When Steven Donovan, the founder of EvenStevenMoney, graduated from college, he had over $55,000 in student loan debt. While the debt was substantial, he initially thought it was no big deal.
“I had the expectation that as soon as I got out of school, I’d basically be killing it,” he said. “I thought my first job out of school I’d make $50,000 and be on my way to earning $100,000. It, unfortunately, didn’t work out that way.”
“I had the expectation that as soon as I got out of school, I’d basically be killing it.”
Facing a hard reality check, Donovan had a tough road ahead of him. But thanks to an innovative side hustle, he was able to take charge of his debt and pay off $46,000 in just two years. Here’s how he did it.
Getting into Debt
While Donovan graduated with an already large loan balance, it grew over time.
“I deferred and deferred my loans, and changed programs to get a lower monthly payment,” he said.
With the deferments and payment plan, he wasn’t paying anything toward the principal, so interest continued to accrue on his loans. And even with the payment plan, he was barely making ends meet. Then, his loan payments jumped up.
“One day I got a student loan bill in the mail,” Donovan said. “My monthly payments went from $80 to $250.”
On a graduated payment plan, your payments start relatively low. But every couple of years, the monthly payment increases. For those who aren’t prepared, it can be a scary wake-up call.
“I was barely making it with my student loans and I was putting a lot of stuff on credit cards to get by,” he said. “So when I got the notice my bill was going up, I knew I had to flip the switch and change.”
“I was barely making it with my student loans and I was putting a lot of stuff on credit cards to get by.”
Addressing the Problem
Up until he got the student loan notice, Donovan had been working in Florida, working multiple side jobs to pay the bills. Once he got the new bill, he realized he had to make significant changes to his lifestyle.
“Within a two or three-month span, I transitioned,” he said. “I moved back to Illinois and got a new and better job.”
However, even with the better job, Donovan still struggled to make progress repaying his student loans. That’s when he stumbled across a new side hustle.
“One day, I just happened to walk into a thrift store and bought five polos,” Donovan said. “I planned on wearing only one or two of these, but thought I could sell the rest on eBay.”
Starting a Side Hustle
Donovan had previous experience selling items on eBay; when he was younger, he bought shoes at Nike outlets and resold them. He used that experience to start a small retail arbitrage business, finding thrift store gems and reselling them online.
Since he knew men’s clothing, especially golf-related brands, he stuck to that as his niche. Using his expertise, he was able to find hidden treasures at the thrift store that would be in demand on eBay.
“The more you do, the more you learn what sells,” he said. “The side hustle was the secret sauce to making big extra payments because I already had a 9-to-5. With my side hustle, if I made $100, that went directly towards the student loan payments.”
“With my side hustle, if I made $100, that went directly towards the student loan payments.”
He built his business up to the point where he was earning an extra $1,000 a month. Because the business costs were so low, he was able to put the majority of those earnings toward his loans.
“At the thrift store, it cost me about $3 a shirt,” he said. “That was my main cost. On eBay, my only cost was the sales commision after things sold. There was very little overhead cost besides the clothing itself.”
While many side hustlers strive to turn their hustles into full-time gigs, for Donovan, the retail arbitrage business was solely a means to an end.
“For me, the motivator was that I didn’t have to do it forever,” he said. “Once I paid off the loans, I knew I didn’t have to keep doing it.”
The side hustle was an effective approach. With the profits from his business, he was able to pay off the remaining $46,000 of his $55,000 debt in just over two years.
With his debt paid off, Donovan finally had the freedom he always dreamed of having.
“My wife and I decided on a phrase to describe what our year was going to be about,” he said. “We called it the year of freedom. We took a couple of extra trips, and did things we might not have normally done [if we still had student loans].”
He also launched Even Steven Money, a blog and money coaching service where he shared his story and helped others tackle their debt.
For others struggling with student loans or credit card debt, Donovan recommends facing it head-on.
“The biggest thing for me and what I recommend is starting a budget,” he said. “I know everyone hates the word ‘budget’. So instead, I explain it in terms of creating a map. You don’t know where you’re going to go without knowing where you are today, and a budget helps you understand where you’re at right now.”
If you need help getting started, check out this post on how to make a budget in five easy steps.
This article was written by Kat Tretina, a freelance writer based in Orlando. Focused on personal finance issues, she’s dedicated to helping people pay down debt and boost their income.