Debt Free Update: $130,947 Paid Off!

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Whenever I hit a milestone like this, I like to reflect on my journey. It’s not easy paying off $201k in student loans, especially on a teacher’s salary. But, I have paid off $130k in 3 and a half years. So, it obviously can be done.

I still have $70k left to pay off, but this feels like nothing when thinking about where I was. I panicked when I hit my financial breaking point and received my first bill in the mail for my private loans. While in grad school, my minimum payment was $1,400, not including my federal loans or grad school.

Of course, I got things squared away so I didn’t need to pay that at that moment. Since I was in school full time, I could defer my loans. But, I knew this would be my reality on graduation day.

I’ve completed changed my priorities over the years. Some of them were definitely sacrifices solely for paying off my debt. Like moving back home to my parent’s house. At first, I moved home because I had no other choice. After my student loan minimum payment was paid, I’d only have about $1,000 leftover every month.

This was with me earning a New Jersey teacher’s salary, which is typically higher. But, that is because cost of living is so high. I would never be able to afford to live on $1,000 in NJ and move out.

After paying off some of my debt, I have stayed to pay off even more. As my income grew from teaching and my side jobs, I continued to throw more and more at my debt. I have now lived at home for almost 4 years and I’m getting ready to move out in 2 weeks!

This will obviously slow down my progress a bit, but I am now ahead of my goal by about a year. I am confident that I will still be able to get my loans paid off by my 30th birthday in 2022.

Here’s an update of where I’m at in my journey.

Private Loans

I am destroying these things with everything I have. I want these things out of my life so bad. Generally, I don’t hate them as much since I refinanced with Earnest, use my referral link to get $200 when you refinance! Earnest is a thousand times better than my previous provider.

But, since private loans are near impossible to get rid of, I want them gone ASAP. This month I was able to get them down to $17,500. I still can’t believe that when I refinanced, they were at $46k, just in September. The lower interest rate that I got has been allowing me to put so much more towards my principle.

When I first started my journey, these were about $142k, with very high interest rates. I was making very little traction because of it. That’s what motivated me to refinance and I’m so happy that I did.

These will continue to be my focus account until they are gone. I originally wanted these gone by the end of the year. Now that I am moving out and have a new job for next school year, I just don’t know if that’s possible.

Federal Loans

My federal loans minimum payment increased this month by about $50. I am currently on an income based repayment plan to lower my minimum payment while I pay off my private loans. This means that every year I need to re-apply and I get a new payment based on my taxes from the previous year.

No matter what my payment is, I always pay off the interest every month. This is because I don’t want the interest to capitalize into the principle. When this happens, my loan principle grows, which means I’ll pay even more to interest. You can read more about this in my post all about making blind student loan payments.

Having my minimum payment is actually great for me. Now, my minimum payment covers the interest the accrues each month. I no longer need to make an extra payment to pay off the interest.

I will continue to do this until my private loans are paid off, then I will use the avalanche method to pay off each of my federal loans.

Debt Free Plan

My plan is a bit up in the air at the moment. There are so many changes coming in the next few months. I’m super excited for all of them and I have created a mock budget, but I won’t know definitely how it will change my journey until it gets here.

In the next two weeks, I will be moving out of my parent’s house and into my boyfriend’s house. This will obviously increase my expenses. Also, the school year is ending at my current school and I will be the reading specialist at a new school for next school year.

All of these changes impact my budget and my debt payoff. I know my debt payments will be decreasing, especially because I am going from 10 month pay to 12 month pay. This I am very excited about because I will no longer need a summer sinking fund and that money will be able to go to debt.

But, it is definitely an adjustment getting paid less each month. I’m excited to see what happens with my debt free journey and plan to track it closely in undebt.it to make sure I still pay off my debt by my 30th birthday.