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Wow. I can’t believe it has been 4 years on this journey and I really can’t believe I have paid off so much debt. When I graduated from grad school in August 2015, I was drowning in $201k in student loan debt. And I went to school to become a teacher.
To this day, I regret taking on so much debt to become a teacher. The truth is, I didn’t know any better and this was what I was told to do. I was completely naive to what student loans were and what I was signing every semester.
The good news was that I had my realization when I had just started grad school and was able to make some serious changes and put a plan in place prior to even graduating. You can check out my financial breaking point story here, if you’re curious about the time I got a bill for $1,400 while making $1,100 every month. A reality check for sure!
But, back to the point of this post, celebrating my 4 year anniversary of being on this journey to pay off my student loans. This year has been a wild ride to say the least. It certainly didn’t go as planned and I’m honestly shocked by where I’m currently at while typing this post.
A year ago, I was living at my parent’s house, working as many side jobs as I possible could, and teaching in a school that gave me major anxiety, all to get these student loans paid off. I was in my fourth year teaching and completely lost as to what to do. It was my tenure year and I couldn’t imagine myself staying there any longer, like even one more day.
The reality was that I had to finish the year because of a grant I received in undergrad and grad school. If I left midyear, I would add $27k to my total student loan debt that needed to be paid off and that just wasn’t an option.
Finishing this last school year made me truly understand why I wanted to pay off my debt. I never want to force myself to stay in a horrible situation, just because of money.
At that point, I had paid off enough of my student loans that my minimums were about $1,100. Still incredibly high, but nothing compared to when I started. I immediately started applying to jobs in December, with the idea that I’d have a job for June, or the next school year.
The year felt like it dragged on, having to go to a place that gives you physical symptoms from anxiety, is brutal. It got to the point where my doctor put me on medication and wrote me out of work, as needed, to manage my symptoms.
Luckily, in March, I interviewed at a school that I truly felt was different and that I belonged there. It was for a reading specialist position and the culture of the school seemed to be completely opposite of where I currently was teaching. I was offered the job, accepted it in April, and took a pay cut for it.
To this day, I still struggle with if it was the right move to take the pay cut because it is drastically slowing down my debt pay off. But, the reality is, I am working somewhere that respects and supports me as a person and as a professional. That’s not something I was getting at my previous employer.
My mental health is in a far better place than it was 5 months ago. My days are longer, my commute is longer, but I still come home with so much more energy than I ever did before. Which speaks for itself.
My debt pay off may extend, but I just keep reminding myself that I’m still paying extra and I’m still in a significantly better place than I ever would have been if I never started. I never could have accepted this job, if I hadn’t paid off so much debt. I wouldn’t have been able to afford cost of living and my minimum payments.
So, even though I’m not debt free, paying off as much debt as I have has already positively changed my life and opened up more opportunities for me. Let’s get into the details of the last year.
Major Life Changes Happened This Year
I moved back home with my parents after I graduated from grad school. They lived in a high cost of living area, which allowed me to have a higher salary than most teachers (I started at $56k with a master’s degree and 3 teaching certifications). This allowed me to actually afford my minimum payments of $2,000/month. I lived there for the majority of the last 4 years in order to pay off as much debt as possible.
This past June, I moved out of my parent’s house and into a house with my boyfriend about an hour away. This increased my living expenses in the last couple of months. It also meant that all of my babysitting and tutoring clients I had, are gone, which was another hit to my income.
I started my new job on July 1st teaching summer school to a few of my students that I would have in the fall. It was an awesome way to slowly get used to the new school and my new coworkers. Other than summer school, I only worked VIPKID this past summer and took 10 days off completely to go on vacation to my boyfriend’s parent’s house. It was the perfect way to recharge for my new job.
Also, my boyfriend and I got the cutest mini bernadoodle puppy named Cooper in August. He has been a huge expense, but he brings me so much joy that it is worth every dollar. We had been talking about getting a puppy for a very long time, we both had started saving for a dog, so we’d be prepared when we found the right one.
