How I Paid off $25k in Student Loans in 18 months while Making $50k a year

High dollar student loans are the struggle that the majority of millennials understand- 63% have >$10,000 in student loan debt. Pair that with the poor financial decisions often made in their twenties *cough* credit cards  *cough* and a lot of millenials are in rough shape

I took out a little over $25,000 in student loans, $5,500 through Sallie Mae with a floating interest rate of 9 – 12% (yikes!) and the rest were all federal subsidized/unsubsidized loans with the highest interest rate being 4.65%.

My plan, when I went to an in-state college, was to minimize my debt. How did I do that? I graduated in three years, applied for every scholarship I could (I went to China for free!), and was extremely frugal.

For me there was no Plan B if I graduated and couldn’t find a job. My parents were out of the picture and I wasn’t sure about living with my boyfriend at the time. I was 100% on my own, both in college and out of college.

While I was in school, I worked different jobs, mainly in the campus offices. I wanted to get some relevant office work on my resume to help me find a job. I worked anywhere from 15 – 40 hours a week while taking 18 credits every semester.

A very Frugal College Experience

My life wasn’t fun in college. Looking back, I wouldn’t go back to those years at all. I was depressed and stressed for three straight years. But future me is appreciative of how past me treated loans. I considered them as not my money . And the thing is, student loans are not your money for booze, parties, and eating out every meal. Student loans are so you can afford to be a student- the bare necessities like tuition, housing, food, and basic transportation.

My Freshman year, I did live on campus, which is where most of my debt came from. I think it was somewhere in the neighborhood of $6,000. The next set of debt came from a Chinese Summer program I did in Indiana, that was another $5,500. The rest of the debt, comes from federal loans, both subsidized and unsubsidized.

My tuition was covered (for the most part) through an academic scholarship and covered four years of education. All I really had to cover were living expenses.

I started getting into personal finance at the end of my Freshman year. I loved reddit’s personal finance  and started using different programs to track my expenses. After realizing I didn’t want to graduate $40,000 in debt, if I were to go to college all four years and live on campus, I grabbed a friend and moved into an apartment right off campus. I could still walk/ride my bike everywhere.

My monthly budget for living expenses in my Sophomore and Junior years were pretty similar and break down as follows:

  • Rent  (utilities included) – $310/$400
  • Groceries – $150
  • Phone – $45
  • Internet $17/35
  • Misc. $50

The max total I ever spent in a month on non-school related items was $680, and that would only have been in my junior year if I spent all my grocery money and all of my Misc. money, which never happened.

The cost difference in rent and Internet is that my Sophomore year, there were three of us in a two bedroom apartment and my Junior year, just two of use.

The apartment we lived in wasn’t new. In fact, it was about 60 years old and besides carpet and 50 layers of paint, had never been renovated. The oven was so small it could only fit the smallest cookie sheet in our pack of  cooking sheets. Everything in the apartment smelled kind musty and old. The tub would flood whenever it rained. And, we got bed bugs.  BUT the money that that apartment saved me was real. Thousands of other students were flocking to the new high rise apartments that cost $750/month for one room in a four bedroom apartment, plus utilities. No, I didn’t have stainless steel appliances, but I did shave off time on my student loan debt sentence.

A note on the Misc. category. This money was rarely spent. This money was for deodorant, shampoo, necessary personal care products, and the very, very rare meal out. My sophomore year, my parents got divorced and amid the divorce I was able to hoard all the shampoo, conditioner, deodorant, and clothes detergent that was built up. I didn’t have to buy shampoo or conditioner the entire time I was in college.

But everything else, I rationed. I allowed myself to use 1 razor for every 2 weeks, and did I take care of that mid-priced three blade razor. I would stretch out my body wash by adding water, cut lotion bottles and toothpaste in half to get out every last drop. Living frugally in college was absolutely utilizing and using everything until you were forced to replace it.

And for my food budget, I ate a lot of rice and beans, beans and rice, just beans, and just rice. But I also ate a rainbow of eggs, spinach, apples, strawberries, frozen veggies, and Trader Joes’ mini pizzas. I had lost 50lbs and wanted to keep it off, so no, I didn’t eat Ramen every day.

What I didn’t splurge on in college defines my frugality just as much. I didn’t buy new clothes for three years (even after losing weight), I didn’t get my hair cut, I didn’t own a car, I didn’t buy booze, I didn’t have time to party. I took care of myself mentally and physically and hoped for the best in my future.

Starting in my Junior year I was re-paying my Sallie Mae loan from my paychecks (literally, my whole paycheck), and living on my other loans.

Finding a Job and Paying off My Loans

I knew I could graduate at the end of my junior year if I wanted to with a major and two minors. That was the goal, but I would need a job first. Plan B was to stay at university and take a minimum amount of classes, and earn enough money to pay for my expenses until I found a full time job. Or multiple full time jobs.

I applied to over 50 positions in the Fall of 2014, I was set to graduate in May of 2015.

I heard back from two. One was a denial letter. One was an interview offer. I interviewed in mid-January and accepted my first full time job two weeks later, earning $50,000 a year.

This was the most money I had ever seen in my life. I set up my 401(k) to take 10% of my base. I had $6,000 of unused loan money in my bank account and while I became comfortable at my new job (while also taking 18 credits my last semester), I slowly started paying back the $6,000 as well.

