When the Great Recession hit, there were many news stories about millennials who graduated with significant amounts of student debt who then struggled with unemployment or underemployment.
That was what Tim Stobierski, 28, faced when he graduated with a bachelor’s degree in English from the University of Connecticut in 2011, as the downturn was ending.
Despite the fact that he accumulated over $65,000 in student debt to obtain his degree, he couldn’t find a job that required postsecondary education.
“Finding a job with the little experience that I had was difficult, and I wound up needing to take a few jobs that didn't require a college degree,” he said. “The low pay made it nearly impossible to make payments on my loans, which meant my balance just kept growing. I honestly thought that I would never be able to repay my debt.”
Luckily, Stobierski, now a writer and the founder of the blog Student Debt Warriors, eventually was able to find a job that used his degree and was able to start his repayment in earnest in 2013. Today, he has just $3,500 in student debt left—which he will pay off this year. Here’s how he was able to get back in control of his student debt and pay it off early:
Tracking His Debt
One of the things that helped Stobierski turn things around was tracking his debt.
“The biggest problem for me beginning to pay back my student loans was that I didn't even understand how many loans I had, who I owed money to, or what my debt totaled,” he said. “So, I created a spreadsheet that tracked information like my servicer or lender, loan amount, interest rate, and monthly payment amount.”
Once he was able to see how much he owed, it motivated him to pay it off and allowed him to keep track of his repayment.
Prioritizing Your Repayment
When it comes to repaying debt, there are two basic strategies. The first is called the Debt Avalanche strategy, which encourages you to pay off your debt with the highest interest rates first. This is the quickest method to get out of debt, but it’s not necessarily the most effective. Instead, some people find that paying off the debt with the smallest balance first, known as the Debt Snowball method, is more motivating since it gives them something to celebrate. That was how Stobierski felt.
“I decided that I needed a quick win to boost morale and free up some money in my budget for faster progress, so I decided to pay off the unsubsidized loan with the lowest balance first,” he said. “Once I paid it off, I added the money I would be putting towards that loan each month to the loan with the next lowest balance.”
Signing Up for Auto-Pay
Why pay more than you need to? When you sign up for autopay, you get a 0.25% interest rate reduction with certain lenders. Another benefit?
“I never missed a payment due to forgetfulness,” said Stobierski. “Super helpful.”
Singing up for auto-pay is relatively easy. You can usually do it online or by calling your lender or debt servicer.
Hustling for Extra Cash
Because Stobierski was struggling to find full-time work that paid enough for him to keep up with his student debt payments, he decided to start a side hustle as a freelance writer.
“Every cent that I made through my freelance writing business, I put towards paying down my debt,” he said. “This helped me achieve my goal way faster than I would have been able to do without a source of side income.”
Whether you decide to drive for Uber in your spare time or start DJing weddings on the weekends, there are all sorts of ways that you can use your extra time to make more money.
Not Ignoring His Debt
Stobierski was so overwhelmed with his high level of debt compared to his meager income that after his grace period was over, he let his loans go into default by ignoring them. That’s one mistake he wishes he hadn’t made.
“If you find yourself unable to make your monthly payments, don’t just ignore your debt,” he said. “Instead, pick up the phone and call your borrower or servicer. You have a lot of options at your disposal like deferment, forbearance, or income-based repayment plans that could help you get on track.”
Saving an Emergency Fund
What happens if you’re on track with your student loan repayment and then an emergency strikes and suddenly you don’t have the cash to make your payments and pay the rest of your expenses that month? Stobierski suggests saving an emergency fund for this exact situation.
“You should also really be working to build an emergency fund,” he said. “If you don’t have one, then you'll be forced to use expensive debt like credit cards or personal loans to cover the expense, driving you further into debt and erasing the gains you've made in paying down your student loans.”
He worked to set aside a few hundred dollars at first, but then eventually built his fund up to three months’ worth of expenses.
Happiness Is Being Debt-Free
For Stobierski, paying off his debt has made him feel better and much less stressed.
“The closer I get to finally paying off my student loans, the happier I am. It's like a huge burden has been lifted off of my shoulders,” he said. “Owing someone—anyone—money is something that makes me incredibly uncomfortable because it limits my life. It limits my ability to leave a job or move around or try new things. Being almost debt-free is incredibly freeing.”
Once he’s done repaying the last chunk of debt, Stobierski will be saving and investing for his future—and avoiding getting into more debt.