Let’s just chop college up to being expensive and leading to debt. Wildly expensive, to the point where I wonder if my fancy piece of paper was worth it.
It was worth it but those loans just make my heartache from time to time.
When I get down about my loan amount — $30,000 in private loans, I remember that I have a great career and I’m able to make my monthly payments. And, that is could be a lot worse.
I just want to tell people that you might dread the thought of paying off your total amount, but you’ll get there. Honestly, it sucks to think about how that money could be going to something else. I feel you. About once a month I dream about winning the lottery so I get it.
Here’s how I got my debt — college
When I applied for college, I was hoping for scholarships and I was blessed enough to receive a handful from each school I applied to. I had great grades which allowed me to get a scholarship that paid for everything but $7,000 (which is still a lot). But, I didn’t have a lot of knowledge about the financial part.
As the first-born, I like to think of myself as the tester child. We took out $14,000 in student loans. Because of the confusion of thinking I needed $7K per semester when I only needed $7K for the year. The mistake that was made was going through Sallie Mae. A last-minute decision as my mom had applied through a different company and they messed everything up so I had two weeks before school and no loan.
Sallie Mae = No
Insert Sallie Mae (and the university), who will give you whatever amount you want, rather than cross-reference if you need that amount. Sallie Mae was not the best vender to go through but the ultimate mistake was getting a variable rate rather than a fixed rate. That’s where the mess came from. I was in college for five years and that $14,000 loan jumped to around $21,000 by the time I graduated. It was the variable rate that messed me up rather than the loan amount.
That was my freshman year. I transferred to Ohio State the next year which meant no scholarship so I lived at home and only had to deal with tuition.
Enter scholarship during my junior year
After that, I was lucky enough to have my dad find out about the War Orphan scholarship. That scholarship pays the tuition for veterans’ children. I received it in my third year after one more year of student loans. They pay from 60%-100% of your tuition which is amazing.
Anyways, I accrued debt from years one through three. I took out $7,000 in my sophomore year with a fixed rate through Wells Fargo and $3,000 in my junior year.
Also, high schools should implement financial programs or seminars for juniors and seniors to get an idea of things. If my high school had programs like that, I might have taken a different path or picked a different school.
Life after college — the payments begin
With the knowledge that my payments were going to start, I began to look into consolidation and deferment in August 2015. Ultimately, I settled on consolidating my loans. I went from Sallie Mae to Wells Fargo at a fixed rate. Plus, they gave me an idea of what my student loan payments would look like.
The grace period ends after six months and I was lucky enough to get a full-time job a month before my student loan payments were to start. Before that, I was working part-time for $14/hr (robbery for what I was doing) but that’s a story for another day.
Now, let me be real with you — I just pay what Wells Fargo tells me to pay and I never really thought to look into it until a month ago. I’ve made four years of payments at $409 for a total of $19K+ and have only seen my loans go down $4,000.
How wild is that?! One, interest comes into play which interest is the devil. And two, I have two loans consolidated into one. I can break it down and see that I can pay off one ($2,000) on my timing which is this year or Wells Fargo’s timing which is 2023.
I pay around $409 a month into my student loans. It doesn’t give me a heart attack but I think about how much money I could have saved. It annoys me when I think about what I could be doing with that extra money. Don’t get me started on how college should be free.
My Debt Plan
Honestly, I won’t lie and tell you I have this big plan because I don’t. It’s non-existent but I’m writing about it here so that I can tackle it.
My Student Loans — $31K with Wells Fargo
- Loan #1: $2K
- Loan #2: $29K
The big call-out is that I should have paid off that $2,000 loan awhile ago. Especially when I add up that $409 for the last 4 years and see that I’ve paid $19K into these loans. Again, interest is the devil.
Another takeaway, refinance. I’m planning to refinance, not sure through who — SoFi and Earnest send me mailings so I’ll have to research. But first, I’m buying my house and I don’t want to mess up that process because I’m about to sell my condo.
Nonetheless, you get the big picture. I need to buckle down and eliminate this debt in the best way that I know. Many people I know have used different methods like Dave Ramsey’s methods. I find that the snowball method might be a plan for me when it comes to that smaller loan.
As inspiring as it is to see people pay-off $100K in a year and whatnot, that’s not in my plan. I just think about the fact that many people pay all their paychecks into their loans and our priorities and responsibilities are different.
My plan? Utilizing my side hustle money to pay down my loans and saving a portion of it. For some that might not make sense but for me, it does.
I’m going to pay down my debt, I’m just doing it my way.
Why and How I Continue to Save
Building savings is a must for me. You never know what you’re going to encounter which is why I continue to set aside money in my savings and split my tax refund with payments and savings.
It might not be ideal for some but it works for me.
As someone who is looking to invest and save, I don’t want to toss away my money to my student loans. I make my payments on time and I strategize to find a way to pay them down (as of this month, that’s what I’m doing).
How do I continue to save? Like I mentioned above, I set aside money to put into my savings account. Whatever is leftover at the end of the month will go into my savings account. There are apps out there that I’m interested in that will save money for you, as well. Once I dive into them, I’ll update you all.
For now, I do balance transfers to build my savings which is why I’ve been able to do things like travel, put down a down payment on my condo, and not be house poor (it can happen, I’ve heard about it).
Another way that I save is by putting aside money gifts in my savings account and my tax refund, etc. Anything that I know can be spent, is going to be saved.
I’m a budget queen, as well. So, I have apps that let me know where I’m at with my money and my monthly income. It’s helpful — check out the Clarity app if you want to see where you’re spending and what to stop putting your money into. I share a blog post on it here — Clarity post.
At the end of the day, we all have to do what is best for us. This is what is best for me and I can’t wait to continue to talk about this subject especially money because that’s been a taboo and it shouldn’t be. Debt is not fun and I’m working my way out of it.
Do you have student loan debt? What are your financial tips for paying them off?