Ready to learn how we paid off 50k in student loans in under 10 years? When myself and my husband (Aaron) graduated college he had 50k in student loans. Yes you read that right, 50 thousands dollars in student loans. That is not a small chunk of change. We graduated in the middle of the housing crisis. Not only is graduating with 50k in student loans scary, but we were facing one of the worst recessions of our time. Questions crossed our mind, would we be able to find a job, if we could find a job would it pay enough, would I even be able to pay off my student loans?
If you are graduating this year, you may be faced with a similar situation with the CoronaVirus. Today, I’m going to share with you how we paid off 50k in student loans in 7 years. I’m going to share with you tips and tricks on how you too can accomplish this goal. I know at times it won’t be fun, and trust me when I tell you you will have to say no to your friends on going out most of the time, but believe me when I tell you, when you finish paying off those student loans a huge weight will be lifted. You can thank me later.
For Reference we had 50k in student loans broken down by: 6K in University Endowment and 44k in Government Loans (FASA)
Why it’s Important to Pay Off Student Loans ASAP
Before we jump into the steps we took to how we paid off 50k in student loans. I’m going to quickly explain to you why it’s important to pay off your student loans ASAP.
- Interest rates
The interest rates on student loans is no joke. On average our student loan interest rate was 6%. Every year we didn’t pay off our student loans, we were adding more to our total amount. AKA The amount of student loans got more expensive.
- Credit scores
Did you know that if you don’t pay off your student loans this will directly affect your credit score? Not only does it affect your credit score, this will snowball into a bunch of long term problems issues, including when you go to buy a house, you won’t get a good mortgage rate, causing you to pay more than a peer who paid off their student loans.
One thing that doesn’t get discussed often enough when it comes to student loans is the stress that is associated with having them. Always having that weight on your shoulders is the worst feeling. For us, the mental game was a challenge as well. As long as you stay positive and stay on track, you can overcome this challenge.
Have Auto Pay Turned on ASAP
As soon as you graduate college, put auto pay on for as much as you can. With the excitement of graduating college and getting a new job you may forget about your student loans. This is a simple step that you can easily do as soon as you graduate so you don’t miss any payments.
If you have multiple student loans pay off the highest interest rate one first (Student loans from multiple sources pay off the highest interest rate first)
There are multiple different approaches when it comes to paying off student loans. You could pay off the smallest loan first, but for us, we paid off the one with the highest interest rate. Overtime we calculated the cost if we paid off the smallest amount first vs the highest interest rate first and we were able to save money by paying off the student loan with the highest interest rate.
Move back home after college
The easiest way to save money after graduating college is to move back home with your parents. I know after living on your own for 4 years this doesn’t seem ideal. However you will be able to sound thousands of dollars and use that money to pay off your student loans. If moving back home isn’t an option for you then I highly recommend that you find a place with multiple roommates to have a low rent costs. By moving back home after college, we were able to add an addition $8k to our student loans!
Stick to a budget – “Live Paycheck to Paycheck”
One of the best things we did was have the mentality of living paycheck to paycheck. We figured out what the lowest amount of money we could get away with spending in the month. For Aaron, it was $300 a month, some months were under some were over but it averaged to $300 a month. With that being said, we stuck to a strict budget in order to achieve this goal. This meant no going out with friends every weekend, enjoying free activities such as walking in the park, or spending time running outside, or even utilizing the neighborhood pool.
The same budgeting worksheet that we used to pay off 50k in student loans in under 10 years is now available to download here!
Avoid any Luxury purchases, you don’t need that fancy car
I know it’s tempting to go out and buy a luxury item now that you have a salary, but I can’t stress enough whatever you do don’t do this. Aaron drove a 1996 Tercel car for years, I can remember his friends giving him a hard time about it, but we didn’t care. We had a goal and that was to get the student loans paid off as soon as possible. Did we want to buy a new BMW like some of our friends of course we did, but did I? No we didn’t.
As your salary increases so should your monthly payments
Over time as your salary increases so should your monthly student loan payments. Everytime we got a raise, or a higher paying job, the first thing we did was increase our monthly payments on our student loans as high as we could. Even if you get a one time bonus, use that bonus on paying a good amount of your student loans off.
In conclusion: How we paid off 50k in student loans in under 10 years
After we graduated from college, we both moved back home with our parents, Aaron couldn’t find a job after college and took a job working retail, we had the mentality of living paycheck to paycheck, in addition we skipped buying new items we didn’t need. After we paid off 50k in student loans, the next step was to save 100k to purchase our dream home.
That’s it, that’s how we paid off 50k in student loans in under 10 years. I’d love to hear in the comments below, do you have student loans? Are you struggling to pay them off?