Hey, everyone! Welcome to the first-ever guest post on Steward and Slave! This week, Jacob from Dollar Diligence shares how he got rid of $25,000 of student loan debt in just over a year. Check out his story, and be sure to head over to Dollar Diligence for more from Jacob!
How I Got Here Today – My Personal Finance Story
Debt used to cloud my life and I was ashamed of how much I racked up from school. If you have read my blog previously, then you know may know that I paid off $25,000 in student loan debt in just 15 months.
I know, it sounds impossible, but I did it.
I was in a serious financial dilemma and I wanted to find my way out, so I made the decision to make that happen. Below, I will talk about some of the steps I took and what I recommend you do to pay off your debt, just like I did.
Tips I Recommend for You to Take to Pay Off Debt
Below, you will find a number of strategies and tips from me that I used to pay down my student loan debt. I do not know your personal situation, but no matter what it is, these tips will help you pay down your student loan debt, despite its size.
Student Loan Refinancing
One of the things I did to reduce the amount of debt I had was I refinanced my student loans. I recommend this strategy for anyone who has a large amount of debt and a hefty interest rate.
Now, while I say I recommend it, it does not mean it is for everyone. If you are unemployed, do not have a good paying job, or you have poor credit, then you will not be approved for refinancing and that is the sad truth. Now, if you have a co-signer who is willing to help you, then you may be approved should they meet the requirements.
I was able to meet the requirements to refinance my student loan debt, so I did it. This allowed me to receive a lower interest rate and shorten my repayment term, though my monthly payment did increase. I knew this would be necessary, though, in order to pay off my debt as fast as possible.
Though I could have used some of the extra money I put towards my debt into an investment account, I decided to try and get rid of it – and the constant anxiety it brought me – as fast as possible. I personally don’t think this was a terrible goal.
Living Below Your Means
This tip is one that I stand by and I know you may not like it or want to even do it, but it works. Live below your means. What this means is that even though you can technically afford a $700 apartment, you choose the $400 apartment because it saves you $300 per month. I chose to move in with my aunt and uncle while I was paying off my debt. This was not my ideal situation, but I was able to save a lot of money and if I did not live with them, I could not have paid down as much debt as I did.
While living with my aunt and uncle, I was also able to save money on gas because they lived very close to the school I taught at. I would sometimes even ride my bike or walk when the weather was nice.
Be as Frugal as Possible
If you are not frugal, you will find that you run out of money as quick as you receive it. I took steps to make sure that I would not regret any of my purchases and I made sure to cut out unnecessary spending.
When I sat down to analyze where my money was being spent, I quickly realized that my entertainment and food needs were never left unmet. What I mean by this is that I would spend a lot of money per month on eating out at restaurants with the guys or drinking some tall ones every weekend.
In addition, I would splurge and attend comedy shows or head to the movies. It was a reality check for me and I saw how much money I was wasting and for what? A couple of laughs and a delicious plate of food at the time? I put an end to it immediately.
Get Out of Debt Today
If you want to get out of debt, you need to take steps to make sure you can. If you enjoy going out to the movies or you spend your money on new clothes every week, sit down and think about whether it is a necessity. That $100 on those shoes could have been $100 off your student loan balance.
While you may not want to live below your means, it helps and it allowed me to pay off $25,000 in just 15 months! You too can do it.
Aside from his full-time job as a high school teacher, you can find Jacob blogging about personal finance at Dollar Diligence, reading books about history, and figuring out which kind of puppy to get next. Follow him on Twitter to keep up with him!