How I paid my $20,000 student loan off in 2 years
Author: Aimee
Paying off my debt has pretty much been my #1 goal since I finished college in April 2005. I FINALLY DID IT!
When I finished school I had about $5000 in credit card debt (yes I said $5000) and $15,000 in student loans. I hated being in debt and wanted to get myself out of the hole as soon as I possibly could so here is what I did:
The first year out of school it took me a few months to find a job and when I did I was making about $15/hour. By the end of the year my income totaled about $15,000. Since I was living with my boyfriend my rent was really cheap so I knew I had a great opportunity and decided I had to pay as much as I possibly could. I continued living as if I was a student. I didn’t allow myself to get used to the life I was living before going to school.
Whenever I got a paycheck I would pay off all of the bills that needed to be paid. I would calculate roughly how much I needed to keep for food and traveling expenses, then I would pay the minimum required for the debt that had the lowest amount of interest (my student loan) and pay as much as I could towards the account that had the highest amount of interest (my credit card). Usually this would be about $200 to $300 per week (I was paid weekly).
One day I received an offer in the mail for a credit card that had an introductory offer that only charged 1.9% interest on any balance transfers for one year. I signed up for this credit card and transferred all of my credit card debt to that account. I cut the card up so that I could not use it and calculated the minimum amount that I would have to pay each week in order to pay it off within the year.
I started paying $35/week on this 1.9% interest card and it allowed me to turn my attentions towards my student loan. I paid the credit card off within the year (a little bit early) and closed the account as soon as the balance was paid off. I still had my original credit card throughout this time for online purchases and credit score reasons.
In the second year (2006) I made about $25,000 and continued living as a student. My rent did go up a little bit but so did my income so that made up for it. I had my credit card debt completely paid off and was working on getting my student loan down to 0.
This year (2007) my income has increased so I have been able to make larger payments. To get my debt down to 0 I kind of cheated a little. I work on a freelance/contract basis so I decided to take the money that I was saving for taxes and put it towards the last $4500 that I owed on my debt. I paid the last of my student loan a few days ago, and am currently not paying a cent in interest for the first time in almost 10 years, but still have to save up an extra $4500 before the end of the year for taxes, which is very doable.
During the time that I was paying down my debt, I was also on an automatic savings/investment program so now that my debt is down to $0 I also have over $5000 in savings which will help me reach my next goal, which is to buy a house that I can use as an income property.
As it stands right now my total savings minus my tax “debt” is around $1200, which is amazing considering it was -$20,000 2 years ago. It can only go up from here!
I realize that many people will be much further in debt than I was by the time they finish school, I also know how hopeless it can feel when you are starting that long road to paying it off. Once you get there it will be all that much sweeter! It was a long road for me but it was so worth it in the end.
Are you Foxy? Subscribe to our Newsfeed!
Wow, congratulations! This is a really inspiring story, and I’m sure you celebrated your debt-free-ness
It’s good to see someone else viewing some monetary goals as being more important than just mindless spending. I have a blog about frugal living and personal development, and you sound like you might be interested in stuff like that. If you are, could you please visit it at The Frugal Aussie ?
Comment by Ruby — May 23, 2007 @ 11:44 am
Thanks for your comments Ruby. I didn’t throw a party or anything, I will save that until I have that $4500 tax money saved up again. At that point I will be able to do whatever I want with my money and will have a reason to celebrate!
Comment by Aimee — May 23, 2007 @ 5:22 pm
[...] message to her readers that she has finally become debt free. I have recently (finally) achieved paying my debt off and I can say that it was a very exciting day for me. Now I can focus on moving forward instead of [...]
Pingback by Staying motivated to pay your debt | Foximus Internet Business Blog — May 28, 2007 @ 11:02 pm
I’m sorry. I don’t think your numbers add up. I assume you mean that you netted $15k, not grossed. $15/hour for full time work is closer to $30k, not $15k, per year, so the few months issue sounds odd.
And cheap rent? How cheap? Even $400/month, which is really cheap is close to $5k per year. That doesn’t add up to your statement that at one point, you were paying $200-300 week (which works out to close to the $15k you stated you earned) on debt [edited - left out two words].
I’m glad that you have no debt, but I think that you had some help. Either your numbers are skewed or your parents/boyfriend/generous benefactor helped you.
At 0% interest, which we know didn’t happen, your payments to pay off $20k in two years would have been more than $800 per month - or $10k per year. I hardly think (again, that’s assuming no interest, which isn’t true) that you lived on $5k including rent, food, sundries and taxes.
Comment by Mandy — June 1, 2007 @ 9:49 am
[...] For some inspiration that is debt reduction related, here’s a blogger who paid off a $20,000 student loan in 2 years [...]
