I've been thinking about posting for a while, but I've decided to bite the bullet and share my story. I love reading success stories from others so I hope this helps someone. I paid off my $26,000 in student loans in less than three years while making $30,000-50,000 per year and living on my own.
As a bit of background, I graduated from a small private college in 2014 with a Bachelor's Degree in Mass Communication with a student loan balance close to $23,000. Not a terrible amount by any means, but certainly not debt free. I took out a total of $26,000 in student loans during college, but I paid off close to $3000 while I was still a student thanks to multiple part time jobs. Thankfully I got lots of scholarships and grants in my financial aid package, otherwise I probably wouldn’t have gone to a private school. I paid for college on my own. As a graduation gift to myself, I upgraded from a 2003 vehicle to a 2010 vehicle, taking on an auto loan of $7500. I got my first full time job at a radio station right out of college with a starting salary just shy of $30,000. My total loan balance was about equal to that starting salary.
I held that first job after graduation for 15 months before taking a new job that came with a pay raise to a bit under $40,000 and great benefits including 401k matching (my default contribution was 4.5% while my employer contributed about 9%). While at both jobs, I rented a two bedroom apartment ($800/m and then $1075/m, including utilities). I rented out the spare room both summers during my first job (summer vacation town) and one semester in my current apartment (college town) plus Airbnb when I didn’t have a roommate.
I delivered pizzas as a side gig the first year out of college. When I took the new job, I started doing radio sports play-by-play on the side. It’s something I did as part of my first job out of college and I really enjoyed it, so it’s been a great side gig for me. I signed up for Uber and did that for about 9 months, but it wasn’t really worth the wear and tear on my car so I stopped doing that. Even with side gigs, I haven’t earned more than $50,000 in a year.
Before finding this subreddit, I was already budgeting, tracking balances on all of my accounts and loans, and being pretty frugal. Once I found this sub, I got more into investing and maxed out my Roth IRA for 2016 and 2017 through Vanguard. When my student loans were gone, I upped my 401k contribution by about $90 per month. As of today, my 401k and IRA total about $27,000.
A few weeks ago, I looked through my spreadsheets to see how much I’ve made on side gigs since I graduated college – close to $24,000, which is basically what I owed on student loans when I graduated. Side gigs have been the single biggest contribution to me paying off my loans quickly. But even with that, sticking to a budget helped keep me on track.
Fast forward to 2017 and I have paid off all of my student loans (as of March) and auto loan (Feb 2016). I like to think I've always had a pretty good head on my shoulders financially, but finding this sub helped me speed up the process of paying down debt and investing wisely. I was on the standard repayment plan for my loans (all federal) and paid extra toward the highest interest rate loan each month. I had my balance down under $12,000 in March when I decided to pay them off. I had enough left over for a healthy emergency fund and extra savings to feel comfortable throwing that much at them at once.
There are lots of posts about people paying off their student loans quickly, many of whom make 6 figures or live at home while they pay down loans. There’s nothing wrong with that at all, but I thought I’d share another story of someone doing it on a more modest income and not living at home. I should mention that I have been very fortunate to be able to stay on my parents’ health insurance since graduation.
TL;DR – Paid off $30,000 in loans in less than three years while living on my own and making less than $50,000 annually. Side gigs, frugality, budgeting, great work benefits, and this sub all helped immensely. Still made investing a priority too.
In case anyone’s interested, here’s a typical monthly budget for me now.
Monthly income from work (gross, pre-tax): $3450
Side gig income: $200-1500, depends on the month
Housing/cell phone: $1150
Transportation: $180
Insurance premiums and out of pocket (auto, life, vision, health, dental): $170
Investing (401k and Roth IRA): $700
Food (Groceries and dining out): $200
Entertainment: $100
Etc: $100
Taxes: $750
I usually come in under budget in most categories. I also make sure that my full time job income covers all expenses so my side gig income could go straight to student loans and now to investing/savings.
I'll be happy to answer questions and/or update my post as necessary.
Submitted June 22, 2017 at 08:34AM by radioguy_1 http://ift.tt/2sZ1gtN
