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How to Pay Off Student Loans Fast

Our goal was to pay off student loans fast…but we didn’t think it would be this fast. Not long ago, fedloan payments and student loan interest were killing our spirit and tying us down.

This year has blown my mind in so many ways. I decided to pull up my FedLoan site. I had been making payments since 2012. When I refinanced in 2018, most of my loans were not back down to their original loan amount yet, even after 5 years of making on time payments! Fed Loan seemed to be a never ending black hole down which my money would go for the rest of my life.

I refinanced my student loans with SoFi on January 21st, 2018. The balance was $208,918.53.

12 months later, my loan principal is down to $58,045.49! Including interest, we have paid more than $155k towards the loans in the last year!

Our Loan Payoff in the Last 12 months

I especially love that last column. No fees!

As you see, April, May, and June were big months for us.  A lot of stuff was happening then- I was starting a new job with starting bonus, tax refunds were coming in, we were finally settling costs associated with the sale of our Savannah house, etc.  We have an autodraft of 4k and schedule extra payments on the same day as the autodraft so they call all go to principal.  So, let me break down how we were able to throw so much money at these loans this year.  

10 Key Factors That Helped Us Pay Off Student Loans Fast

Living like a resident again while earning as an attending freed up a lot of capital, even on a primary care doc’s budget.

2. We Increased Our Income

For my first two years as attending, my husband was going to school to get his masters.  His studies were funded by the Army and he was taking care of our newborn son, so we were still pretty optimized.  But it sure helped when he went back to work. Of course, that also meant daycare expenses added- around $2800 a month.  But, we moved to an area with family, and they are kind enough to pitch in. For the last year, we have basically lived off my husband’s salary and every dollar I brought home (and more) went straight towards my student loans.

In the last year, we threw everything we had at the loans.  For my first two years as attending, we were trying to save 1k/mo to put away, max out retirement accounts, and pay extra towards student loans.  That was unsatisfying.  We didn’t seem to make much progress in any direction. It was disheartening psychologically.

This year, we adopted the Dave Ramsey- “your debt is an emergency” mindset.  We threw ⅔ of our sizable emergency fund and all bonuses towards the loans. We also didn’t max retirement accounts. We put in just enough to get the employer match. This makes me a little uncomfortable.  But, I have run the numbers several times and I’m confident we can catch up once the student loans are annihilated. The key is to stay motivated and keep saving. I think we can do that now that we are disciplined about money and have regular budget dates.  

We made a budget and optimized our spending.  Yes, a written plan to get control of money was necessary to make such huge process.  We aimed for saving $7k/month but ended up saving more like $8-10k some months. With the budget came a sense of control.  

There is a difference between “I’m on a budget” and “I have a budget for that.” 

The spending we did do was done with a lot more comfort, knowing we had already budgeted for it.  

Even though we were cutting back, we gave away more to charity this year than we ever have. We did this mostly by donating our time to cook meals at the Ronald McDonald House and fundraising for the Leukemia and Lymphoma Society.  

5. We Are Renters and Landlords

We rented our primary residence this year.  Renting minimized unexpected expenses. We’re renting 1525 sq foot house in New York.  But, we also own an almost equivalent rental property (1320 sq foot) in Nashville (our residency house).  

This makes for a very interesting situation as we are both collecting rent and paying rent. We did have some unexpected costs at the Nashville rental, but nothing that affected our bottom line, thanks in part to insurance. 

So basically, the rent we are paying is covered by the rent we are collecting.  It is tempting to sell the Nashville house because the proceeds would have annihilated my student loans, but we have decided to keep it to further our future goals of investing in more real estate in Nashville.  More on this later.

6. I Changed Jobs

Changing jobs brought the opportunity to cash in some unused paid leave and to negotiate some loan payoff at my new job.  I highly recommend working in loan repayment into your contract, if your employer is as awesome as mine (shameless brown nosing).  

7. We Educated Ourselves

I started learning and writing about finances this year.  I dove deep into the FIRE movement this year. And then I joined the scores of FIRE bloggers.  I get why people do it. You guys have been such a huge motivator to keep us on track to achieve our goals.  Your thoughtful comments and encouragement have given us the validation to proceed full force ahead. The FIRE community has been the kindest group of penpals I could ever have dreamed.  I can’t imagine having the confidence of living such a radically different lifestyle than most people I know without this blog. The success this blog has had in just 5 months has shown me that the student loan problem is a common one and for one that we have a cure.  We can do this!

Ok,  full disclosure, I had major beef with Fed Loan Servicing.  I had $18k of accrued interest on my loans when I went into standard repayment but that was not visible ANYWHERE on their site.  I had been trying to pay attention and was super surprised when it compounded. I filed a complaint with the Consumer Financial Protection Bureau.  Action was taken and then next time I logged in, I got a message that they had changed it and had added an “accruing interest” section. 

But it was too late.  I was done paying the salary of the clerk running that site every year! So, we refinanced with SoFi for 3.875% interest and never looked back. Best decision ever.  You can make a lot of progress when you’re not accruing 6-7% interest on >200k of loans. That’s over a $1000/month just in interest! If you make extra payments, make sure to make them on the day your regular payment is due so all your extra payment goes towards principal.  

A lot of people think frugality means deprivation.  It doesn’t! It just means NOT being dumb with your money and throwing it away to people for no added value.  This year, my family and I went on not one but THREE beach vacations… Hilton Head in April, Cape May in July, and Isle of Palms in December.  We had to fly to Hilton Head and Isle of Palms. We funded the flights with Chase Points. My parents graciously covered the house Air B&B’d, so we really owe them a huge thanks.  Cape May was the only vacation we fully funded. We budgeted for it so when the trip came, it was no big deal.

I go against Dave Ramsey here. We have utilized credit card rewards to our benefit.  We never carry a balance.   We just make the money we spend work for us.

I’m not sure how this happened, but somehow, we reached our goal of paying off $150k of loans and then still had money left over.  I REALLY wanted to use that to add to our savings. 

But, my husband is quite miffed that I took over his gaming computer for my blogging hobby.  So we really needed to get two work stations set up. That’s what we did. 

We’re also using a bit of that extra money to buy my hubby a ticket to tag along to my CME conference. It MAY be in Maui. Yes, I have a lot of discomfort with spending on this trip.  But, I think it will be good. It’s healthy to reward ourselves. We have stuck to our plan and done a great job saving.  It’s about balance after all.  God my hubby and I could use some couple time!  Make sure you’re following me on instagram at frugalphysician so you can see all the pics!

It has been a great year of much growth and learning.  Thank you all for your love and support along the way!

Stay frugal, TFP tribe!

Much love,

Dr. D

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Standard Disclaimer: Not meant as individualized financial advice.  This article contains referral links.              

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