Did you recently graduate and want to pay off student loans early? Paying off my student debt was the main goal I set for myself once I graduated and started my full-time position.
My first loan payment was on August 8th, 2019 and I will be making my last payment this month, in August 2020. I can’t believe it.
I paid off $20,145.60 of student debt, all in one year!!
My journey to financial freedom was trial and error. While I do recognize the privileges I had while paying my debt off, I am extremely grateful and thankful that I was able to pay off my loans so quickly.
This blog post is about my experience and things that helped me pay off student loans early.
INTRODUCTION
Skip and scroll down if you do not want to read about my background, and want to jump to the tips!
Before we get started, I want to introduce myself and tell you a little bit about my background. This way you can understand my experience better. When it comes to money, I understand people handle it differently. I don’t think it’s a one size fits all when managing your financials, and I respect other peoples’ decisions.
Although I’m sharing my experience and what worked for me, assess your situation and do what’s right for you when paying off your student loans.
I come from a single parent household and graduated Cal Poly, SLO with a BS in Business Information Systems. When I was paying off my loans, I was making $75,000 and living at home.
Wow. I haven’t publicly shared my salary before, but I think it’s important to be transparent.
Growing up, there were times when my family wasn’t financially stable, and I knew I didn’t want that for myself when I grew up. I’m so so so incredibly thankful for all of the sacrifices my mom made for us. With the help of FAFSA (free tuition), scholarships (I applied to in high school), my grandparents (monthly allowance during college), and working a part-time job during college, I was able to only take out ~$20,000 in student loans.
Appreciation side note for my grandparents for funding my groceries and part of my rent. Love them so much. Another appreciation for my mom as she helped me out whenever I asked for financial help.
After college, I moved back in with my mom, so I could tackle this thing we call debt.
Everyone’s experience is different. What worked for me may not work for you.
This is not professional financial advice. This is my personal experience. Please read my full disclaimer.
BEST WAY TO PAY OFF STUDENT LOANS EARLY
1. Apply for scholarships
If you are a high schooler reading my blog post, hi! I’m glad you’re thinking about how you’re going to tackle debt very early! I applied to scholarships through programs I was in during high school. I was rewarded enough to pay off my first year of college (room and board + books and supplies + fees) and received a renewable scholarship each year for rent and supplies.
If you are a post-grad, don’t fret. There are still some scholarships out there that you can apply to! For instance, First Aid Beauty is giving away up to $100,000 to each individual to pay off your student debt. That’s amazing!! Here’s the link for more information. It actually ends this month, so I suggest applying soon! *Not sponsored, just love this initiative*
If one brand is doing this, I’m sure there are other similar opportunities out there. You just have to do your own due diligence.
2. Make necessary sacrifices
When being serious and paying off debt, you have to make certain sacrifices. If you are usually going out with friends, you can make a temporary sacrifice of going out less and staying home… or you can still go out, but find free activities to do with friends. Everyone’s sacrifices are different.
Once you make the decision of being serious about paying off your debt, you have to make the necessary sacrifices.
No excuses. This is what leads to your success of paying debt off quicker.
I had the privilege of moving back home. I was still paying rent, but not as much as others living away from home. If this is an option for you, I highly suggest moving back home to save money. What you would be paying for rent elsewhere, you can put towards your debt.
3. Start off small — intimidation can halt you from making your initial payment
I had no initial plan, and I definitely did not follow the plans my provider offered (Pay off debt in 10 years?? No, thank you). It was too overwhelming. The more I thought about creating a plan, the more intimidated I would get, which ultimately prevented me from paying anything off. Don’t procrastinate.
I started with a small student loan payment of a few hundred dollars each paycheck I received. It was enough to get the ball rolling. Then once I got the hang of it, my payments increased and I started to make a plan.
Side note: I get paid bi-weekly so I based my payments on that, instead of monthly.
4. Make a plan and put more than half of your disposable income towards your student loans
Once I started to get the hang of payments, I created a plan. I calculated my expenses and figured out how much disposable income I had. Each paycheck I would put more than half of my disposable income towards my debt.
Lifestyle creep (when your expenses increase and you start to spend more money on luxuries) is real when your income increases. By putting more than half of my disposable income towards my debt, it helped me be more cautious of not spending money on things I didn’t necessarily need.
After figuring out how much disposable income I had, I created a timeline that enabled me to pay my debt off in a year.
5. Stay educated and motivated
Read financial books and articles, and watch financial Youtube channels. This was one of the critical motivation factors during my journey. It helped me create a healthier relationship with money and learn more about budgeting.
I like to watch The Financial Diet and Aja Dang on Youtube. Some of the books I read were Money, a Love Story and I Will Teach You to be Rich (I skimmed through this book for tips on financial literacy).
6. Don’t get into more debt
I was so close to buying a car. SO CLOSE. My college car had died on me, so I was left with no car. I didn’t like the inconvenience of using my mom’s car and sharing it (even though it wasn’t that bad). Thankfully, my mom talked me out of it. Had I bought that car (it was more than $20,000), I would have still been in debt till this day. And now that I’m student debt free, I realized that I might not even need a car soon. I want to travel the world (once everything is safe again… lol) or move to different cities, like New York or Chicago– cities where I don’t need a car. By not putting myself in that situation and having to pay monthly car payments, I was able to put more money towards my debt.
Whenever you’re about to finance a huge purchase, ask yourself, do you really need it?
7. Be patient and trust the process
To pay off student loans early is a challenging journey, but I promise you that all of your hard work will be worth it. I hope these tips help. If you have any questions, please don’t hesitate to ask!
SUMMARY
- Apply for scholarships
- Make necessary sacrifices
- Start with small payments — intimidation can halt your progress
- Make a plan and put more than half of your disposable income towards debt
- Stay educated and motivated
- Don’t get into more debt
- Be patient and trust the process
Now that I’m student debt free, I’ve taken the time to reflect on how I spent my money in the past year. I’ve realized that although I paid off my student debt, I could have been way better at saving my other money. Don’t get me wrong, I’m extremely grateful and proud of what I’ve accomplished, it’s a huge milestone. I’m just saying I’ve learned more about myself and my spending/budgeting habits that I want to start working on.
These are 7 things anyone can start doing to pay off student loans early.
I want to create a community of encouraging individuals, so leave a comment and let me know what other blog posts you’d like me to write!