I graduated with about $16,000 left in student debt.

I think my paychecks were something like $1,345.00, and I felt like I had made it- that everything would be okay.

Hunkering Down

Due to a problem with our apartment, my friend and I split ways. My ex-boyfriend helped me buy a car on craigslist for $2,500 and I got my own place. My rent has skyrocketed up to $975/month and utilities for an additional $140 (Arizona is HOT). And while I wish I could have stayed at that apartment longer to save money, living on my own after all those years was fantastic.

I had a car, which was freedom. A gym membership. And I even spoiled myself with the occasional makeup product.

But at this time I never had more than $1,200 in my account – which scared me shitless and I was paying down my debt as fast as possible. If an emergency did happen, I could just not make a loan payment.

I got a kitten during this time too.

My 22nd birthday went by and I bought myself Kat Von D’s Shade and Light Palette. I cried. I was so excited.

And for the next 5 months I would get paid and immediately pay what I could uncomfortably afford to pay for my student loans.

The End

March of 2016 was when I made my last student loan payment. I went to work and told coworkers double my age about it. Most were proud of me, and many mentioned their own student loans that they were still paying off. It was one of the happiest days of my life, no longer being debt free, being able to hold more than $1,000 in my account because there is no debt for it to go to.

I had also just gotten a $20k raise. My next check, the very first check where no student loan needed to be paid, was all mine. I had a really, really fun shopping trip to Sephora, upped my 401(k) contribution, and never looked back.

Finances My Finances student debt

Foxxy Finance Female Fridays (FFFF) – How your Nails Compound Interest

Welcome to Foxxy Female Finance Fridays! How many more F words can I add to the alliteration?  Fridays are dedicated to females and their finances. I hope these articles specifically target women and bring up issues and decisions, as women, we all struggle with.
This week I want to talk about nails, and getting them done.
For some of us, our nails are who we are, it’s like our hair, our go-to outfit, or a bag- they help define us. Well groomed nails, that are shaved trimmed, and often painted look better than nails that are manicured. Even nails that have a thin, clear layer of polish look better.
But not all of us are good at clipping our nails without making them stubs (me), painting their nails (me), or maybe we just don’t have the patience for it (also, me). So, we go to a nail salon to have them professionally done. The nail salon is also a great way to catch up with girlfriends, bond with mom, or have some alone time with a coffee and a magazine.
Salons are also a great way to separate yourself with your hard earned money,

personal finance budgeting

In an ideal world, I would get a manicure every 5 weeks. That’s about the time where the growth really starts to show. For a pedicure, I could go every 5 weeks, but let’s just say every 8 weeks because that’s more realistic.
The average cost for a gel manicure is between $35 – $45, so I’m going to go with $40. The average cost for a pedicure is $25 – $45, I’m going to go with $35, again right in the middle.
With tip, that’s $45 for a manicure and $40 for a pedicure.
Let’s do the sexy math:
Annual Manicure =  $45 * 52 weeks / 5 weeks = $468
Annual Pedicure = $40 * 52 weeks / 8 weeks = $260
 For an annual total of $728.

Let’s say you’re 25 and 40 years away from retirement. Saving that $728 and letting it grow at 7% interest is almost $11,000.

You can do the math too! Download the below Excel template and try it for yourself!

Now for me, I don’t go every 8 weeks or every 5 weeks. This year, I went 3 months without going at all. But I was consciously not going to save money and hated every second of it.  There are a lot of assumptions in the above calculation, but I hope the message is clear: getting your nails done is expensive and you need to weigh the opportunity cost. Would you rather get your nails done, or invest 728? Would you rather get your nails done or come close to buying a pair of Valentinos?

Alternatives

When I was in college, I was poor. Not twenty-something broke. But poor. I had no parents to bail me out of a bad situation, or anyone I felt comfortable accepting money from. But, I still wanted to look good and feel good.
Starting in my freshman year, one night a week I would have “spa” night where I would soak my feet, scrub of dead skin, trim my cuticles, and trim my nails. It was fun “me” time where I could stream a movie and relax. I was never good at it, but it did the trick.
I would usually paint my toe nails and put a clear coat on my fingernails. As I became a sophomore and junior I started trying designs I could do with Scotch Tape and was horrible at them, but, a couple of times they did work.
In effort to up my nail game and turn it into a self-care hobby I bought a gel nail UV lamp and polishes. My nails looked better and I was the one doing them. I had no talent for design or even getting polish only on my nails, but by doing my own nails I was able to save money.
When the time came and I found a full time job, I waited until I paid off my student loans. Then I sold my gel kit for $20 and have never touched my nails again except to ruin them with a nail clipper.

personal finance for women

Now, I could afford to go every 5/8 weeks if I wanted to. But to me, being able to go a few times a year and having naked nails the rest of the year is a much better alternative than doing my own nails because it turned out, I never became good at it, and I rather it be a service than a hobby.

In Conclusion

Yes! You do look more put together and professional when your nails are done. But, you need to understand if it’s something you’re willing and able to do yourself or if you can afford to have your nails professionally done. Even when you can have your nails professionally done, is it worth the cost? With the savings could you get something else that will last you longer than 5 weeks?

 

 

Female Fridays