Slaying a $30,000 Student Loan Debt Beast in a Year
What would you sacrifice to pay off a $30,000 student loan in one year?
Cellphones? Cable TV? Having to share a 605-square-foot, one-bath apartment and eating Hamburger Helper dinners twice a week?
“It’s not as bad as you think,” John said.
Not sure if John was referring to Hamburger Helper or the other vital necessities he wrote off — cellphone, cable and a second bathroom — but it’s clear there were a lot of things he and his wife Elizabeth could suffer through as long as it meant getting rid of the pain of student debt.
John and Elizabeth, who prefer to keep their last name private, are certified public accountants. They saw the news stories about college graduates in 2012 owing an average of $27,253 in student loan debt and realized they had something in common with those folks. Last year they launched their blog to share their story.
The couple owed a combined $30,000 when they graduated from college in 2003. They ignored it for four months and then made a pact with each other to ditch the debt in one year and then did it.
“We didn’t want our lives to be tethered to this debt,” said John, 32, who still works, while Elizabeth stays home to raise their two daughters. “We didn’t want it growing all around us for 10 years. We wanted to kill it and be done with it.”
Slaying the Debt Beast
They killed it all right.
They started with a $2,000 bullet in November 2003 and finally slayed the beast with a $5,449 blast to the heart in November 2004. John and Elizabeth destroyed the myth that $30,000 of student loan debt equals a lifetime of servitude.
“It was never painful to part with our money when it was being used to slay the beast,” Elizabeth said. “It was always thrilling to send it off and see a lower balance on the next month’s statement. It put us a step closer to debt freedom.”
John and Elizabeth would have paid $4,384.11 if they continued paying under the Standard 10-year plan. Most college graduates who depend on student loans for their education owe close to $30,000 in student loan debt.
Not Everything Was Sacrificed
John and Elizabeth felt some pain early in the process, especially from cellphone users. New designs and the ability to shoot and transmit photos made cellphones a must-have toy for all 20-somethings in 2003.
But hidden cellphones costs can make for some expensive bills. The couple sat and smiled when friends pulled out their cellphones to show pictures of children, parties or the new paint job on their homes.
“There were some extremely cool things happening with cellphones that really tempted us, but we couldn’t commit to a bill month-in and month-out,” John said. “The same was true with the Internet and cable TV packages. We stuck with dial-up.
“Our friends never called us cheap, but that’s how they painted us. We took it as a compliment. We were on a mission.”
John and Elizabeth didn’t cut entertainment from their budget completely. They vacationed in Las Vegas (arriving with $4,300 and leaving with $500), spent $1,300 on a destination wedding in Cancun and dropped $2,057 on a down payment for a vacation in Hawaii.
They didn’t spend much on rent, utilities, clothing, eating out or the latest gadgets, which left them enough money to attack the debt. Both worked at the time, which helped considerably.
“We were getting ahead by cutting expenses instead of falling behind, which is pretty much all we ever did in Vegas,” Elizabeth said.
Not Much Has Changed
Not surprisingly, John and Elizabeth adopted the frugal lifestyle permanently after the student loan bills were paid.
They bought and paid off a house, two cars and now invest in college savings plans for their two children. John’s income help accomplish much of that since Elizabeth “retired” from work several years ago to stay home with the two children.
John said things are going so well that it’s conceivable he could stop working at his CPA job by the time he’s 45. He said he’d like to pick and choose a few projects to work on each year and spend most of his time blogging for his website.
“I’d like to give advice for families going through financial struggles,” he said. “Husbands and wives are going to have differing viewpoints on how to spend money, but you’ve got to have a plan. You can’t have one side sabotaging the plan by being deceptive about spending money. That’s not going to work.
“But if both sides stick to the plan – and check in before spending on something that’s not in the budget – you can eliminate a lot of debt in a hurry.”