How we paid off $300k in Student Loan Debt in 3 years
I know that the title of this article sounds crazy! Paying off 6 Figures of student loans. $300,000 in student loans, in 3 just years??? Yeah right! There is no way! Did you win the lottery? Do you have rich parents? Do you make a million dollars a year?
But, I promise, this article is 100% real. And the answers to all of the above questions is “No, we did not win the lottery, or make a million dollars, or anything else of the sort.”
In fact, when we started paying down Mr Dentist’s student loans from dental school, we had a total of almost $310,000 in student loans!
If you want to talk about staggering under a mountain of debt, I hear you loud and clear. I have been there and it was no fun.
But we also learned that with a plan, determination and focus it is possible to get rid of your student loans fast.
We made our first payment on the student loans in August of 2015. Then, in September of 2015 I gave birth to our third child.
So not only did we pay these loans off in a short amount of time, we did it with 3 kids in tow!
And finally, in July of 2018, we made the final payment on the student loans and could officially call ourselves debt free.
So how did we do it? How did we pay off such an enormous amount of debt in such a short amount of time?
I’m glad you asked! Here we go…
Best Tips for Paying Off 6 Figures of Student Loans
Start with a Budget
In order to know how much we could pay towards the loans each and every month, we had to have a written budget, and stick to it.
This is honestly where I got my love for budgeting. I was crazy about seeing where our money was going every month and seeing if we could cut expenses anymore.
And our budget was tight! But I was determined to pay at least a certain amount each and every month. I wanted to pay what would be the minimum monthly payment, if we were on a 10 year repayment plan.
The only way to figure out how to do that, and keep food on the table, was to create a budget for our family.
RELATED ARTICLE: Budgeting for Beginners
Live on Next to Nothing
When we made our budget, we took out as many expenses as possible. So when I saw we lived on next to nothing, I am being serious.
Dave Ramsey calls this “living on Rice and Beans and Beans and Rice”. We did not go on vacations. We rarely ate out (usually to celebrate paying off another debt).
Our kids were really young during this phase, so there weren’t a lot of extra curricular activities. But even then, we limited their activities as much as possible.
All in all, while we were paying off the student loans, we lived on a little less than $2500 per month, and we had to pay our $1200 mortgage out of that amount too.
You can find out all about our budget during this time on this post. I share our actual budget numbers.
RELATED POST: How to Live on $2500 per Month
Living on next to nothing is definitely not fun, and it is hard. BUT it is possible, especially when you have a plan, you are working the plan and seeing progress towards your goal.
We did all this in an effort to spend as little as possible so that as much as possible could be put towards our debt.
Make More Money
Sometimes, even when you have budgeted and are living on as little as possible, there still isn’t enough in your budget to make headway on those loans.
This was the case with us. So, to help our efforts even more, we had to make more money.
For us, this meant that my husband would work on his day off. The clinic he worked at had their employees work 4 days a week, 10 hours a day. Which meant that he had one day a week off.
Well, rather than take the extra day every week, most weeks he would request to work that 5th day.
Now, he was on salary, so technically he didn’t get paid for those extra hours. But he work did have a bonus system in place. So the work he did on those days went towards his quarterly bonus. And the bonus quickly increased when he worked those extra days.
And, yes, it also meant that we saw him less. But in the grand scheme of things, it was for a short amount of time. And we had a big goal in place to keep us going.
Now if you are looking for ways to make more money, this is where a side hustle or second job would come in. A few hours here and there, at nights and on the weekend, could really help put a dent in your debt.
Check out these business ideas for some great side hustle ideas.
Make A debt Payoff Plan
This is big. It is one thing to acknowledge that you have debt, and how much you can put towards it. It is another thing entirely to make a plan for how you are doing to pay it off.
For us, we used the debt snowball plan.
In the debt snowball, you list out all of your debts from the smallest amount owed to the largest amount owed. We had 17 individual debts all tied up in the big student loan amount.
Then, you continue to make the minimum payments on all of the loans. Except on the smallest loan. For that sucker you throw any extra money in your budget at the smallest loan, in addition to its minimum payment. And any other money you can find.
Once it is paid off, you take the total amount you were paying on that smallest loan (minimum payment + extra money from budget) and apply that amount to the next loan on the list, with its minimum payment amount.
