By Melanie Lockert, Content Writer at Credit Karma
Two degrees, nine years and over $81,000 later, I did something I had been dreaming about for years. I made the very last payment on my student loans and became debt-free.
When I graduated with my bachelor’s degree and $23,000 worth of student loan debt, I didn’t think much of it. After all, I had been told that college was worth the cost. I treated my debt like a bill and paid the minimum for several years.
It wasn’t until I took on an additional $58,000 in student loans to go to my dream school that I woke up and realized that I didn’t want to be in debt forever.
After obtaining my master’s degree in Performance Studies from New York University, I made a commitment to get out of debt as soon as possible so I could live freely ― not in the shadow of debt.
Getting out of over $81,000 in student loan debt, not including interest, was one of the hardest things I’ve ever done, but it was well worth it.
In order to get out of debt, I employed various strategies to help me reach my goal. Here’s what I did to reach my goal of debt freedom.
1. I employed the debt avalanche method.
There are two common methods people employ to pay off debt: the debt snowball method and the debt avalanche method.
Using the debt snowball method, borrowers pay off accounts with the smallest balances first, while paying the minimum on the rest of their loans. People like this method because it provides the feeling of quick wins and long-lasting motivation to keep paying off more debt.
The debt avalanche method, on the other hand, involves paying off accounts with the highest-interest debts first, while paying the minimum on the rest of their accounts. Borrowers can generally save more money using this strategy.
I went with the debt avalanche method ― paying the minimums on my low-balance, low-interest undergraduate loans while aggressively exceeding the minimum payments on my high-balance, high-interest graduate loans ― first paying off the 7.9 percent loans, then the 6.8 percent loans.
2. I calculated my daily interest to stay motivated.
When I graduated with my M.A. in 2011, I still had $68,000 of debt, and a lot of my payments were going to interest. One day, I decided to figure out how much interest I was paying per day.
To calculate my daily interest, I used the following formula:
Interest rate x current principal balance ÷ number of days in the year = daily interest
When I calculated my daily interest, I realized that I was paying roughly $10 per day, or $300 in interest each month.
After feeling discouraged about the state of my debt, I got angry that I was spending so much money on interest. From that moment forward, I used my anger to fuel my debt repayment and committed to getting out of debt as soon as possible.
3. I mastered the art of the side hustle.
In my first few years of debt repayment, I cut my budget to the bone and lived on very little. There wasn’t any room to cut back further, and the progress on my debt plateaued. I knew that I had to earn more to really make the progress I wanted to on my debt, so I started side hustling every chance I got, taking gigs on nights, weekends and early mornings.
I did anything I could to make an extra buck. Over the past few years, I’ve worked as:
A pet-sitter.
A brand ambassador.
A house cleaner.
A mother’s helper.
A greeter for an art show.
A registration attendant for a marathon.
During those years, the extra income really helped me to make higher payments toward my loans.
4. I made multiple payments throughout the month.
One of the best ways I combatted my debt was by making multiple payments throughout the month. Instead of making one monthly payment, I began making biweekly payments. Any time I had cash to spare, I made another payment.
5. I made student loan repayment my number one priority.
For better or worse, I prioritized my student loan payments over everything else. Over the past five years, I’ve focused on paying off my student loans by earning more, streamlining my expenses and increasing my payments.
Going all in helped me reach debt freedom several years earlier than if I had just paid the minimum payments and saved me money on interest payments.
Bottom line
It took me a total of nine years to pay off all my student loan debt, but the turning point was when I got really serious about my debt five years ago. I realized I didn’t have to be in debt for what felt like forever, and that I could make changes to my priorities and repayment strategies to get out of debt.
The hardest part was making the necessary lifestyle and attitude shifts required to get out of debt. While getting out of debt is obviously about money, it’s about mindset as well. Once I started to believe I could do it, committed to it and made the changes to my repayment strategies, I made it happen.
About the author: Melanie Lockert is a freelance writer and editor currently living in Portland, Oregon. She is passionate about education, financial literacy and empowering people to take control of their finances. Her work has been featured on Rockstar Finance, GoGirl Finance, The Globe and Mail and more.
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