We’re student loan debt free! It feels awesome! The only debt we have now is our mortgage, and that isn’t going anywhere anytime soon. (Unless someone wants to give us a very generous donation? Anyone? Bueller?)
I’m going to give you a bit of background so you’ll have a better idea of our situation. I graduated from the University of Illinois in 2011 with a bit over $32,000 in debt. (I know this is way less than a lot of people, but still a lot and above the average according to Google) I started paying on my loans in 2012. Brett went back to school and got his associate’s at Parkland, which we paid for out of pocket. (No loans for Brett!) We were also paying off Brett’s car. In the midst of that, I quit my old job, got a new job, Brett finished school and got a job, we had Lil’ Bit, and bought a house. So it isn’t like we are bajillionaires and just paid for them at once using my extra pocket change. (Sorry, the smallest denomination are hundreds in my billfold…(ho ho ho))
Here’s what we did:
- We snowballed our debt Dave Ramsey style. The gist of snowballing your debt is paying the minimum payment for all your loans and then adding extra onto the smallest one. You pay that one off then put the extra + the minimum of the smallest loan onto the next smallest loan. Repeat until you’re debt free. If I had two loans that were about the same amount, I paid the one that had the higher interest rate off first.
- We paid off our credit card bill every month. No accruing interest on that bad boy. (We still pay off our credit card debt every month.) If you have credit card debt, I’d focus on getting that paid off first since the interest rates on those are crazzzy.
- We didn’t go on fancy vacations, buy new cars, or live fancily. Our vacations consisted of going to Lake of the Ozarks and staying in the condo free or going to St Louis, Metropolis, Nashville, etc., for family things. I’ve really really really wanted to go to Harry Potter world, but alas. We weren’t going to go into debt for a vacation, use our savings for it, or save up for it. One day. . .One day. . .When my car was totaled, I bought my uncle’s old car and drove that. We were down to just the Santa Fe for a few months and we survived.
- We used Mint.com to track our finances. Good night! Mint is awesome! It is kind of like Quicken, but it is all online and easier to use. It is also free! You can set up goals there (which is what we did with my loans!), there’s income/debt/spending analytics, budgeting, investment tracking. It really has been an essential tool for keeping our finances manageable.
It wasn’t easy, and sometimes it seemed like that’s all we were doing (which it kind of was) was paying on loans. But man, it was worth it! It is so awesome to know that we don’t have student loans hanging over our heads and how much money we saved on interest.
Your thoughts? Do you have a method for paying off debt that works for you?