How I Paid off $112,000 in Student Loan Debt in 18 Months

How I paid off $112,000 in student loan debt in 18 months

I was fortunate enough to graduate from college debt free. Then I had to go and attend law school where I racked up $112,000 in student loan and credit card debt. So you can add this to the unremitting list of “student loan debt payoff” stories. I will admit that my story is more boring than most:

My secret is that there is no secret: I got paid a salary that made it possible to pay off the debt while living a reasonable lifestyle. There are no magical tricks herein. My story is completely mathematically realistic.

The high income was the most important key to paying off my debt. Still, there were a few basic guidelines I followed that helped me pay off the debt.

1. I Reduced Student Loan Debt Before Repayment

Part of the reason I was able to pay back my student loan and credit card debt in such a short time was that a year and a half is not that long a time to sacrifice. Had I taken the maximum load of debt offered to me, it wouldn’t have been feasible to pay off the debt for several years, and I likely would have given up the fast-paying scheme.

The more interesting articles are why I only accumulated $112,000 in debt as opposed to upwards of $180,000, which is the full cost of tuition, fees and approximate living costs at my law school for three years, without interest:

How I Saved $65k in Four Years for Graduate School

How I Saved Tens of Thousands in Law School

It was critical that I was entering a profession that offered jobs that could be high enough to pay off this debt in a reasonable time period. I worry sometimes that these amazing debt paying stories may encourage people to accumulate huge debt while preparing to enter low-paying fields. My favorite debt payoff stories are boring because it’s a bad situation to end up with a lot of debt and a low income. Don’t accumulate so much debt that it becomes mathematically impossible to pay back!

2. I Used my Bonuses

I was lucky enough to get two bonuses during this time period, both of which I put completely towards my debt. I didn’t even consider using the money to buy anything else. What motivated me was that I wanted to be debt-free more than I wanted any more stuff or experiences.

3. I Plowed All of My Money Towards Student Loan Debt First

After bonuses, I paid about $5,000/month for 18 months to pay off my loans. I had an auto payment of approximately $3,000/month (3 times my minimum loan payment). Then I would make periodic extra payments. I could have made a higher automatic payment but I had already had one disaster where extra expenses left me without sufficient funds to pay my rent and credit cards on time. I figured I’d give myself a little more leeway on the monthly payment.

Instead, I would make extra payments when my bank account looked high. Having large balances in my bank account that encourages me to spend. Low balances, even if they are artificially low – like the money is in a separate bank account – subliminally encourage me to spend less. So the extra payments served both to pay down my debt and discourage spending. Still, it was really difficult sending such large amounts out of my bank, particularly after loan payments were already taken out. It was like ripping a bandaid off. You force yourself not to put it off and then when you get to it, you do it quickly and move on. If I had given myself the option, I would have left the money to wallow in my bank accounts. But I was determined to pay off my debt.

4. I Knew the Value of Money


After maxing out my 401k, transportation, taxes and health benefits, and after rent and utilities, and paying off my loans, I had $1,100/month left. That covered the cost of my car, home goods, clothes, food, insurance – basically everything else. For a lot of new lawyers, $1,100/month is too low. (I knew a classmate that was renting a $7,000/month apartment after all).

But $1,100 was enough money for me and I knew the value of this amount of money. When I was an entry level employee, I lived on just a little bit less disposable income, because I was maxing out my 401k. And I remember during that time wanting for nothing.

I was used to living like a law student.  Knowing that I could survive on less was invaluable knowledge to me. I wouldn’t have paid off such large chunks of debt so quickly had I thought I would have had to feel deprived. I knew the value of money so I knew how to be happy with less.

I cooked at home. I kept my 15 year old car. I shopped at JCPenney to create my corporate work wardrobe. I bought a handbag from Target. I rarely shopped and, in fact, my apartment was basically unfurnished for my first six months working. I didn’t get a smart phone until 8 months in, relying on my work phone if I needed to look something up. I was used to this lifestyle, and even though it’s been years since I’ve paid off the debt, this is not so different than how I live today.

5. Everyone was in the same boat


I knew I could live on less, but I also had more expenses in this time period than ever before. I had medical expenses, a new wardrobe, a drastically increased rent. During this time, It helped that most of my friends were also paying back loans and lived similar lifestyles. A lot of my friends were supporting their parents with their salaries.  It also helped that we worked such long hours our first year that we had very little time to blow through our money. (Some people though would take this as license to spend more). I didn’t take my full vacation days until 4 years in (I don’t recommend this – I mean take a frickin’ staycation even. But forgoing expensive vacations does save money).

