I remember the last few months before I graduated college. Many of my friends were frantically applying for jobs or planning exciting travel. People were pledging undying friendship and partying harder than ever.
Strangely enough, I felt a strong sense of calm. I knew I was going to move home and work for a year at whatever I could find. I wasn’t trying to be ambitious in any way, and for a very good reason: I had no money and a boatload of debt.
I graduated college in 2011 with $25,302 in debt, no job, and an English degree. It was the Great Recession and I was basically unhireable.
It was cool though, because I was Kara Perez, and everything was going to work out just fine. I was going to live at home for a year, work a whatever kind of job, save some money, and then move somewhere amazing and start living what was sure to be my incredible adult life.
How I Handled My Student Loan Debt
The main reason I wasn’t looking for jobs after graduation was my debt. I didn’t know it then, but that was the first of many decisions that my debt made for me. I felt burdened by it.
Even though I had a six month grace period on my loans, I had to start earning money right away because I had none. My mother wasn’t going to pitch in with my loan payments, so it was all on me.
I found a job waitressing three weeks after graduation and started saving my money right away. I had a rule for myself: I could keep all my ones for spending money, but everything else went into my bank account for loans and savings for my move next year. I hated my debt. It was already holding me back, and I had plans to pay it off as soon as possible.
So for half of the year I lived at home, I paid extra on my loans. They kicked in January 2012 and my minimum payment was $330 a month. I paid $500 each month, and divided the money between all five of my loans. I distributed the amounts however I felt each month, with no real reasoning to it.
When I finally moved away and headed to the dirty south in July 2012 (Austin, TX holler!), I continued to pay extra but the consistency was off. I was living on my own for the first time and responsible for rent, utilities, car insurance, food, gas, fun, loans…everything!
I got an unpaid internship and continued to wait tables to pay the bills. I would throw an extra $50 or $100 to my loans every other month or so, but the dedication was gone. I wanted to make sure I kept a cushion in my account and I wanted to have fun. I was finally an adult! Those loans were important, yes, but were they as important as my weekly Tuesday night of drinking? (No. No they were not.)
Employment Problems Put a Cramp in My Plans
Things continued on like that for awhile until they started taking some turns. I quit waiting tables in 2013 and was faced with the long and scary road of odd jobs and bouts of unemployment. I was now two years out of school and I’d made some headway on my loans. By January of 2014, I was down to $18,000. But I was only catering part time, and I wasn’t moving towards any full time or even stable work.
My loans were hanging over my head every day. They were always there, no matter what was going on with my income. I felt suffocated. I constantly worried about money. To make things worse, because I was so broke, I had to take a six month deferment on my loans. Yes, I got a break from monthly payments, but my interest kept accruing.
Five months later, my deferment was about to expire and I was still struggling to find a full time job. I was living within a cloud of fear and anxiety. I made every decision from a place of fear.
I couldn’t move because I didn’t have the money. I couldn’t go out to eat or drink because I didn’t have the money. I felt trapped in my house and my less than amazing life, paralyzed by my debt and my low income.
How I Got Back on Track With Paying Off Debt
I began searching the internet for terms like “fast debt payoff” or “pay down student loans.” I found the personal finance community online, and something shifted in me. I was totally done with debt. I hated living with it. I hated how it made me feel. I hated spending money on it. It was stressing me out to an unhealthy degree, it was holding me back from living a life I wanted, and it was literally costing me money.
I dedicated myself to paying off my debt. I did everything in my power to be rid of it as soon as possible. I made every lifestyle change that I could.
I signed up for automatic debit on my loans, which reduced my interest by a small percentage. I stopped driving every day and started walking or carpooling to work, the grocery store, or wherever I was going. I starting buying bulk food and making big bulk meals. I wore my clothes multiple times before I washed them, saving on water, electric, and detergent costs. I eliminated any social activity that cost money. I made multiple loan payments a month (even if it was just $50!) so that I wouldn’t pay as much interest as I did making one time payments. (Student loan interest accrues daily. So if there are fewer days between payments, there’s less time for the interest to grow.)
My life started getting more concrete. The cloud of anxiety started to lift. I was taking control over my actions and over my money for the first time since graduation. I found a part time job at a non profit in Austin, and combined with my other part time catering gig, I was able to make more money in the second half of 2014 than the entire first half. I paid off one loan completely in October, then another one in December.
I was on a roll. I had three loans and $12,500 left in debt at the beginning of 2015. My lifestyle changes were paying off big time. I skipped out on buying my family and friends Christmas presents last year to save money. I stopped buying clothes. I brought home leftovers from my catering events and ate those to reduce my grocery budget.
I put all my Christmas money (yes, my mom and grandmother still gave me gifts!) towards my loans. The same went for birthday money and my tax refund. I sold extra books and clothes and put that money towards my loans. I negotiated with my insurance company for a lower car rate. I stopped spending any change and collected it in a jar to cash in at the end of 6 months.
I followed the debt avalanche method: I focused all my extra payments on one loan at a time, the one with the highest interest rate. By sending all my extra money to one loan, the balance dropped quicker than if I had spread it among all my loans. Paying off your highest interest rate loans first means that you pay less in interest overall, saving you money in the long run.
I Paid Off My Student Loans!
It’s been less than a year since I made the decision to devote myself to becoming debt free. I am proud to say that the first week of June I made my last student loan payment. I am 100% debt free today. All the little changes I made added up, and in 10 months, I had paid off the final $18,000. I paid the entire debt total off just two months after my 27th birthday – three and a half years after I graduated.
Debt is a burden. It is a hardship. I was glad to exchange meals out or a new pair of shoes for my freedom. Getting out of it was the best thing I have ever done for myself. I would absolutely make that decision again.
Are student loans holding you back? Do you feel piled under your debt? How are you working to pay it off?