I ended up taking my debt from a 25-year repayment plan to a one-year timeline. It required some major sacrifices in the short-term: I got a roommate, switched cell phone providers, cut all travel, reduced eating out to about once a month, pressed pause on my 401(k) investments, and skimped on the almond butter at the grocery store. This saved me around $2,000 per month, not including the $3,500 I made selling furniture and electronics.
But I realized that I could only cut my expenses so much. Increasing my income would be a critical part of gaining freedom from debt. So as a side gig, I took a skill set that I was using in my corporate role — streamlining projects to save money and time, and get better results — and used it to show entrepreneurs how to run their businesses more efficiently. The business didn’t require much overhead, and I knew I wanted to explore this venture once I left my day job. Getting started on the side first meant I could grow the business while I had a steady income, ideally setting me up with a thriving business once I could finally quit the corporate world.
The side business also allowed me to be even more in control of my income: The more clients I took on, the more my income grew, which is not usually true when you work for a corporation.
I started putting as much money as possible toward the debt repayment each month, and I was finally able to start paying it off faster than the interest accrued. I used the snowball method: I paid off the smallest loan first to build momentum, and then kept rolling payments over to the next lowest loan until there was nothing left. My newly calculated one-year debt repayment plan soon shortened to just six months.
I paid off $48,000 of student debt from January 2015 to May 2015. I made the final payment on May 31, 2015, and turned in my letter of resignation at my corporate job within the week. Less than a year later, I’ve grown my business to make more than triple what I was making at my last job.
The purpose of telling my story isn’t to convince you that this exact timeline or repayment plan is something everyone can or should do. I was okay with foregoing 401(k) and emergency savings contributions once I did the math: The interest over the 25-year repayment plan would have been more than I would have been able to save in that year that I suspended my savings (which was eventually shortened to six months). I also had an emergency fund of $1,000 during this time, and I felt comfortable with that amount.
Whether we are consciously aware of it or not, debt can suffocate our lives. It can be an excuse for why we can’t do all the things we really want, like leave that job we hate, travel the world freely, start a business, donate to causes that are close to our hearts, or take time off to spend with our parents as they age or with our children when they’re young. When I gained control of my finances and paid my debt on my terms, I gained control of my life. This type of plan absolutely isn’t for everyone, but for me, the trade-off was freedom.