I felt that I was able to maintain a fairly comfortable existence – just without any lifestyle inflation – and I knew that the time for watching my purchases was short. It was a small price to pay to be debt-free in 18 months.

***

How I Paid Off $112k in Student Loan Debt

So there you have it – I paid off my loans by reducing the loans I took out, making enough money to cover the loans I had and then just throwing money at the loans until they disappeared.

It was technically possible, and indeed my initial plan was, to pay off the debt in one year. But I thought my life was becoming too Spartan. I had increasing visions of dying without having bought a sofa for my apartment. So I went on Craigslist and I bought a sofa and chair for $60. (frugal doesn’t change, natch).

Whatever your plan, being debt free is amazing.  I don’t regret any part of it (even law school, which is rare among lawyers).

Do you have any debt repayment tips?

Don’t Force Your Kids to Eat Their Vegetables: What I Learned from “First Bite”

All the books I’ve read this year have changed my life – via new information and/or new perspectives. This book, First Bite: How We Learn to Eat, is the only one that changed my family’s life.

I accidentally left this book in my sister’s car, and she started reading it. She tried an experiment described in the book, the tiny tastes program, on her picky son, to great success. His palate has been considerably expanded to include new favorites like cherries, asparagus and cucumbers. The program consists of offering the subject an incredibly small amount of the target food over a period of a few days. The subject can also be bribed with a spoonful of their favorite food for successful completion of each “tiny taste.” But because the taste is so small, the subject generally complies anyway. And with repeated exposure to the taste, the subject learns to like the taste.

This is exactly the opposite tactic that adults who are picky about eating were subjected to – generally their parents made them eat a whole plate of food they hated without any choice.  This program works because it’s not as frightening to eat a small amount of the food and because many children and adults really can enjoy a wide variety of foods if they’re comfortable with them.

The most interesting bit of knowledge that I learned from this book is that there is almost no genetic component to our taste. If we were born in a different culture, we would be eating that culture’s food rather the one we currently do. The food we tend to like is food that is familiar to us and that may also be associated with good memories. The food we tend to avoid is food we are unfamiliar with and/or is associated with bad experiences in our past, like being forced to eat a whole plateful of food we hate/weren’t familiar with.

I know I still can’t stand the smell of creamed corn because I threw up once after eating it when I was a kid, so I totally believe in this hypothesis that bad memories dictate the foods we avoid. Also, I’m not a picky eater at all and perhaps part of that is due to growing up in an Asian family where we ate all our meals family style. I could put as many or as few things on my plate as I liked. I was fully in control, though my parents would of course encourage us to expand our palates. (We all eventually grew to enjoy bitter melon but it was definitely a no-go when we were young. Hey, it took 20 some years of “tiny tastes” but we made it!)

The more I read about our personal preferences, it seems like we are really products of our culture. Like how our taste in music tends to run towards whatever was popular (or at least whatever music we listened to) when we were 13. That’s why I’m a 90s music girl, but that’s why most women of my age also listen to the same music. We are all uniquely the same in this way. Our food preferences just show that we are products of our upbringing and how scary the food culture was when we were children.

Overall though, people can still change. One way to do this may be to incorporate something like a “tiny tastes” program into one’s own life. Small exposures breed familiarity, which may breed to affinity (though there’s no guarantee that you’ll like something even after a tiny taste). You are not confined to your childhood experiences and instituting  small changes can help you change your habits and your tastes (maybe, I’m shooting off the cuff here – it’s a hypothesis).

Let’s talk about our traumatic eating experiences!

How to Let Go of Your Anger: Reviewing the Mistitled “How to Fight”

I’m a Christian but I understand that there is a lot of moral wisdom to be gained from nonChristian and non-religious books. I also often think that the Bible may be lacking sometimes in practical guidance. For instance, Jesus instructs us in Matthew 5:22, that even being angry at your brother is a sin. But he doesn’t tell us how to stop being angry. And the church doesn’t usually offer any advice beyond “call on the Holy Spirit to give you [patience, endurance, kindness].”

In Bible study, we are wrestling with the idea of God being our friend, while also being someone who was revered. The group agreed that “Sup, Bro” would be too casual to say to God. But they also agreed that getting angry at God was ok. But I think it’s got to be more reverential to ask “how are you” in vernacular than it is to express anger. Plus, though I realize that God isn’t a human, so we don’t really have to worry about God’s feelings, I think the act of getting angry, even when another person is not the victim, has damaging effects on us.

