Pay Off Your Student Loans in Less than 3 Years
3 Simple Steps to Paying off your College Loan before you turn 30
With the threat of increased interest rates on government-backed loans scaring the hell out of a new flock of college students, I thought it would be a good idea to make a very bold statement: It doesn't matter.
First of all, there is absolutely no reason the government should back student loans with taxpayers' money. But I don't make the rules, I just go along with them (sometimes). Second, I'm living proof that even with a heavy college debt burden, with a little discipline you can not only pay off your college debt in a very short amount of time, but you can do so without living in a cardboard box.
In 2009 I graduated from college with a degree in business management. And like so many other management majors, I struggled to find a job for which I had been trained. But with my first college loan payment coming due within six months, I knew I had to make a decision: Put off the payments for another six months while looking for the “perfect job” and accumulate more interest or suck it up and start paying it off by any means necessary. I chose the latter.
By the time I graduated, I had racked up $41,000 in college debt. It would've been more, but I worked throughout my college career, mostly nights. And in the world of student loans, $41,000 isn't much.
Regardless, following graduation I made a decision to pay off my debt as soon as possible. I didn't want to spend the next ten years paying off an old college loan when I could instead be investing that money for the future. And that's what I did. In fact, I payed off all of my college loans in just under three years. Here's how I did it. . .
Step One: Get a Job
Seems fairly obvious, but by “get a job,” I mean “get any job.”
Two months worth of cover letters and resumes resulted in little more than a lot of rejection letters. My grades were good, I had some experience through an internship and I had been very active on campus. But these days, that's just not enough.
Eventually I knew I'd land a decent management job, but I didn't have time to wait around for that. Not only did I want to get cracking on those loans, but I needed to eat! So I picked up a job at sports bar, working both as a bartender and barback. It worked out well because it allowed me to pound the pavement during the day, send out resumes and hopefully interview for a good job.
The money was good, and with tips I managed to bring home about $800/week. This was enough to cover my rent (a tiny studio apartment within a mile of my bartending gig), utilities, gas, car insurance (thankfully I paid cash for my car back in high school and kept up on the maintenance myself), phone bill and food, which, combined, ran me about $1,550 a month, and left me with roughly $1,650 remaining. Nearly all of which went towards my student loans.
Step Two: Necessities Only!
Although I've lived most of my life in a world where cable television, cell phones and the Internet are common and readily available, these are not necessarily necessities.
In my apartment was little more than a donated table and chairs (from a former girlfriend), my bed from high school, my guitar, my laptop, my bike, an old dresser and a few boxes of books.
It was pretty depressing, but I didn't actually need anything else. The apartment came equipped with a stove, sink, refrigerator and bathroom. And heat and hot water was free, although there was no air condition.
I did still have my cell phone, as I needed it to take calls from potential employers, but I made sure only to get the cheapest cell phone plan the phone company offered. I didn't have Internet in my apartment either, but I did have access to a library less than a mile away where I would regularly check email, send out resumes and mess around on Facebook.
The way I saw it, if I had enough time to watch television and download music, I had enough time to send out more resumes or pick up another shift at the bar.
Cars are also luxuries that can add to your expenses in more ways than one. In other words, even if you own your car, you still have to pay for gas, insurance and maintenance. Fortunately, I learned long ago how to take care of my own car, and rarely have I ever had to take it to a mechanic. And because I lived so close to work and the library, the only time I actually drove my car was when I went to the grocery store or to visit my family. Everything else was really just a quick bike ride.
Step Three: Don't be Lazy
It took more than a year, but 14 months after I graduated from college, I finally landed a well-paying job at a real estate management company. The money wasn't great. In fact, after taxes, I was bringing home less than what I was making at the bar. But I didn't want to work at a bar for the rest of my life, so I took the job, and the entry-level paycheck.
Of course, if I had any intention of paying off my student loans as soon as possible, the cut in pay would've made it nearly impossible. And because my bartending job was full-time, and there was no part-time work available there, I had to make another decision: Be happy with my new job and just take longer to pay off my debt or find another part-time job and kick this college loan to the curb once and for all. Again, I chose the latter.
It took about six weeks, but ended up finding some night shift work at a shipping company about 40 minutes from my apartment. I wasn't happy about the commute, and the gas money, but the hours were perfect (Friday and Saturday from 7:00 p.m. To 7:00 a.m.), and the money was impressive. Two 12-hour shifts earned me an extra $350 a week, after taxes.
Sure, I was tired on Sunday, but with this new part-time job in place, plus my new “steady” job, I was back on track and closing in on the end of that debt. When all was said and done, I was college debt-free in a matter of two and a half years. And that's without food stamps, welfare, moving in with my parents or standing on the street corner asking for a handout.
And despite what many of my struggling peers claim about the job market and college loans, the truth is, if you stay hungry, disciplined and focused, student loan debt does not have to be a ball and chain dragging you down.
I just think there's too much complaining going on these days and not enough working. My sacrifice was minimal at best, and to be honest really helped me appreciate the important things in life: Family, friends, hard work and honor.
Today, I still maintain many of my very frugal ways, and I'm richer because of it: Both financially and personally. I've taken on no new debt since paying off my college loans, although I'm now getting ready to take on my next debt – a mortgage.
I just bought a new home. Picked it up on a short sale and was able to put 40% down. It's a bit of a fixer-upper, but I'm no stranger to these types of projects. I plan to have this one payed off by the time I turn 30.
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