How We Paid Off $80K of Student Loan Debt in 2 Years

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Before we dive deep into this post, I want to let you know that this post is Part 3 of a three part series of how my wife and I paid off over $100,000 of student loans by the time we turned 28.

If you haven’t read Part 1 or Part 2 yet, then go check them out first for some helpful background information and context before continuing on with this post.

Okay, let’s continue…

Now that you know how we ended up with so much student loan debt in the first place (Part 1) and how to avoid the mistakes we made early on (Part 2), I’m going to share with you exactly how we paid off $80K of our student loan debt in just two years.

When Ashley and I were engaged and during our first year of marriage we were kind of coasting through our student loan journey.

We were paying the minimum monthly payments on our loans, except for the two small student loans I had, which I had been paying double the minimum amount since graduating college. They were $50/month each and I was paying $100/month each.

During those days, we didn’t have a plan to completely eliminate our student loans and were not working towards a common goal to get out of student loan debt quickly.

It wasn’t until a little over a year into our marriage that we started making major changes to prioritize paying off our student loans.

In this post, I’ll share the 9 steps we took to pay off over $100K in student loans and the specific changes we made to pay off the remaining $80K of our debt in 2 years. I’ll share everything we did in chronological order and the moment we decided to make drastic changes.

Let’s get started!

Below are the 9 steps we took to eliminate the burden of our student loans.

Step 1:  Getting Organized & Understanding the Details of Our Student Loans

In December 2014, just a couple of weeks after I proposed to Ashley (and she said “Yes!”), we sat down and talked about our personal finances and major expenses we had on the horizon. I mean, we now had a wedding to pay for and they’re not cheap…I’ll save this story for a future post.

One of the first things I did was create a spreadsheet to house and organize the key information for all of our student loans. The purpose of this was so that we could fully understand how much debt we were in, what the interest rates were and how much we were paying on each of them every month.

I was shocked to realize that between the both of us we had 8 different student loans with interest rates ranging from 2.66% to 12.49%!

I even felt a sense of anger…not because of the amount of our student loan debt, but because I just found out how much our student loan debt had grown above the amount we originally borrowed (if you read Part 1 of this series, you already know this).

I was angry to learn that our government allows big business to charge such high interest through unsubsidized, private student loans to students (the future of our country), which means their debt grows higher and higher while they are still in school for 4+ years getting an education.

I didn’t fully understand this since, at first, it didn’t affect me. The only student loans I had were federal, subsidized loans with low interest rates. But, since my wife could only obtain private, unsubsidized loans with high interest, I now understood…

Together, we originally borrowed $80,996 for college. After graduating, we owed $102,295 in student loans! Our debt grew over $21K and 26% while we were still in college!

Below were the details of our student loans.

Talk about lighting a fire!

At this time, we had been making student loan payments for almost 4 years, so our student loan balance as of December 2014 was $87,352.

Knowing that we still owed more than what we originally borrowed after making the minimum payments after 4 years, I was even more motivated to start making changes, which leads us to Step 2.

Step 2:  Consolidating & Refinancing Our Student Loans

After gathering the key details of our student loans from Step 1, I knew the next step was to use that information to determine which loans we could consolidate and refinance for a better interest rate.

Refinancing is basically when another bank buys your loan from your current bank and gives you new (better) payment terms to continue paying off your loan. It’s a Win-Win-Win for everyone. The old bank gets their money back (after making money on the interest you paid or accumulated). The new bank adds another loan to their portfolio with a less risky borrower (you) to earn higher interest than they could on other options. And you get a better loan with a lower interest rate and lower monthly payments.

The other good thing about refinancing is that you don’t have to do this one by one for each loan. You can consolidate two or more of your existing loans into one new loan with a better interest rate than both of your old loans!

But, you need to perform a simple analysis to make sure you get the best deal possible.

You could accidentally consolidate a loan that has a lower interest rate into a new loan with a higher interest rate. Nobody wants to make that mistake!

So, we used the spreadsheet from Step 1 to compare our existing student loan interest rates to the advertised interest rates from companies that would refinance them.

We were happy to find out that with SoFi, which had the best interest rates, we could consolidate and refinance our two biggest student loans that also had the highest interest rates and save $100 per month!

After getting approved in January 2015, we ended up consolidating the Chase loan that had an interest rate of 8.25% and current balance of ~$29K with the Wells Fargo loan that had an interest rate of 12.49% and current balance of ~$30K.

The result?

A new loan with a $59K balance and much lower interest rate of 6.13%!

Now, as of January 2015, we only had 7 student loans totaling $86,945 with interest rates ranging from 2.66% to 7.65%!

Step 3:  Creating Quick Wins For Motivation by Paying Off Small Student Loans

Since we were getting married in September 2015, we decided to keep paying the minimum amounts due on our remaining student loans during 2015. We were paying for our wedding, rings and honeymoon on our own and we wanted to pay for all of that with cash, not debt.

