This article is by Kassondra Cloos, an Earnest client and freelance writer.
When I was fresh out of college, with about $37,000 in student loan debt and a job that paid $12.50 an hour (before tax), I spent a lot of time scheming and dreaming about paying off my loans. I figured I had two options:
- Pay as much as I could and get out from under my debt as quickly as possible by living in a crappy apartment on an essentials-only budget that wouldn’t even accommodate shoestring french fries; or
- Pay the minimums on my federal loans, often $0 based on my income, inevitably dragging it out into my 30s or 40s.
For better or worse, I am a value-driven person. I wanted to pay off my loans quickly to be free of them and to save thousands on interest.
Repayment Is Easier Said Than Done
I made my last student loan payment on Sept. 25, 2018, five years ahead of what had originally felt like a lofty 10-year goal. Over the span of my last year of college and the first five of my career, I paid $37,000 in principal and roughly $9,000 of interest into my loans. That’s nearly a quarter of my pre-tax income since graduation, and more than I’ve paid on rent.
Paying off my loans so quickly required discipline—a lot of it—and a lifestyle focused on paying off debt. I thought of this goal every day, every time I had to make a spending decision. And the vast majority of the time, I chose debt freedom over all else.
When I was in the thick of it, shoveling money into Great Lakes, my Stafford loan servicer, it felt like I was trying to empty an ocean with an eyedropper. No matter how big the automatic debit transfers felt to me, no matter how many extra payments I sent in, the interest seemed to overshadow any progress.
How I Paid Off My Loans
I wish I could tell you I had an easy, magical formula for making it happen. I hunted for blogs like this one and read any story with a headline like “How I Paid Off An Absurd Amount of Debt in a Ridiculously Short Period of Time,” hoping to learn the recipe. But the secret sauce these writers had was usually “spend less money,” and that wasn’t much of an option for me.
I was already avoiding nearly every non-essential purchase. I took on second jobs, freelance projects, and side gigs for further income. Even still, my total income in the past six years was (roughly) $200,000. Between student loans and car payments, I’ve spent roughly a third of my pre-tax income on debt since graduating from college.
The things that contributed most to paying off my debt were the obsessive frequency with which I studied my loan balances and the consistency with which I chose an inch toward debt freedom over a comparative foot of instant gratification.
“Between student loans and car payments, I’ve spent roughly a third of my pre-tax income on debt since graduating from college.”
Thoughts of budgets and debt repayment were the background music to my daily life. I thought about my debt when I went to the grocery store and stared at the frozen food aisle, wondering if I could justify ice cream. I thought about my debt when I weighed saving $80 by neglecting to update my car’s registration against the risk of getting caught. I thought about it when I spent hours looking for ways to save $20 or $30 on a flight home for a holiday, and when I refused to turn on the air conditioning in my first apartment.
In late 2016, for example, I refinanced about half of my remaining Stafford loans for a lower-interest loan with Earnest that I planned to repay within five years. I intentionally made my payments higher for a shorter repay period and lower interest. I had been holding back for years on a dream to quit my job and write more creatively as a freelancer, and I knew that the biggest thing keeping me from going for it was the fear that I wouldn’t make enough money to pay my loans.
This might not sound like a fun way to pass your first few years out of college, complaining about how little money you have and then throwing even more of your meager salary at the idea of freedom, as far off and unattainable as a trip to the moon.
But it worked.
My Last Day in Debt
I was sitting at a table of relative strangers at a work conference 1,500 miles away from home when I realized it was finally the day I had been waiting for. My final payment had cleared, and I had officially finished paying off my student loans.
A month earlier, I had started posing questions on social media about how I should celebrate my upcoming debt freedom. I dreamt of splurging on a beach getaway, a long weekend with sun, surf, a book, a journal, and no wifi. I thought about donating an average month’s worth of student loan payments to a cause. I thought of small splurges, like subscribing to an international magazine I love. I thought about big purchases, like saving up to buy a house.
That day, I was surprised to find that I didn’t have stronger emotions. I was proud, to be sure—I had done what I had once considered impossible—but there were no tears of joy, no screaming from rooftops.
Once, my loan balance dictated most of my emotions. But I had finally earned the right to stop thinking about them.
How It Feels to Be Debt-Free
As anticlimactic as it may seem: I cannot overstate the pricelessness of not having to worry about my debt.
I had set out with a goal to pay off my debt as quickly as possible because I had wanted to save on interest payments in the long-run and be in a better position to chase adventures of all kinds. By frontloading my payments in the lowest-earning years of my career, I think I also got a lot of stress and anxiety out of the way, clearing a path for me to take bigger risks more confidently, and to build a business focused more on creativity and joy than money.
It’s the most expensive peace of mind I’ve ever purchased, and it was worth every penny.