Where the Debt Originated
When I graduated college with my third degree I owed over $85,000. A few things about this debt: The $85,000 represented an undergraduate degree amount of $24,000, a graduate degree amount of $35,000 and a second undergraduate degree (career change) amount of $30,000. This $94,000 in total student loan debt accumulated by attending three difference schools (two public and one private) over an 11 year period. Many of the initial student loans were subsidized, but many of the graduate student loans were not subsidized.
When I came out of grad school with a degree in accountancy, I worked for a big 4 accounting firm for a couple of years. While working there I lived at home with my parents, in the attic. This awesome gift of having no housing expenses allowed me to pay down that initial undergraduate balance from $24,000 down to $18,000, while paying towards the newly added $35,000 from grad school. I still don’t know how I left grad school with so much debt. I worked full time and I had a partial (and by the end, full) scholarship. I distantly remember using the excess money to pad expenses over the 2 year period, but $35,000!?!
Life marched on. I kept paying, and eventually, I decided to go back to school for yet another degree.
High Interest Woes
After my third degree, which took me into the medical field, I remember calling the student loan provider (it went from Sallie, to some others, to Nelnet, etc). I wanted to get a clear sense of what I owed, what my interests rates were. I also needed to know my repayment options. I remember trying to sign up for the 10 year student loan forgiveness program, because I thought I qualified. I was an RN working in a rural setting. When they worked through the numbers they denied me access to the program. They let me know that because my husband at the time made around $75,000, our combined income was high enough to pay the loans off within 10 years. Mind you they took his income into account, but not his student loan balance, nor our house payment of $1700/mo.
I remember getting so angry. I was angry that I was being penalized for being recently married. My husband made way more than me, and we kept money somewhat separate. I worked part time for about $23/hr in a rural setting. I couldn’t just access his money the way they made it seem I should.
I was angry that my house’s interest rate (5%) at the time, was lower than education rates (6.5%). I was extremely upset that I could buy a depreciating asset (a new car) at an even lower 0%. Yet, there was nothing I could do to decrease these interest rates for my education. Compared to my undergrad loan rates (2%) these graduate loan rates were unbelievable to me.
The Money Plan
It became clear to me that I needed a plan. I began at work. I picked up more hours as they became available. I covered people’s shifts when they needed it. I worked the overnight shift for the differential (more pay). I applied for increased hours, and let the nurse manager know (often) that I wanted to be 36 hours if possible. Eventually, I got the hours and began making higher payments.
I also joined the military-the Army Reserves Medical Corp. This provided me with extra work experience, more nursing training, combat training and rifle skills. I learned so much, and I also received assistance in paying down my student loans after the first three years of service. They paid $50,000, but the total was subject to tax. In the end, the disbursements totaled around $38,000.
After the disbursements, which the student loan company conveniently put towards my lowest interest loans, I still owed over $35,000. The interest accumulated so quickly, that the loan seemed never ending. Along the way, Suze Orman retired (I used to watch her show), and I somehow found Dave Ramsey. I binged on his podcast every single day.
The Power of the Snow Ball
Finally, I found a way to be intentional with my money. I cleaned up my finances for the first time. I put the numbers into an excel spread sheet, and I created a budget. My car was sold, but I went into a lease for a lower payment instead of a used vehicle. That was a last minute change in plans-I went into the dealership for a USED CAR! UGH! Anyway, it freed up my monthly cash flow by $200/month. I cut the cable, I reigned in the food budget, I cut the kid’s activities, I stopped buying tons of clothes. We paid $1500 to that b*tch of a student loan until all of the 6.5% expensive debt was demolished. We stopped at the 2% amount, for which I still pay $100/mo- and we went back to putting that excess money away into the stock market.
I think it’s time to snowball again in 2018, because my current (new) husband has $30,000 in student loan debt at the high 6.5% rate. Spurts of snowballing (10-12 months) are all I can handle before I start to feel overly deprived. That said, we plan to adjust our retirement contributions down and I can track the balances monthly, so you can see how it’s done!