how i paid off student debt

How I paid off $34,579 in student loans in under 4 years

Wow, this feels good to say: fter years of hard work and sacrifice, I am now officially debt free. So long, student loans. Good-bye Debt Monster :)

Defeating the Debt Monster

How can someone with an average salary after college tackle tens of thousands of dollars in student loans in just a few short years? Here’s how I pulled it off:

5 Strategies to Defeat the Debt Monster and Crush Your Student Loan Debt in No Time

Below all the superhero strategies I used to pay off my massive debt in a short period of time. Some of these tips may work for you; others may not. But even if you decide to only try a few of these tactics, I guarantee you’ll be one step closer to financial freedom and living an amazing debt-free life.

Here’s how I paid off student loans – all $34,579 of them – in under four years:

how i paid off student loans

Step 1. Hustle

When I got my first “real” paycheck, I thought I had it made. As soon as I started earning decent money after college, I realized just how quickly my take-home pay disappeared. I honestly thought that I would be able to pay off all of my student loans in a year on a $48,000 salary… HA.

I made pretty good progress on my debt my first year out of school, paying back almost $7,000 in 12 months. But I knew that I had to boost my earnings if I wanted to quickly dig myself out of this debt hole. And that meant finding ways to earn more money on the side.

I knew that I wanted to earn extra money, but I also knew I wanted to keep growing my career and getting new skills. I started reaching out to companies, start-ups and websites that I thought were doing interesting work, and then I offered to work for them for free. Why free? I wanted the experience and I made sure that we agreed to revisit our work together after a month or two to see if we could turn it into paid work. After launching my blog, I also began freelance writing for other personal finance websites.

I’m not going to lie: working on the side is tough. More than a few of my weekends were spent hunkered over my laptop and I had a few deadlines that kept me up very late at night. But every extra dollar I earned helped me tackle my student loans. Not only did I have a few hundred dollars extra each month that I could use toward my debt, but I was also building awesome experience that I later used to leave my job.

Step 2. Negotiate

This is hands-down the most overlooked but most effective strategy when it comes to finding extra money to pay off debt. I always ask for more: a raise at work, a higher starting salary at a new job, and even fees on my credit card. Of course, I also spend hours researching and preparing my request with facts and figures. But more importantly, I went into these conversations with confidence. With just a few hours of research and some rehearsal in front of the bathroom mirror, I was able to get a significant raise at my previous job, negotiate my starting salary at my new job, and waive late charges, fines and annual fees from my credit cards and bank accounts.

How much did I earn just by asking over the last 4 years?

I earned $13,000 in bonuses and salary adjustments by negotiating.

That is not an exaggeration. And this doesn’t even include the few hundred dollars I’ve saved in credit card and bank account fees. Can you imagine what you could do to your debt if you had an extra $13K? That’s a good feeling :)

If you want more about the specific strategies I used, check out my post on negotiating: I negotiated a $13,000 salary increase (and all it took was $20 and 4 hours of prep)

Step 3. Allocate

The biggest mistake I made out of college? I used my checking account balance as my budget. If I had $1,000 in my account, I felt like I had $1,000 left to spend. So before I started getting used to my fat paycheck, I mapped out my fixed expenses and student loan repayments with a quick, back-of-the-envelope budget. That gave me a better sense of what I could spend – and what I needed to do to accelerate my debt payments.

The other big win was setting up automatic transfers from checking account to my student loan lender. I didn’t have to think twice about the money that was being automatically taken out. And that gave me more incentive to pay more than the minimum when I could afford it so I could reduce my debt quickly.

I also made sure I had a plan for how I would spend any extra money that came my way. If I got a raise at work, earned extra money on the side or got a tax refund, I made sure to allocate that extra money before it hit my account. My rule of thumb for extra cash that came my way: Student loans: 50%, Long-term savings: 25%, Whatever I wanted: 25%.

Step 4. Prioritize

I knew if I wanted to tackle tens of thousands in debt in a few short years, paying off my student loans had to become one of my top 3 financial priorities – and that meant ruthlessly cutting down on the things that didn’t matter.

For the last four years, I had a clear list of priorities: paying off debt, buying healthy food and travelling to the West Coast every few months. Everything else was slashed. I stopped buying lunch at work (I think I’ve bought lunch maybe 10 times in four years!). I tried not to spend more than $50 a month on new clothes. And I only bought one new book a year (even though I love to read, I always went to the library instead). With my priorities set, I did my best to scrimp and save everywhere else.

Just as important as prioritizing debt was prioritizing my savings. Even just $1,000 in my rainy day fund gave me some piece of mind that I could handle a true emergency if it came up. So even though I was insanely focused on paying down my loans, I knew I still had to put some money away in savings.

Step 5. Motivate

Psychologically, this was my most important step. The biggest motivation for me came from publicly declaring my debt goal online. After posting a YouTube video about my debt story, I got comment after comment asking how I was doing and if I was debt free yet. I felt accountable to reach my goal, even to complete strangers! And after launching The Empowered Dollar, I began to build an awesome support system of fellow indebted bloggers, fans and friends who cheered me along my journey.

