It happened this year. I finally payed off my private student loan. I still have a government loan with a $20,000 balance looming over my head, but after 5 years of teaching done (currently in year 2/5), it will be forgiven, God willing.
This Discover loan loomed over my head for far too long. Back on February 8, 2017, I wrote to my accountability partner for my Financial Peace University course about how long I thought it would take to pay off my loan. I couldn’t imagine paying it off in a year. I owed $10,001.65 at the time and wrote to my friend that in 2.5 years I could pay back to $10,000 dollars. I was paying $400 a month at time. Somehow I managed to pay back my loan at a rate of almost $1000 a month, a substantial part of my income, especially considering my expenses (rent, groceries, government loan payments, tithe).
Here’s how I did it:
Lots and lots of extra work
I didn’t intentionally work extra, but I ended up doing a lot more hourly work this past year. I have a per session rate of almost $40 an hour as a teacher. Almost every time I got an extra check from doing this work, it went to my loan. I said yes to a lot of extra work that I normally would never agree to. I went on extra trainings and took opportunities because I knew that the extra money would inch me closer to my goal.
Just put a little extra
Every time I would make a monthly loan payment, my mom challenged me to put a little extra. For example, if I was paying $400 for the month and the loan balance was $5,500, my mom would tell me to pay $501 to see the balance drop a little bit more into the $4,000 range. It became so much fun to push myself a little more each month and to pay off more and more.
I never budgeted effectively before last year. I have my own weird system that works for me. I use Everydollar.com but at the beginning of the month I only vaguely put my money into categories. As I spend money, I keep receipts and adjust my budget to my actual spending. If I buy something and don’t get a receipt, I log it right away on my Everydollar app. I challenge myself to “feel” every purchase. I want to get better with this because often my money goes to things that aren’t important to me and I want to tell my money where to go.
The truth is that I’m still learning how to manage money. Now I’m working on my rainy day fund. My goal is $6000. I’m following Dave Ramsey’s steps by avoiding debt and spending somewhat wisely. I still buy things I don’t need and make mistakes but I am so proud to now be one step closer to financial freedom.