How to Fight by Thich Nhat Hanh has a really misleading name. It’s really about controlling your anger. Hanh shares my belief in the corrupting force of anger:

When you try to get anger out by hitting something like a pillow, it may seem harmless. But it’s not certain that you can release your anger by hitting the pillow, imagining it to be your enemy, the one who has made you suffer. You may be rehearsing your anger and making it stronger instead of releasing it. . . By rehearsing our anger we are creating a habit of being angry, which can be dangerous and destructive.

So Hanh is saying, the act of getting angry, even when there are no victims, is destructive to oneself. I think we know this instinctively to be true. My favorite passage is called “Killing Anger”:

…he cursed the Buddha to his face. The Buddha only smiled. The cousin became even more incensed and asked, “Why don’t you respond?” The Buddha replied, “If someone refuses a gift, it must be taken back by the one who offered it.” Angry words and actions hurt oneself first and hurt oneself most of all.

This passage reminded me that, many times, you have complete choice in how to respond to people. (It’s also helpful to think of in terms of gifts this holiday season. If someone gives you a malicious gift, you can just give it back. You don’t have to accept everything that is given to you). They may bait you, they may come at you with anger, but you don’t have to return the gift. They can take the anger home with them. You don’t have to take the anger home with you.

It’s funny that when you start reading books, they all start to relate to one another. The Longevity Plan , which I had discussed in another blog post, had also talked about the dangers of anger for the heart and breathing as a means to remove anger.

This book was really helpful to me for understanding my own anger. When I think of getting angry, I think of fighting. I don’t stop to think, did I misunderstand what the other person said or did? Do I need to fight back? If I started fighting, what would “winning” look like?

But when you’re angry and the other person is angry, you feel like you’re the only one suffering but the fact is, you’re both suffering. Hanh compares fighting in this scenario to running after the arsonist when your house is still on fire. By settling the anger within ourselves, we stop both sides from suffering, and we train ourselves not to become angry. This is the only way to truly put out the fire and prevent more fires from spreading.

What are your techniques for defusing anger?

Image via Giphy.

 

Hack Your Days to Have a Better Life: Advice from “How to Have a Good Day”

Ok I didn’t finish reading this book. But I skimmed it and there’s an appendix that lists all the best practices as an easy shortcut. Here are the most helpful tips I found.

Before Work

  • Think about something you’re looking forward to.
  • Set your intentions. What matters most today? What does that mean for my attitude, intention, attention and actions? What specific goals should I set for the day? Try to keep these answers in mind.
  • Visualize the most important thing you’re doing today and picture yourself doing your best. Notice what you’re doing and saying.

As you get started.

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Why the Poor Can’t Get Ahead in the U.S.: Reading “The Broken Ladder”

Look – a Republican reading a book about inequality? You all should be so proud of me.

Have you ever played that game where you’re trying to survive as a working poor person? The game keeps giving you terrible options but I’m so much of a stoic that I came out ok. It seemed like a bad exercise. I’m sure others would think I wouldn’t really be able to pass the game in real life.

According to The Broken Ladder by Keith Payne, the latter group may be wrong. The book covers how inequality completely changes the poor’s perspectives, focusing on the now, increasing risky behavior. Because I’m not one of the poor, I may be able to lift myself by my bootstraps but, if I had been born in poverty, I likely couldn’t.

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How to Live to be A Vibrant Centenarian: Lessons from “The Longevity Plan”

The Longevity Plan by Dr. John Day chronicles an American doctor’s journey to a bucolic Chinese village that has one of the highest rates of centenarians in the world (yes, Chinese. Everyone keeps correcting me to say, don’t you mean Okinawa? Nope. China! people). Not only are there plenty of centenarians, but the centenarians are in great health.

The tips described in the book aren’t really earth shattering, but it’s good to be reminded of them and sometimes, a certain way of describing the problem can finally spur action.

1. Eat good food

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On Treating Yo’Self: How to Splurge Without Guilt


EW.com

I had lunch at Popeye’s – 3 piece platter with 2 sides and a biscuit. I had one of those sugarbomb Starbucks Holiday drinks the other day. I also ate a cinnamon bun. I’ve been known to eat whole huge desserts without sharing. I’ve never counted calories and I hate dieting.

I hate salads.

Judging from what I just wrote, it would seem that I’m overweight and pretty gross. Well, maybe the latter but not the former.