So if you want to turn your finances around, find a way to declare your intentions and announce it to the world. Tell your family, friends and dog that you’re going to tackle your debt once and for all and you need their help staying accountable.

It also helped me to set a timeline. By announcing in March that I was going to pay off all of my debt by the end of the year, I knew I had to get an aggressive jump start on my payments.

Hopefully that was a helpful rundown of how I defeated the Debt Monster! I encourage you to take a moment to imagine your life and all the possibilities you’ll have without debt. No matter which strategy you use, that picture of a debt-free life should be enough motivation in the short term to get you going :)

PS You can get more tips for defeating your own Debt Monster in my free comic money guide (you can sign up for that below).

Comic

Start here! Get your FREE illustrated money guide

and all the superhero tricks I used to pay off $35K in debt in under 4 years

31 thoughts on “How I paid off $34,579 in student loans in under 4 years

  1. Sara Carbaugh

    You are such an inspiration and I wish I could give you a BIG hug!
    I would love to know more about your Allocation and Prioritization because that is where I seem to fail miserably. Having all the adult thing to worry about now (kid, house, pets, cars, groceries, etc) I have a really hard time knowing how much money I have to work with and what is already spent (if that makes sense).

    Reply
    1. Stephanie Halligan Post author

      Thanks Sara! :) I think a few things come to mind: 1) Prioritization is tough when you have a lot of “needs” like kids and a house. If you feel like you really can’t cut back, you should focus on the other side of the equation (Hustle and Negotiate. 2) All the things you listed are fixed expenses and needs. But is there a way to modify any of it? Can you sublet a room in your house or refinance the mortgage? Can you trade in one car if you don’t need two? Are you making your meals efficient and in-bulk when you cook at home?

      There’s lots of ways to find money and everyone’s life is so different – it’s all about figuring out what’s absolutely essential, questioning the norms, and sometimes asking for more :)

      Reply
  2. Sarah L

    I have not had the good spending skills or fortune to be debt free or get myself out of debt. Made poor choices of schools and lack of savings, and entered a low-paying field, grr. lol, but I WILL get out of debt one day, and when I find a higher-paying job, I will be on the road ;)

    Reply
  3. Jena Z

    Great article! I personally saved myself over $5700 by dual enrolling and getting my A.A. paid for free! Now I just have to focus on getting through 2 more years!

    Reply
  4. Beth Anne

    I’m still trying to get that awesome post-college job. These are tough times! But man you and all these finance bloggers are my inspiration to live within my means vs the bloggers that say we shouldn’t have gone to college/gotten the debt to begin with…well maybe that is true but I can’t change the past!

    Your #3 used to be what I did but I’ve recently recategorized and bought budgeting software so that I don’t even look at my checking account but at my budget categories. It works much better.

    Reply
  5. Dear Debt

    Wow, this is so inspiring! Congrats on finally being debt free. I can’t wait for that day. I still have roughly 45k to go, but have also paid off 34k or so. Congrats on being awarded a Plutus!

    Reply
  6. Luke

    I also just finished paying my student loans off just this week, 40k in 2 years. What helped me and what I connect with in this story is the announcing it to the world theme. I would share my story, my plan, and my progress with coworkers and friends in the same situation. In the process I refined my payoff regime and developed a system that worked for me. Another skill that helped was goal setting. I set realistic attainable goals (SMART goals) of where I wanted to be at what time and then I focused on beating them to the point where it was a personal competition.

    Reply
  7. Ryan Hart

    Negotiating is definitely one of the most overlooked strategies when it comes to paying off debt. As you mentioned, Ramit is the go to resource for negotiation if anyone wants to follow in your footsteps. Congrats on your success!

    Reply
  8. Chas

    I just want to thank Sean Ogle through you for interviewing you(I am subscribed to his newsletter). I so needed to hear your story and find your blog. After deferment upon deferment, I am faced with the struggle of paying-off my student loan debt, besides other financial obligations and living expenses. I look forward to delving into ‘The Empowered Dollar’ and learning more from you. Thank you so much for being here. I have ran across your blog at just the right moment for me.

    Reply
    1. Stephanie Halligan Post author

      Chas, I’m so glad you’re here and you found me! I hope you find my journey helpful. Please let me know if you have any specific questions.

      Reply
  9. Ms. Debt Emergency

    Hi Stephanie!

    Your blog is such an inspiration for me! I have $175k in student loan debt and have decided that 2014 is the year of eliminating debt. I have started a blog to track my progress publicly. Feel free to check it out and share with others, if you feel it’s worthy.

    Congrats on paying off your debt – that is such a huge accomplishment and you are more free to do what you want. I’m so happy for you! :)

    Reply
  10. M. L.

    Yeah… I’m not fortunate enough to have a salaried job (let alone be earning as much as you were straight out of school). I earn $18,000 a year working retail because I majored in an undesirable field, making it hard to find a salaried job, or a job with good pay for that matter that will consider me.

    I feel defeated! I have no clue how to keep from drowning in this debt!

    Reply
    1. Stephanie Halligan Post author

      Hi ML – Sorry to hear you’re having a tough time. Have you tried starting something on the side? That really helped me explore my talents, build up my resume and earn extra money.

      Reply

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