- Courtesy of Melanie Lockert
- Melanie Lockert graduated from college with $ 81,000 in student loans, and spent several years paying the minimum amount due each month.
- When she still had $ 68,000 in debt after earning her master's degree, she decided to take debt relief seriously and implemented the debt avalanche.
- She then struggled to earn more, took advantage of gifts that could reduce her cost of living, repay money on her loans, and adjust her tax withholding.
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When I graduated in May of 2011, I became anxious about my student loans.
I had just graduated with my masters degree in Performance Studies from New York University. For my bachelor's degree, I asked for $ 23,000 and for my masters I loaned $ 58,000. Between graduating with my bachelor's degree in 2006 and obtaining my master's degree, I treated my loan payment as an account and paid the minimum.
But after several years of paying and taking on more debt, I graduated and still had $ 68,000 left. Once I took my debt seriously and faced my debt head on, I was able to make progress and pay off the $ 68,000 remaining in less than five years.
Here are the six strategies I used to get out of $ 81,000 in student loan debt.
1. I used the debt avalanche method
My Grad PLUS loans had interest rates of 6.8% and 7.9%, while graduation loans had interest rates of less than 3% (I can not remember exactly how much). When I calculated how much money I was spending on interest, it came to $ 11 a day. After that, I learned that I had to abandon my high interest debt first.
I used the avalanche debt method where I paid the minimum on all my loans while throwing extra money at my highest interest debt – the 7.9% loans. I continued to do this until this was paid, and then threw extra money at 6.8% of the loans, and so on. The avalanche method will help you save interest money over time, which may mean putting more toward your primary balance.
2. I made biweekly payments
One thing I did not realize about student loan debt is that interest rates increase daily. In order to combat the growing interest each day, I changed my strategy. Instead of making monthly payments as needed, I made biweekly payments. I split my monthly payment in two and paid this amount every two weeks. This helped me to keep the interest more manageable without having to pay more.
3. I put my energy to earn more
After graduating and not finding a full-time job, I moved to Portland, Oregon. I cut my expenses in half, but I still only found temporary work between $ 10 and $ 12 per hour. I had diminished as much as I could. That's when I realized that if I wanted to make real progress on my debt, I would have to focus on earning more.
I started aside to rush any way I could. I worked as a brand ambassador, working as a public face of a company at public events. I enjoyed sitting down for coworkers, I found gigs on TaskRabbit how to help someone move, and once I found a show on Craigslist where I ended up selling water bottles overnight at an underground dance party.
The holiday season was especially lucrative. I worked for a wealthy family helping with their Halloween party. I worked as a holiday party jacket. I pet sat down during Thanksgiving and distributed appetizers during the Christmas parties. Any show I could find, I would. I put all that extra money into my debt.
4. I took advantage of free items
One way to keep my expenses low was to take advantage of the free stuff. I was lucky enough to get some free samples of soap, free coupons for food items, etc. with my trademark side hurry up.
I started working as a conference attendant for a congregation. On that hurried side, there were many leftovers of food and wine, which helped to reduce my food budget.
If I had to buy and buy something, I searched for free coupon codes by typing "[company] + coupon code ". Taking advantage of the free stuff helped keep my expenses low.
5. I put my money back into my loans
If I had to spend money on something, I wanted to make sure I would make some money in return. When I was shopping online, I used Ebates, a site where you can get money back from some retailers.
I also had the Capital One Quicksilver card, where I received 1.5% on all my purchases.
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I took the money back from Ebates and my credit card and put it in the direction of my student loans.
6. I adjusted my tax withholding
Like most people, I was excited every year to receive a tax refund. But then I realized that it would be better to adjust my withholding tax and raise my salary every month. That way, instead of receiving a monthly amount once a year, I would have more money to work on each month. I used that extra buffer of money to put more into my student loans.
Becoming debt free has been one of the great joys of my life. It was neither easy nor glamorous. It took a lot of dedication and hard work. Using these six strategies, I was able to streamline the debt repayment process and get out of debt faster.