How We Paid Off $20,000 Of Student Loan Debt In 6 Months

Hey Vacationers! Today we have the story about how we crushed our student loan debt in 6 months! Give it a read and share your own student debt story below!

$20,000 was the total student loan debt that we owed a few years back. We were fortunate that it was below the average of recent graduates, but we still had the debt. Then again, it was my choice to take the debt on and mine to repay. It needed to be repaid and repaid fast because this debt sucked.

Again, $20,000 – I stared at this number for a really long time. How did we get here? How long was this going to take to pay back? Could we pay it back? Would this newly owed debt affect our lifestyle? Why didn’t we scale back our lifestyle while in school and take out a smaller loan? These were the questions going through my head.

I knew that we could do this and that we had to pay back this debt as soon as possible. There were a couple of options that I could use to pay them back:

  • Standard Repayment Option – The most common option to is the standard repayment model. My loan servicer offered a 15 year repayment period for our consolidated loans in this option.
  • Income Based Repayment Option – Those are based on your income level and take 10-15% of your pay to put towards the loans. The idea here is that the burden should never be too high no matter how much or little you make. Make more and you pay more, make less and you will pay a little less.
  • Graduated Repayment Option – Here you start out paying a smaller amount and after a few years (Ideally after you income increases from a promotion or by having more experience) your loan payment increases. The most common anecdote for this loan would be a doctor.

Personally, we weren’t really interested in the income-based repayment method. The graduated plan was also interesting, but over the long-term the amount you pay would still be greater. The goal at the time was to get this paid off as soon as possible. So, the standard plan was the one for us!

Once the loans were consolidated there was about a 6.3% interest rate on them in total. It ended up being about $130 per month over 15 years. That is a long time to pay back that kind of money. If you are a fresh college grad that would mean that you make the last payment on nearly your 40th birthday.

No thanks.

So we made it our goal to pay back the loans in six months or less now that they were consolidated. This was our main financial goal at the time and seemed to be the best use of our money. (In hindsight, I wish we would have started our real estate journey sooner and paid the loans back over a longer period of time. Oh well.)

We put each and every dollar towards the loan that was extra in our budget. Any birthday or Christmas money that we received went towards the goal. We were both paid bi-weekly in our jobs so that “extra” paycheck you get twice a year went towards the loans as well. That one really made a dent!

It was slow and steady at first, but once that initial $5k was repaid you could really see the difference between months. We were paying the loan every other week and each payment started to have a bigger and bigger effect. Fortunately, the cars didn’t break down and the house was still standing so we were able to keep pushing a lot of money towards it.

Another big thing that helped us was increasing our income. I took a new position that paid a good bit more and funneled this extra money towards the loans. The key here was that we were laser focused on achieving our goal and put each and every extra dollar to the loan. I mean every last dollar. This included the extra that came from selling random stuff on eBay that we didn’t need.

Eventually, we could see the finish line. We actually made the last payment by dipping into our emergency fund. We were so close and agreed to pay off the last couple of thousand to simply get it out of the way! It felt awesome and was such a relief to not have that payment.

What I would tell anyone that is out there with student loans is to keep pushing forward. A few extra dollars here and there do make a difference. I would also suggest that they check out SOFI and look to refinance with them. They have some awesome rates and every percentage that your loans go down is a benefit to you!

Unfortunately for us, SOFI couldn’t offer a rate that was better than our existing loan company, but you should absolutely check them out. Also, I know that we dipped into the emergency fund but I would not recommend that for everyone. This is why it is personal finance after all.

Do you have a student loan story? Share below.


The Sofi link is an affiliate link. If you use them I will receive a small referral bonus, so you know.

2 comments… add one
  • Franklyn Roth Sep 8, 2017, 3:20 am

    Amazing story. I paid off my student loans and followed a very similar approach. I even picked up side gigs dog sitting and delivering pizzas for dominos. I was just coming out of school starting a salaried job and keeping my living standards the same was easy and putting everything else into loans.

    It hurt seeing $2k/month to towards it for a long time, but it is such a good feeling when its gone. I also dipped into my emergency fund on my 26th birthday to be debt free and clear.

    • Sep 8, 2017, 4:25 am

      Congratulations on paying off your debt there as well! Seeing that cash go out always sucks, but it sounds like you really did as much as you could to hustle it away.
      Not everyone would do that for sure, so it is awesome to see people getting shit done! Congrats again!

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