$38,800 Paid Off This Year
It has been challenging for me to see my debt pay off slow down so significantly. I’m trying my hardest to shift my mindset and realize that I have been on this journey for 4 long years. I have made a significant dent in my debt and I have sacrificed a lot to get here.
It’s okay to slow down now. It’s okay to spend money on the things I value most. I have been sacrificing for so long that it feels weird to be spending money now and to have so much less left over at the end of the month.
This is a number I am so proud of because this is with a significantly lower income and significantly higher expenses the last few months. It’s a number I reached while only paying minimum payments all summer.
I know my debt pay off will be less in year 5 and I’m slowly accepting that it’s okay. My minimum payments have dropped to $541, which is SO much more manageable than they were. I know I will still pay off my debt early, it just might not be by my 30th birthday.
I also refinanced my private loans again with Earnest. I’m not sure I can say enough good things about this company and I truly mean that. They dropped my minimum payment without telling me because I had paid off so much. Then, started making additional principal only payments for me. Of course, I called to confirm this was correct.
You will never guess what their answer was, “Of course it’s correct, it’s to pay off the loan faster!” I still can’t believe it honestly. I highly recommend them because they truly do want you to get out of debt, which is clear based on what they did when I had paid off a significant amount of my loan. We can both get $200 when you refinance your student loans with my link. If you’re not sure if refinancing is for you, check out my post that walks you through the questions you should ask yourself before refinancing.
Current Debt Totals to Be Paid Off
I still have my federal and private student loans. I have always used the debt avalanche to target my specific loans. The snowball never made sense for my situation because my smallest debt was 5 figures, I had no quick wins (Don’t know what I’m talking about? Check out my post about the debt snowball vs. debt avalanche). So, I wanted to save the most money in the long run.
It has helped me significantly because now, so much more of my payment goes to the principal. Having large debt figures with high interest rates is so hard to tackle. But, once the higher rates are gone, it makes it so much faster to pay off the debt.
I just refinanced my private loans for a second time to get a slightly lower rate, but mostly to lower my payment from $865 to $239. This will allow me to put more money towards my federal loans with a higher rate, paying them off faster. And it gives me such peace of mind to have a manageable payment now, instead of $1,100.
My federal loans currently total $44k and my private loans are just under $12k. I’m currently focusing on my smaller loans within my federal loans that have higher interest rates. Once I am done tackling the higher rates, I’ll pay off my private loans and then finish off the last of my federal loans.
My Plan for Year 5
Year 5 is going to be interesting. My debt pay off will definitely be less. I can realistically put $1,500 to my debt every month. Anything over that is awesome, but not very likely. This is significantly less than I have been paying in the past.
I also have a ton of expenses next year I need to cash flow. Next year I have 4 weddings and one of them I am a bridesmaid in. I’m so excited to watch some of my best friends get married and I want to think nothing about money when I’m celebrating them. So, I’m cash flowing it slowly every month before.
Cash flowing and sinking funds are awesome for these kinds of expenses. I’m contributing to my emergency fund, car sinking fund, and wedding fund (Not for me! For my friend’s weddings!). This is a lot of cash going to these funds. I know it’s for good reason though, so I’m okay with it.
These are big expenses I know I need to make, so I might as well prepare for them. Then, I won’t be scrambling when they come up. I’ve been realizing more and more that I need to consider the unknown and be more prepared for it. I’d rather have more cash sitting in my savings account, then not have the cash when an emergency comes. That’s why I’m beefing up my emergency fund while paying off my debt.
Also, I really hope to increase my income, but it’s hard with my minimal time I have with my long commute and long day at school. But, I have found one tutoring client I see on Sundays, which has been perfect.
I’m ready to see what the next year has in store for me. I can’t wait to see where I am in one more year. Six figure debt can be seriously intimidating, but you can get out from under it, just take it one step at a time. I’d love to hear about your journey to pay off your debt in the comments below!