Pingback by Blogging Away Debt » Blog Archive » An Inspirational Friday Blog Highlight — June 1, 2007 @ 3:51 pm
Hi Mandy,
As I said at the end of the article, I took money out of my 2007 taxes to pay the last portion of the amount that I owed so I actually still owe $4500 to the government for the end of this year. It actually took me 2 years and 1 month to pay off my debt. So that’s $620 per month, not including that the tax money.
Also I don’t know why you assume that I was working full time. As mentioned in the article, I was in school (full-time) until April of that year. So I only made 15k in 2005 because I was only working from June to December of that year and it was not full time work.
I was paying my boyfriend much less than $400 at that time. As mentioned in the post my boyfriend did help me out by giving me a break on my rent and I love him for it. He is my Schmoopy Poo!
But you’re right; I did leave a couple things out. First any money that I was allowed to keep from my tax return was paid directly to my student loan. Secondly, I didn’t mention my income level for this year. By the end of this year I will have probably made around $45k so this has allowed me to make larger payments towards my loan.
Comment by Aimee — June 1, 2007 @ 5:50 pm
[...] We also had a link placed on Blogging Away Debt, which ended up bringing a lot of traffic in. Thanks to Tricia for linking to the post How I paid my $20,000 student loan off in 2 years. [...]
Pingback by Stats update: Our 13000% spike in traffic! | Foximus Internet Business Blog — June 2, 2007 @ 1:16 am
What an inspirational story!! Congrats on getting rid of your debt so quickly!
I also was able to get rid of my student loan debt quickly ($17,000 in 10 months), and I was able to do it basically the same way you did … except it was the generous parents who let me stay in their rentable basement suite for the year while I paid off my loans.
Anyway, congrats again. I look forward to snooping around your blog some more!
Comment by Krystal — June 3, 2007 @ 9:20 pm
Wow 10 months, that’s great Krystal! Somtimes it takes a little bit of help from your loved ones.
You blog looks interesting as well, I’ll have to take a look through it.
Comment by Aimee — June 4, 2007 @ 9:38 am
[...] I recently paid of all of my debt I have allowed myself to go on a couple shopping sprees over the last couple days. My wardrobe is [...]
Pingback by I forgot how much fun shopping was | Foximus Internet Business Blog — June 7, 2007 @ 11:47 pm
I’m glad that worked out for you! That is a relief I wish was in the near future, but it isn’t. When I’m finished, while I do not have credit cards or other such debt - my student loans will excess 120k.
Yuck
I may, with some summer work, be able to chop that down about 30k, over the next two years. What’s more depressing is, it seems almost daily, I’m getting emails and letters about how the rates are increasing in July.
Ah well,
Abiding Sense of Tragedy
Comment by Sinnfeiner — June 22, 2007 @ 2:42 am
[...] presents How I paid my $20,000 student loan off in 2 years posted at Foximus. Aimee says, "When I finished school I had about $5000 in credit card debt [...]
Pingback by studentaides.com | Carnival of Student Finance #5 — June 28, 2007 @ 7:57 am
[...] presents How I paid my $20,000 student loan off in 2 years posted at Foximus. Aimee says, "When I finished school I had about $5000 in credit card debt [...]
Pingback by sitetricks.com | Carnival of Student Finance #5 — June 28, 2007 @ 10:54 am
Hey, congrats on paying off your student debt. I hope I can pay off my debt just as quick. I used Next Student for my college loans and have about $5000 in student debt right now but I hope to use your tips to pay it off just as quickly.
Comment by John Kim — July 9, 2007 @ 1:41 pm
Congrats..Im looking for a way to cut down my student loans..I probably will have 60k when im finished..What is the best way and shortest way of cutting this debt down? I’m thinking about joining the army or becoming a teacher so I can get some of this debt paid…
Comment by Shay — August 9, 2007 @ 7:26 pm
It took me forever to knock out my school loans, and they weren’t even close to 20K. Way to kick AZZ!
Comment by School Loan Stuff — December 6, 2007 @ 6:51 pm
Well done on clearing your debt. A few sacrifices are always necessary. Bet it’s a relief!
Comment by DM — February 12, 2008 @ 1:47 pm
All I can say is congratulation.
Paying off your loan is a huge accomplishment. The keys of your success are discipline, faith and clear vision on goal.
Even if you have repaid all of your debt, keep these strong values in your life. Instead of paying for debt, start saving.
In just a few years you’ll have a sizable fund for an investment.
Comment by Loan Advisor — February 23, 2008 @ 1:49 pm
I have been lookin some program like you said in this post. But i need for more spesific. Now i have live in Singapore and theres nothing program like you said about here.
Anyway, thanks for wrote and keep share.
~Thomas
Comment by Thomas — March 12, 2008 @ 4:59 am
Student Loan…
One of the best and well known is Campus Based Aid. These are obtained directly through your schools financial aid office. FSEOG (Federal Supplemental Educational Opportunity Grants)…
Trackback by UMN . edu - Career Blog - Student Loan — June 10, 2008 @ 12:12 am