More students are taking out over six-figures worth of student loans to get their degrees, but not all grads with that much debt end up with high-paying jobs after graduation. That’s been Diana’s struggle after graduating with a BA in Inclusive and Special Education in 2014 and an MSC of Literacy Education in 2015 from Syracuse University.
When she walked across the stage at graduation, she had a total of $201,096 in loans. Diana, who asked to keep her last name confidential, was able to land a job prior to finishing her degree, but she struggled to repay her debt.
“At first, my student loans definitely caused me a lot of stress because I knew I couldn't afford my minimum payment of $2,000 per month, rent, and other bills,” she said.
“However, once I decided to move back home with my parents, started budgeting, cut my expenses, increased my income through side jobs, and created a plan to pay off my debt, my stress levels were lowered immensely.”
“At first, my student loans definitely caused me a lot of stress because I knew I couldn't afford my minimum payment of $2,000 per month, rent, and other bills,” she said. “However, once I decided to move back home with my parents, started budgeting, cut my expenses, increased my income through side jobs, and created a plan to pay off my debt, my stress levels were lowered immensely.”
Three years later, Diana’s debt is down to $102,603, and she hopes to have it all paid off by July 2021.
Here are some secrets to how she did it:
Don’t Make a Big Repayment Mistake
Before she graduated, Diana was worried about finding ways to pay off her debt quickly, so she did a lot of research to fully understand her student loans and what her options were. She recommended others do the same in order to avoid making a costly repayment mistake like not refinancing your debt or choosing the right federal student loan repayment program.
While she was able to take full advantage of her repayment options, Diana does regret how focused she was on paying down her debt to the exclusion of everything else.
“I do feel at times that I have been a bit crazy with my debt payoff, and have forgotten to enjoy some of my 20s,” she remarked. “I've now realized you can experience so much more by budgeting and finding lower-cost alternatives.”
She recommended others don’t focus so narrowly on their repayment and being proactive about finding ways to have fun within their budget.
Consider Moving in With Your Parents
Diana did what many graduates with large student loans end up doing—she moved back in with mom and dad.
“Moving back home with my parents has definitely helped me immensely in paying off my loans. Rent in New Jersey is astronomical, and I wouldn't have been able to afford it when I first graduated,” she said. “Now that I have paid off a significant amount, I can afford to move out, but have chosen not to so I can continue paying down my debt.”
While moving back home to live with your parents isn’t an option for everyone, it might be a wise choice for some people.
Cut Back and Earn More
Diana tries finding creative ways to increase the payments she makes on her student loans each month. One thing that helps her is being frugal.
“Budgeting and cutting out unnecessary expenses has definitely helped a ton,” Diana said. She started buying in bulk, switched to generic food brands, and realized that investing in good-quality things could save her from having to replace cheap alternatives.
Another thing that helped her was taking on extra work, including tutoring, babysitting, and starting a blog called Diana on a Dime.
“Increasing my income through my side jobs has been incredible for me,” she said. Those extra sources of income were critical in helping her accelerate her debt repayment since her job as a teacher doesn’t give her frequent pay increases.
“I have not had a raise since 2016, and without my side jobs and living at home, it would be very difficult to afford living in New Jersey on just my salary at this point,” said Diana. “Also, as a teacher, I am a 10-month employee, so I budget for my bills in the summer during the school year just in case my summer jobs don't pay as much as I need.”
When you have a large amount of debt like Diana, it might feel like you’ll never pay it off. That’s why it’s so important to stay motivated. She used the repayment visualizations anyone can create at undebt.it to help her see how far she’s come and what she needs to accomplish next.
She’s also part of a supportive Instagram community that uses the hashtag #debtfreecommunity which helped keep her motivated when she was feeling discouraged.
“I also think it is super important to celebrate the small victories,” she said. “I celebrate when I hit a number milestone and I celebrate when I pay off a single loan. It's important to acknowledge the small steps you're taking towards a big goal.”
Make a Plan of Attack
If you have a huge debt number, you might feel too overwhelmed by it to take action. But having a clear plan will help you feel more in control and reveal how your small actions can add up and make a big difference.
“Take it one step at a time. Start with a budget and then create a plan to attack your debt using either the snowball or avalanche method,” Diana said. “It is so much more manageable when you focus on one debt at a time versus paying a little bit here and there.”
Having a Plan Reduces Your Stress
While Diana still has a long way to go before her student debt is completely repaid, having a clear plan for her goal of achieving debt freedom has been very liberating for her.
“My stress is almost non-existent around my debt now. I feel like I can finally breathe,” she said. “It's amazing how much calmer you feel when you have a plan of attack and you see it progressing.”