My Plan to Pay Off Over $30K of Student Loans By My 30th Birthday
“Make specific birthday wishes and write it down. You will be amazed about the power of pen and inner strength to accomplish the wishes.”
By the time I had finished my masters degree last year (2019), I had accumulated over $33,000 in debt just from student loans. While I was coming out with two degrees in a 5-year period and I was technically better off than some of my peers who on average had racked up $37,370 in 2019 in the state of New Jersey, I still had an overwhelming amount to tackle.
My Big Realization
While it made sense to pay off the minimal balance (it was already calculated for me!) that my loan servicers had provided, it didn’t make sense to me to be paying for something well into my 30s or older. Unfortunately, I have a mix of both private and federal loans that I manage between Navient and Discover Student Loans. Initially, I had 7 loans of differing amounts and varying interest rates and I never ended up consolidating or refinancing any of them.
Here is a breakdown of what I was working with and my current standing with them:
Breakdown of my student loans and my plan to be student loan debt free in 5 years.
All of my federal loans were for under a 10-year term, but my private loans varied between 15 and 20 years. 20 years. I would be 43 years old if I followed through with it. Even with my shorter loans, I would be in my 30s. That’s when I came to the realization that I hated this plan! While I was thankful for the education and experiences that I had in school, I didn’t want to be in my 30s paying for the dumb things that I did in college. I learned a lot and I met a slew of great and diverse peers and professors, but college also consisted of the all-nighters, the classes that I might have skipped to catch up on work or sleep, and social outings and activities. I simply didn’t want to be 30-something paying for something I did 10 years ago. My degree is forever, but those college experiences were fleeting.
So, how did I realize I could cut my payment time? My sister helped set up an amortization schedule that I keep on Google Sheets. An amortization schedule basically shows you how much money you will be paying in both principal and interest over time. It’s a convenient way to assess my loans and how fast I can pay them off. Yes, there are dozens of different loan calculators available on the internet (like this one!), but it was nice to have my own personal spreadsheet that I could edit to my needs. Here is a free downloadable Excel sheet that you can edit to fit your needs! I could play around with how much I wanted to pay each month, if I had a projected end goal date in mind, or if I had some additional money to spare that I would put as a bonus additional payment. By inputting and playing around with my schedule, I realized I could be student debt free before my 30th birthday in 2025. I think it will be the best present I could ever give myself.
It’s certainly a challenging undertaking — to be aggressively paying off my loans. This means I need to pay about $500 a month towards my loans. Normally, my minimum payments would have been over $250, so I’m paying about double. Of course this is something I can only do because I have the financial means to and it was imperative to budget my student loan payments in and make sure it was financially possible to do. It was also important to recognize that at any point, I can switch back to my minimum payments. Sometimes our finances can be thrown in for a loop, so I needed to be flexible.
My amortization schedule on my quest to be student loan debt free by 30.
My Approach
Within my first year post-grad, I had approached my loans with the snowball method -- paying off some of my smaller debt amounts regardless of the interest rate. I wanted the satisfaction of paying something off at the very least. Instant gratification gets the best of us sometimes. I did have a method to my madness, where I paid off the smaller amounts from my private loans, rather than my lower-amount federal loans. Now that those are out of the way, I can utilize the avalanche method and focus my efforts toward paying off my last high-interest private loan from Discover.
Because of National Emergency Forbearance, my federal loans have been granted forbearance in accordance with the CARES Act passed by Congress in response to the COVID-19 pandemic. During this forbearance, I can still make payments, but no interest will accrue. While I easily could have stopped paying for these loans because I was granted forbearance, I took this as an opportunity to continue paying the minimum so the amount would go immediately towards my principal amount, rather than stubborn interest.
Now that I’ve settled on this plan, it definitely took some time getting used to. $500 is no small amount and to be paying double of what my minimum payments were was a real shocker to my bank account. I’ve now been paying around $500 a month for a few months. I have definitely adjusted and have just come to accept the transaction. I probably would have used that money to buy things I didn’t need or eat out more. In this case, quarantining has helped ease any unnecessary purchases and social outings. While it does seem like I’m sacrificing some of my spending money, I know it’s going towards a sound decision to pay off my loans aggressively. I know there are others that pay more and I know there are others that pay just their minimums, so it was important to reassess what I could financially handle.
What Happens After I Pay It All Off
Once I pay off my student loans, then what? Of course, I’ll celebrate. I’ll then have the opportunity to devote that money towards something else, whether it be home ownership, marriage and/or kids, travel, retirement and investments, etc. Not that I can’t already be thinking about it now (because you definitely should be saving and investing too!) but I’ll no longer have student debt looming over my head. If you have the financial means to, don’t settle on the minimum payments and pay off what you can.
Do you currently have student loan debt? What’s your plan to pay it off? When is your FREEDOM date?
If you’ve paid off your debt, got any advice for me? Leave them below.
My Plan to Pay Off Over $30K of Student Loans By My 30th Birthday