How do I do this? Well, what I’ve listed above are all aberrations to my diet. 90% of my meals are home cooked. I limit my intake of caffeine, snacks, processed and deep fried foods. I also have a very calorie-restricted diet. So when I eat my decadent meal, it’s really an outlier to my normal lifestyle.

I look the way I do because of my normal lifestyle – not because of my outlier.

I think most people in America eat some sort of quasi-healthy dish most of the time and then they splurge. A quasi-healthy dish is like a store-bought salad, but as the Internet is quick to point out, restaurant salads aren’t necessarily healthy. So they feel all of the restriction but get none of the benefits. If they splurge, and the button pops off their pants, maybe the splurge was the tipping point, but it’s the everyday lifestyle that got them to the tipping point all along.

So people may see me eating unhealthily in one instance and think, “she must have really good genes. There’s no way I could do that.” But they’re seeing a snapshot. They have no idea what the whole story is.

It’s the same with spending money.

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The Three Items You Need to Add to Your To-Do List

Ugh, you must be thinking, three MORE things I need to do in a day? It’s hard enough finding time to complete the things that are already on your list. Why did you even click on this link?

Because you’re a masochist. That’s why. Anyone who has a to-do list is.

And I promise, I wanted this to be “The Only 3 Things You Need on your To-do List” but I know that you need to pick up your dry cleaning, fill out that registration form and order more toilet paper. Those are all important and worthy things to put on a to-do list and I don’t want you to run out of toilet paper. In fact, go ahead and pause from reading this post while you order more toilet paper. I’ll wait.

Ok. Ready? Fill in the following blanks and then add them to your to-do list:

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The Ugly Truth about Frugality

I haven’t done many diets because I hate the idea of restriction. I lasted about 4 days on a no-carbs diet and they were some of the most miserable days of my life. But one that has stuck is the “one meal a day” diet.

I started by skipping breakfast. That was quite easy. I immediately didn’t miss it. Skipping lunch was much more difficult and I could feel the hunger eating (haha) me alive. But it got easier as my body adjusted. And the hunger would subside after 15 minutes, max. And when I finally eat my meal of the day – dinner – I eat without abandon. There are no restrictions. There is always dessert. So it seems like a joyous celebration rather than a constant level of restriction.

I think the parallels to personal finance speak for themselves. I look at other people’s spending, and I’m pretty shocked about the constant frittering of money.

For me, I’m pretty used to wanting something and not buying it. It seems that for a lot of these people, that’s not how they do it. They get the itch and they scratch. I get the itch, and I store the itch in a file and revisit the itch in a week.

Frugality often reminds me of my diet. I’ve heard supermodels complain that they’re always hungry. The truth about frugality is that it often feels like you’re hungry all the time as well. Frugality means you just ignore these “hunger” pangs. If you think about frugality as a whole, you’ll feel like you are constantly living in a state of desire and denial. You’re always craving.

Sometimes you’ll feel like you’re deprived. Sometimes you’ll feel like you don’t have enough. You will have a list of things a mile long on your “to buy” list. That’s just the truth of denying what you want. It doesn’t get easier. Unless you have a way to tune out all marketing, there will always be new things that make you itch for more.

Of course, giving in to your desires isn’t what you truly want. The problem with scratching every itch is that your skin will be all scratched up. The problem with eating whenever your hunger strikes is that you’ll often eat too much. You don’t recognize the signals to stop eating anymore and you may start mistaking signals for thirst or boredom for hunger. And as your weight balloons, you start to worry about every time you eat, trying to restrict at all times. Sometimes it’s better to restrict from the get-go.

The upside of ignoring your desires is that 90% of the desires will go away and often quite quickly. And rather than having a lot of products that you can barely remember desiring, you’ll have a fat checking account.

It reminds me of co-opting and bastardizing Steve Jobs’ graduation speech motto, “Stay hungry. Stay foolish.” But here, “Stay hungry. The hunger will go away.” The caveat is though, you still remember to eat and when you do eat, relish every moment of it.

[I thought about submitting this article idea to a personal finance site but figured it would get a lot of backlash because the idea of restricting one’s meals is basically as unpopular as saying “Trump’s doing a good job.” People will accuse you of encouraging eating disorders. Meanwhile, we’re facing an obesity epidemic in conjunction with widespread malnourishment. To the extent this counts as advice, it only applies to people who don’t have an eating disorder. Please take care of yourselves. ]