On my last day of college, I was sitting in my class when my professor asked us a question. “Who is graduating tomorrow?” I was the only one that raised my hand. I was one of two seniors in the class, so it wasn’t very surprising. After he congratulated me, he asked me about my plans after graduation. “I want to travel a bit first and then I’ll figure it out.” A classic millennial response. I hadn’t given after graduation much thought, but was just so happy to be graduating a semester early and wanted to be done. “Raise your hand if you have student loans,” my professor continued. To my surprise, only half of the class raised their hands. I was one of them. “Those of you that have raised your hands, have you given much thought into a plan of how you are going to pay back your loans?” He was facing me when he said this. My face immediately felt flushed and I just said, “Well, no.” “Have you taken your exit counseling? It’s something you should really sit down and look at before you take off to Europe,” he suggested. The class ended and I felt embarrassed. I stayed afterwards and talked to my professor. He explained he didn’t want his students to go through what he experienced with his loans. He was still swarmed in student debt in his late 30s. To be in my 30s, 40s, or even 50s and still paying off my college tuition was not in my “life” plan. I didn’t know how much I owed exactly, but I knew what the ball park was.
After graduation, I sat down in the library and did my exit counseling. I owed approximately $21,000. I wasn’t shocked, because I knew this was coming, but looking through payment plans is when it started to hit me. I was overwhelmed. How was I going to pay this? Where do I even start? I sat down one night and brainstormed for about an hour. I scribbled down what I needed to do, how I was going to do it, and the time frame it would take me. After two years of working, less splurging, and lots of saving, I paid off my student loans in only two years. Here’s what I did:
1. I Got a Job
First and foremost, I, of course, needed a consistent flow of cash. This took a lot of time and patience. While I was looking for a job, I deferred my loans six months. I didn’t want to, but I had no choice, and it actually was a smart move. Rather than digging into my savings, I deferred until I had the cash to pay. I applied to server positions, nanny jobs, sent out my resume to a million places. Five different interviews, a couple of side jobs, and four months later.. I found the amazing job I have today, in hospitality/international tourism to the USA. It paid more than what I needed, had travel opportunities, and I got to work from home. Dream job. Check! Be patient and keep working hard, and you’ll be surprised at what opportunities will come your way.
2. I Lived at Home
For one full year out of college, I lived at home with my parents. I know what you’re thinking, I could never move back in with my parents. Actually, it was pretty easy for me since my family is pretty tight knit. It was just me, my sister and our parents. New roomies! It wasn’t exactly where I thought I would be living immediately after graduating, but living at home saved me more than $12,000 in rent I would be paying otherwise. Plus, it was nice to be home with my family after being away for so long. If you can live at home for any given time after college or split rent with a couple of roommates, I would recommend it. It was my first real boost of saving I needed to help me on this financial journey, and looking back, I am so glad I did it.
3. I Saved.. A lot!
Believe me, I get it, you’re out of college so you want to go out twice a week and on the weekends. Here’s some advice: don’t. Don’t treat yourself to expensive dinners, don’t splurge at the mall. Just concentrate on saving. You will find bars are not college priced anymore (ugh!), four course meals are out of your budget, and buying new clothes every weekend, in my opinion, is just not a smart move. My first year out of college, I saved about 50% of every paycheck. Today, I still try to save about 40-45%, and you can too! And let me clarify, you can still go out, but make it once or twice a week instead of three or four. You can still buy clothes, but be smart about it. (hello sale racks!) You can still do anything you want to do, as long as you put away the 25-30% of your paycheck away. You can’t touch it! The rest is for you to have fun with.
4. I Talked to a Loan Mentor
I started saving, but I wasn’t sure how to make my first student loan payment. I was clueless. The smartest thing I did through out this entire process was call a student loan mentor and ask for advice. They are really helpful when it comes to finding the perfect payment plan. Personally, I use myfedloan.org, and make monthly payments that work best for me. Take thirty minutes out of your day and speak to a mentor on what plan works best for you. If you work in public service, many of your loans can be forgiven. This is something I wouldn’t have known unless I had spoke to my mentor. Although I did not qualify for loan forgiveness, I told my sister, a nurse, and she qualified for more than 50% of her student loans to be forgiven. That is huge news! So talk to an advisor, or loan mentor, it could really pay off in the end.
5. I Set Up Automatic Payments
After finding a plan that worked best for me, I set up automatic payments with my mentor. This helped strategize how much I needed to be saving, how much I would be paying, and the time it took me to pay. I really liked this tool because you don’t have to worry about logging in to pay, it automatically will pull from my account. You can also see how much interest you’ve paid, how much of the principal balance you’ve hit, and which loans you should pay off first. For instance, I knew I needed to pay all of my loans with interest rates of over 5%, while the ones with 3% rates I saved for last. Although many of my payments were paid in lump sums, automatic payments helped me stay organized. I highly recommend doing this!
I’m two years out of school and I’m so proud to say I am now debt free. If you’re struggling with student loans, trust me – there is a light at the end of the tunnel. Just remember: be patient, utilize your resources, and stop spending – start saving!
You totally got this!