You keep doing this process until all the debts are paid off.
Rather than refinance into one lump loan, and get a smaller interest rate, we chose to keep them separate. Why?
Well, I liked to seeing the progress of paying off another loan. It gave us a chance to celebrate another win and kept us motivated to keep going.
Did we pay extra in interest because of it? Possibly.
Throw All Extra Money at the Debt
I mentioned this tip when talking about the debt snowball, but it does deserve its own section. When working to get out of debt, throw as much money as you can find at those loans. This will allow you to pay them off faster and get out of debt sooner.
This meant that ANYTIME we had extra money come our way, we did not keep it. We threw it at those darn loans.
Tax refunds–so fun right? NOPE. Back to the government to pay off our student loans they went.
Bonuses–I mentioned that my husband got a quarterly bonus from work. What did we do with it? Throw it at the debt.
Pay raises–now technically my husband did not get a pay raise while we were at this job. But if we had, we would have used the extra money from the raise to put more money towards the debt, not to increase our lifestyle.
Accrued Vacation Time–Do you have vacation time that is piling up at work? See if you can cash that vacation time in for actual money.
When it was time to leave the job at the clinic, my husband had a lot of vacation time he hadn’t used. So we were given a pay out for it in cash! It really helped us finish off the loans AND start our bigger emergency fund.
Can’t find extra money? Time to start selling things. We had 2 garage sales while we were paying off debt.
Remember, every little bit helps and gets you that much closer.
Loan Repayment Program
Okay. This tip is part of what makes our debt payoff story unique. This tip won’t apply to everyone, but there are some of you that it will apply to. And you never know unless you do some research to find out.
The clinic where my husband worked was in a rural town. It was considered a clinic in an “underserved” area. And this clinic qualified for loan repayment programs from both the state and the federal government.
Basically, how this works is that, in exchange for working in an underserved area (what most would consider a less desirable location), for a contracted amount of time, you could be qualified to receive a grant that was specifically for paying off loans.
You had to apply and get accepted into one of these programs in order to get the money. And, at first we didn’t get the money. But eventually my husband was accepted into the state level student loan repayment program. And we were able to receive these grants every quarter for a little over two years.
Now, these grants did not pay off all of our student loans. But it did pay a big chunk. And we lived in a small, rural town for those 3 years so that we could get the loan repayment.
Like I said, this may not apply to everyone. But you also might be surprised at what loan repayment programs you can find if you look. Or maybe you can ask your employer to throw in some money towards loans, in your paycheck. Can’t hurt to ask, right?
Sold Our House
After three years at the clinic in the small rural town, my husband’s employment contract was up and we decided not to renew.
This meant that we had to find another a job and, ultimately, relocate to a new town. This also meant that we had to sell our home
It was an emotional, stressful time. Anyone who has sold a house will probably agree with me.
But it ended up being the final push we needed to pay off the loans. We had owned the house for the three years we were paying off debt. So it was increasing in value.
When we sold the house, our payout included all of our equity and the added value the house gained. And we used ALL of it, every last drop of the equity from our house, to pay off the rest of the student loans.
We could have saved the money from the house, but then we would have had a pile of cash in the bank and still be in debt.
This way we were able to start with a clean slate at our new home and start working towards other financial goals.
Selling your house may not make sense. But, then again, you might consider it.
Could you sell and downsize to something cheaper, at least for a small time? Again, the cheaper you can live, the more you can save and the less you can spend, will all help in paying off your debt more quickly.
Final Thoughts on Paying Off 6 Figures of Student Loans
Let’s be honest. Paying off debt is not fun. It requires hard work, determination, sacrifice and so much more.
But I can also tell you that it is also worth it. Yes, we spent 3 years living on next to nothing, my husband working extra hours and not doing many fun things. But, on the flip side, it was only 3 years. That isn’t a very long time. Not really. I mean, yes, it feels ENDLESS when you are in the middle of it. But once you get to the other side, the freedom and send of relief is incredible.
I know that not all of our story will apply to everyone. But then, not everyone will have over $300k in student loans!
I hope by sharing our story, you will be encouraged to tackle your own debt load. And maybe get some ideas for how to you can make even more progress.
Are you debt free? How did you do it? Let me know in the comments!