So, fast forward 14 months from January 2015 to February 2016 and we paid the final monthly payment on my two Nelnet student loans! We were able to pay these off earlier than required since I was paying double the required amount since graduating college.

We now only had 5 student loans remaining and it felt so GOOD!

Soon after, in April 2016, was when we decided to start prioritizing paying off our student loans. We didn’t start making drastic changes at this time, but we did make a better effort.

At this time, we owed approximately $80K.

After receiving my bonus from work in April 2016, we decided to pay off three of our smaller student loans of which two of them just so happen to have the highest interest rates. The total payment for these was $5,160 and the interest rates were 7.65%, 6.55% and 4.25%.

We chose to pay these smaller loans off as a mental trick to create quick wins that would increase our motivation.

It helps when you feel like you are making progress and winning!

By doing this, we paid off 3 student loans, two of which had the highest interest rates, and decreased our debt by a little more than $5K!

Now we only had 2 student loans remaining with a balance of just under $75K and their interest rates were 2.66% and 6.13%!

The Moment That Changed Everything

For the next 10 months, we kept paying the minimum monthly payments on our remaining two loans with the understanding that we would use my annual bonuses from work each April to pay off more student loan principal.

Then, in March 2017, everything changed…

We were preparing to leave for a trip to Seoul, South Korea and Tokyo, Japan for 10 days. During our trip planning, Ashley found out about a couple named Kara and Nate who are full time travel vloggers.

We started watching their travel vlogs and learned that they had been traveling the world for well over a year and have a goal to travel to 100 countries!

Ashley and I LOVE to travel. We enjoy learning about new cultures, visiting unfamiliar places, experiencing the ever-changing landscapes of the world and the feeling of freedom and wonder we get every time we travel.

So, before we took off on our trip, we sat down at dinner and decided that we wanted to travel the world. Not just a couple of times a year.

We decided to save up as much as we could with the goal to travel the world non-stop for at least 1 year!

But, there was a catch…

We made a deal that we couldn’t travel the world unless we paid off ALL of our debt.

It’s pretty wild to think about now, but Kara and Nate are the ones that inspired us to achieve our dreams of traveling the world and, as a byproduct, to eliminate our student loan debt as quickly as possible. Thank you, Kara and Nate!

Check out Kara and Nate’s YouTube channel and get inspired too!

At this point, it was March 2017 and we owed $70,755 in student loans!

Step 4:  Being frugal and spending less on “nice-to-haves”

Now that Ashley and I had a common goal to work towards, it became much easier for us to make drastic changes to get rid of our student loans as fast as possible.

So, we made an extremely tight budget each month to save as much as we possibly could. Some call this being frugal and in a weird way it brings me joy…LOL

We decided to eat out only once per week at a restaurant and cook all other meals at home. We even decided to give up meat, which turns out is kind of expensive. You save quite a bit when you’re just eating veggies, grains and dairy! Especially with a Costco membership!

We also decided to stop ordering expensive cocktails when we went out. Now, we love a good craft cocktail (which I’ll explain more in Step 8) so we got around this by making craft cocktails at home. It’s amazing how much you can save by making your own drinks at home!

We stopped general shopping…

No more shopping for clothes or shoes. No more trips to the nail salon. No more buying “stuff” for the home that wasn’t an absolute necessity.

Y’all…this was extremely difficult for Ashley.

But, now that we had a common goal, she powered through and we were both able to stick to our budget so that we could save more money to pay off our student loans.

If you’re looking for an awesome budgeting tool to help you get your finances in order, then go download our free personal budget template!

Step 5:  Paying More than the Minimum Monthly Payment

Now that we were able to save more money by being frugal, we could afford to pay extra towards our principal balance each month!

So, in March 2017 we started paying an extra $1,400 per month in principal on our highest interest student loan. We were only required to pay $600 per month, but we chose to pay $2,000 per month!

Then in May 2017, one month after we got back from our trip to South Korea and Japan, we decided to pay an extra $2,000 per month in principal on our highest interest rate loan.

We were now paying a total of ~$2,600 per month on our student loans!

By the end of May 2017, our student loan balance was sitting at ~$65,000.

Pro tip:  When paying more than the minimum payment each month on your loans, pay the highest interest rate loans first!

Step 6:  Selling Non-Essential Assets to Pay off Expensive Liabilities

In 2016 we paid off the loan on Ashley’s 2009 Nissan Rogue. Then, in April 2017 we paid off the remaining balance on “Pearly”, my 2009 F-150 truck, with my annual bonus.

One of the scenarios I ran was selling Pearly, using the money to pay off more student loan debt and becoming a one vehicle family.

My thought process was that I had a depreciating asset (vehicle) that wasn’t adding a ton of value (happiness) to my life. So, why not sell it and use the equity to pay off a liability (student loan debt) that took away from my happiness and cost us money each month?

