Paying Off $137,000
How to pay off student loans and still live your life. Here's how I paid off $137,000 in 4 years.
Friday FinTips
August 04, 2023
Read time: 3 minutes.
Welcome to the Friday FinTips newsletter, where I provide tips to simplify how you manage money.
The Point
If you’re only making minimum payments, it can seem like you’re not making any progress with your student loans. Refinancing and paying more than the minimum helps you see the light at the end of the tunnel.
What I Did
I paid off $137k in student loans in four years!
Four years ago I was dealing with negative amortization on my student loans -- it’s when your balance goes up every month, even though you’re making your payments. I refinanced, twice. First, to consolidate all my loans at a lower rate. Then, a second time for an even lower rate. This made my life so much easier for several reasons: one payment, an amount I could afford, and got rid of the negative amortization.
I started paying more than the minimum. As my income increased, so did my payments to my loans. Any month we were under budget, extra money went to the loans. A bonus? More to the loans. You get the idea. Toward the end, we stopped saving for other things and put all that cash toward the loans.
Throughout the journey, I continued to live my life. Sure, I scaled back on some things or delayed them, but I still lived. I moved, got married, went on several trips, and experienced a lot of great things in NYC. We valued a balance of fun versus paying off the loans. For some people, maybe you, it’s more important to get those loans paid off ASAP.
What You Can Do
Pay more than the minimum. Can’t do that? I get it. I’ve been there. Keep reading for some other ideas.
If/when you have extra money in your budget, try and put some of it toward your loans. Any little bit helps!
Consider consolidating and refinancing. If you can get a lower rate, it might be worth refinancing (even though it’ll temporarily hurt your credit score). It definitely was worth it in my case - I saved about $30,000 in interest.
Set a goal for paying off your loans. Keep it ambitious, but also realistic. You can do this!
That's all for this week. Have a great weekend!
-Logan
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