On November 30th, 2011, I made my very first student loan payment. It was a big bill, one that I was pretty afraid of paying off. $26,720 is a huge amount of money, way more than anything I’ve ever owed before.
But I started paying on them, making small payments at first, and adding whatever extra money I had.
Today, almost 12 months later, I’ve made the payment that officially brings my student loans owing to $13,168. That’s less than half of my original owing amount.
In the past I’ve gone over my top tips on how to eliminate debt, so I’m not going to rehash those here.
I would, however like to highlight the role extra income has played in my debt reduction strategy.
Windfall money is money you didn’t know was coming. It could come from a variety of places, it could be an inheritance, unexpected profit from the sale of household items, or a tax return.
For me, a huge amount of progress in my debt repayment came from windfall money. Last spring, I got a monster tax return. I took $4,000 from that tax return, and put it towards my debt. It was a huge motivator because it was early on in my debt repayment, I still had $24,000 in student loans owing, and that payment put the 20k mark firmly in my sights.
A second, more recent bit of windfall money came in the form of my insurance settlement from my car accident. It was a smaller amount, but still, being able to slap $1,200 down on my debt in one go was a beautiful thing. Even better, that $1,200 sunk my debt level below $15,000 owing, and getting under that 15k mark was a huge milestone in my student loan debt repayment progress.
To be honest, I was really, really tempted to spend both of those windfalls. My tax return would’ve made a great trip somewhere, and my insurance settlement could’ve purchased a nice new couch. As much as I wanted these things, I knew that I would be fine without them. After all, before the windfall money, I had no intention of purchasing these things, and I was doing just fine. I knew I’d do just fine without spending the money, so, before I could second guess myself, I just tossed it onto my debt.
Another big contributor to my progress on my debt repayment lately has been the extra income I’ve been able to generate. I’ve always known that I was supposed have a side hustle, but I was busy with my (non-income generating) blog and enjoying my life without the demands of being a student. It was only recently that I was able to accept a staff writing gig for Michelle at Making Sense of Cents, and I didn’t make my first tangible blog income until September.
Since September, I’ve funnelled all of my extra income towards debt, and it’s helped me bring my student loan debt from 16k owing in September to the 13k I owe now. Now that I’ve had a chance to see the benefits that a side hustle can provide to debt repayment, I’m going ahead with it full bore. (So if you need some staff writing done, contact me!)
The Next $13,000
I’m halfway towards paying off my student loans. This first year of debt repayment has been amazing, and I’ve made more progress than I ever could’ve imagined. So many things have gone perfectly right to enable me to pay so much money back so fast, I can’t even begin to name them all. That said, I think it’s extremely unlikely that I could have the good fortune to repeat this experience. The odds of being able to put over $5,000 in windfall money towards my debt this year are slim to none, and I have no idea what’s in store for my side income.
I have this imaginary goal of being able to pay off my student loans by next November, but it seems like such a pipe dream that this is the first time I’ve been able to mention it, even though I’ve been mulling that over as a possibility for months now.
So for now, the plan is to keep calm and carry on. I’m going to keep chugging away at this debt repayment game, I’m going to keep hustling, cutting back my budget, and exploring new ways to spend less money on life and more money on getting rid of this debt, without being miserable. But above all, I’m going to celebrate this milestone, because it really is a milestone, in my debt repayment journey.
So go me! Now, I’m off to take a run in the sun with my favourite pup.
Where are you at with your debt repayment? How long did take you to pay off 50% of your student loans? I want to know!