So, in August 2017, I decided to sell Pearly.

I ended up selling Pearly in September 2017 for over $16,000!

We put this money in our savings account and decided to downsize our living situation, which leads me to Step 7.

Step 7:  Downsizing and moving into a smaller home

During 2017, we lived in a 2 bed/2 bath 1,200 square foot apartment in Dallas, TX where we were paying $2,200 per month in rent, which included a garage.

It was just the two of us and we definitely didn’t need a 2/2. The extra room was nice since I used it as my office. We even had our own bathroom and closet that we didn’t have to share!

I know…stupid of us.

Why were we living in such luxury while having so much student loan debt? I guess we got swept up in wanting nice things and living a cushy life.

Anyways, in October 2017 we decided to downsize. So, we started apartment hunting.

We learned that our current apartment complex had a 1 bed/1 bath 730 square foot unit available for $1,400 including a garage!

We were sold.

Since it was in the same complex, we could get out of our current lease without having to pay an early termination fee and move into the new one without having to pay a new deposit!

We also could keep our same garage, which was nice because I had quite a bit of inventory stocked in there that I didn’t want to move (I’ll get to that in Step 8).

After moving into our new apartment, we immediately started saving $800 per month!

Knowing we had decreased our monthly expenses so much by being frugal and downsizing, we decided we could be more risky and pay down our debt without worrying about having much in our savings accounts.

So, in November 2017, we took the $16,000 we made from selling my truck, combined it with $8,750 we had in our savings account (from being frugal) and paid off an additional $24,750 on our student loan with the highest interest rate!

Our remaining student loan balance? Only $26,000!

Step 8:  Selling an e-commerce business after 2 years working for $0

Okay, I mentioned in Step 7 that Ashley and I love a good craft cocktail.

Well, a few months after we got married I started building an e-commerce business where I sold everything cocktail, wine, champagne and craft beer lovers needed to stock and style their bar carts or home bar.

I’ll save the details of how this idea originated and how I built and sold the business for a future post. In the meantime, you can learn a little more about the e-commerce business I sold here.

I want to get this out there in the open. I didn’t sell the business for an insane amount of money and it wasn’t like I had a lot of money to invest in the business in the first place.

I raised $0 from investors. I built this business with sweat equity and the little funds I had to front the cost of some inventory, registering an LLC and paying a designer for the logo and branding (I highly recommend using Corinne at Stuck With Pins if you need an awesome designer).

I built this business while working 50+ hours per week at my corporate job. I had to work nights and weekends to build and grow the e-commerce business and, trust me, it wasn’t easy.

I don’t even know how many hours I worked every week between my full time job and the startup. But, it must have been 80+ in the early days.

No, I didn’t pay myself a dime while growing the business. I reinvested everything back into customer acquisition to keep scaling the business.

There were times I felt like giving up because I was exhausted working two jobs…for two years straight.

But, I powered through, thanks to the extra support from my wife, and grew the website into a profitable business.

Then, I successfully sold the business in January 2018!

Due to confidentiality terms in the sale contract, I’m unable to share how much I sold the business for.

Once the funds cleared, I paid off the remainder of our SoFi student loan (the one we refinanced in Step 2), which was $7,000, and put the remainder in our savings account.

By the end of January 2018, we only owed $16,400 in student loans!

Before I go on, I want to stop for a second and thank my wife, Ashley, for being so supportive of my entrepreneurial endeavors.

This wasn’t an easy situation to be in for a newly married couple. I was so busy working all the time that we struggled to spend enough quality time together. For that, I am sorry. Thank you for being so supportive, Ashley. You’re the best wife ever!

Step 9:  Using annual bonuses to only pay off student loan principal

In Step 3, I mentioned that we made small changes and decided to use my annual bonus each year to pay off debt.

We could have used my bonus each year to splurge on a vacation or buy something material that we wanted, but we had a goal and wanted to be debt free.

We used my annual bonus in April 2016 to payoff student loans. Then, in April 2017, we used my bonus to pay off my truck.

Well, I received my annual bonus one month earlier in mid-March 2018 and put it in the bank with the rest of our savings.

Then, at the end of March 2018, we paid off the remaining $15,326 of our last student loans!

WE WERE FINALLY DEBT FREE!

And it felt SO GOOD!

It felt like the weight of the world fell off of our shoulders.

Ashley and I were so excited! We celebrated by popping a bottle of Veuve Clicquot champagne!

Cheers to being debt free!

I know how wonderful this feeling is and I want you to experience the same feeling.

I hope my story helps you on your journey to eliminate your student loan debt and, most of all, I hope something I shared motivates you to make positive changes to improve your life!

Take Your First Step – Refinance Your Student Loans and Start Saving Money Today!

Simply fill out an application with one of the below student loan refinancing companies and start saving in less than one month.