Ep.24 - SOML: How I Paid Off My Student Debt

Disclaimer: I want to acknowledge many may not be in the same situation I was in. Some could be in situations with much more debt and much less disposable income. Nonetheless, there are still constructive takeaways in my journey. 



After college in 2012, I was about $11,000 in debt, comprised of student loans, borrowed money from parents, and credit card debt.

  • Student Debt: I graduated from Dartmouth College with about $8,000 in student debt, a mixture of Federal Perkins loan and Stafford loan. 
  • Family Debt:  I borrowed $3,000 from my parents to cover my rent in Boston, which was an upfront cost of $5,400, 4 times the amount of rent (first month + last month + security deposit + realtor fee). I paid the other $2,400 out of my own pocket.
  • Credit Card: I also carried a small amount of credit debt of $500.


FIRST 6 MONTHS (08/12-1/13)

Amount Paid Down: $3,500 ( ~$600/month)

Income:  I started out on a salary $52k/year. 

  • After taxes and deductions, which included 10% to 401k and 1.5% to charitable donation, my monthly take-home pay was $2,650.  My recurring monthly expenses in Boston were $2,000, mostly made up of $1,350 on rent, $300 on food, $130 on utilities, $70 on transportation, and $150 for anything else. In other words, I had a maximum of $650 in savings.
  • I did have another blessing, which was a signing bonus of $6,000.

My Plan: I used the snowball method, which is simply to pay the smallest amount first. My plan was to pay back the $3,000 to my parents and $500 in credit card debt. That is it. I did not touch my student loans.

Thoughts Behind It: I prioritized everything before student loans, because I did not HAVE to pay my student loans until 6 months after college, which began in 2/13 for me. Credit card was also prioritized over parents, because it carried a high interest rate and it was a small amount.

How It Worked:

  • Paid Credit Card Debt Immediately: The signing bonus came out to be $3,000 after tax, and I used it to pay off the $500 in credit card as soon as possible. But I saved the rest for living expenses. 
  • Pay My Self First $600/month No Matter What: I saved $600 a month for five months straight, between September 2012 and January 2013. To put it into context, I made no big purchases and I bought most things from Groupon (mostly restaurant deals), Craigslist (e.g. an iPod Shuffle) and eBay. Amazon wasn't that great before Prime came along.


NEXT 10 MONTHS (02/12-11/13)

Amount Paid Down: $8,036   (~$800/month)

Income:  In February 2013, I received a promotion, which boosted my income to $61,200. My take home was $3,200 a month.

My Plan:  It was a 3-part goal.

  • Pay off my entire student debt by the end of 2013.
  • Visit my now-wife every other month (we were in a long distance relationship between Boston and Tulsa).
  • Save for an engagement ring (will detail how that worked out in a later episode).

Thoughts Behind It: I knew even with the boost in my income, it would've been improbable for me to manage all three priorities on student loans, paying for travel, and paying for an engagement ring. So, I knew I had to be a little creative in finding ways to pay for necessary expenses. Here is how I did it.

How It Worked

  • Moved in with a roommate: I abandoned my studio apartment and moved in with a roommate, which immediately saved me $300/month. 
  • Signed Up Credit Card Perks for Flights: My now-wife and I traveled between Tulsa and Boston six times in 2013, which cost on average $600 per round-trip ticket. I quickly learned how to play the bonus-point game with credit cards, which is discussed in-depth in Episode 12 - How to Fly and Stay in Hotels for Free. In short, I signed up multiple credit cards to earn bonus points and used them to pay for 3 of the 6 flights in the year. Of course, I closed them within 12 months so I avoided paying the renewal fee.
  • Pay Myself First: With the increase in salary and additional savings from rent, I saved $1,200 every month. Groupon and Craigslist grew from acquaintances to best friends. 
  • Pay More Than the Minimum: I paid more than the minimum on student debt, which was $90/month. Depending on the month, I paid $300-$400/month, for 9 out of the 10 months. You may ask why not more, if I saved $1,200/month? I wanted to invest the rest because I had a hunch it was going to be a boom year in stocks.
  • Additional Cash From Investment: I started playing in stocks in college with pocket change money. By 2013, I had gotten the basics down and I had a macro hunch the stock market was in a recovery mode so I put my money where my mouth was. By November 2013, I made an extra $2,000 in stock, with $10k invested. Then I cashed out and paid a lump sum of $4,936 to pay off my debt entirely.



  1. Moving in with roommates is the most efficient way to cut costs: If you already live with one roommate, live with more. 
  2. Always pay more than the minimum if you can: You will end up saving in interest and time. If you can't pay off your student loans within 12 months, you should consider consolidating them into a lower interest rate. If you want to learn all about student loan consolidation,  you should first learn about the pros and cons from this well-written article  published by U.S News. 
  3. There are non-cash ways (such as credit card points) to pay for necessities that otherwise would've cost you cash: I saved close to $2,000 in flights in 2013 alone. Since the points are untaxed, that's equivalent to an extra $3,000 in a pay raise. Imagine that!

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