Friday, July 29, 2011

So long, student loans!

On my fridge, I have an old one-panel comic clipping (from back in the day when I received a physical newspaper). It shows two very elderly people toasting the fact that they've finally paid off their student loans. At times, it really did feel like I would be 90 years old before the darn thing was finally paid off. (Then I got a mortgage, but that's another story.)


As it turns out, with persistence and a willingness to funnel my extra pennies into that loan over the years, I'm thrilled to say that I've paid off my student loan. It took me about five years--the same five years that we spent saving for and buying a house. Here's how I did it.

1. I worked my ass off in high school, earning good grades and doing tons of extracurricular stuff. This enabled me to get my pick of two colleges offering very good scholarship packages, meaning that although I chose to go to a private liberal arts college, I didn't have to take out exhorbitant loans in order for my family to afford it.

2. While not exhorbitant, the amount was still daunting. With my loans for grad school, it added up to more than I was making during the first year I was out of school and working. I looked up average loan amounts before writing this entry, and my amount when I started was a couple of K over this year's average. I'm not sure what the average was back in 2006. For my last semester of grad school, I opted not to take out any additional loans at all. I lived on ramen, worked tons of overtime, and at one point had only $20 in my checking account, but I was able to pay the tuition bill myself and squeak through.

3. I found a job during grad school that could be part-time when I needed it to be to work in around my classes, but that could give me seasonal full-time hours and time-and-a-half overtime hours during school breaks. No health insurance since I was technically part-time, but see #6.

4. Those were frugal times, but in general I live a fairly spare lifestyle. I don't give a crap about shoes and handbags. I wear clothes from Target until they wear out. I cut my own hair. I rarely eat out. I carpool or bike to work. And I've never carried any credit card debt. Also, my parents are awesome and bought me a used car when my hand-me-down Bonneville from my grandparents was worn out. I partially, but not completely, paid them back for it. They also paid for our wedding (for which I kept the expenses pretty modest).

5. I was lucky enough to consolidate my loans at a time when the rates were really low. I further lowered the rate by enrolling in auto pay and by paying my first 12 payments on time.

6. I am lucky enough to be in good health. I've had one medical incident that necessitated an ambulance trip and exhausted my high insurance deductible at the time. That was a blow, but I was able to cover it, barely. Besides that, I've never needed to deal with insane medical bills. I am also lucky enough to have only been laid off once, and to have found another job within a reasonable amount of time.

7. Especially during the first few years, I made extra payments whenever I could. This didn't happen as much while we were hardcore saving for our house down payment, but even in the past year, when we've been concentrating much more on extra payments to the mortgage, I've been putting aside bits here and there to pay down the dwindling student loan.

8. After five years in the workforce, I make about 10K more per year than when I started. I think the habit of living a fairly spare lifestyle is well ingrained. I spend a fair amount on my biggest hobby (running)--but even those expenses can be kept on the modest side by training more and racing less, and by mostly doing races close to home. My other big hobby (reading) is very cheap indeed, thanks to libraries and PaperbackSwap.

I guess that's about it. Now to celebrate--by increasing my IRA contributions. Oh, the exciting life I lead!
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