How I Paid Off $22k in Student Loans in 18 Months on a $45k Salary

Welcome back!  I think a bit of background information is necessary for this post.  Sometimes you’ll come across blog posts with headings like: “How I Saved $100,000 in One Year” or “How I Paid Off My $300,000 Mortgage in Five Years.”  To be able to save $100k in a year, that means you have to make more than $100k.  I know I certainly don’t make anywhere near that amount, and I’d be willing to bet I’m not alone.  I encourage everyone to keep that in mind when reading ANY blog post or financial advice.  Everyone is in a different financial situation so what works for one person may not be possible for you, and vice versa.

In the interest of full disclosure, I think it’s only fair to give you a brief overview of my financial situation before getting into the real “meat” of this article:

  • I make roughly $45,000 per year at my full-time job.  Overall, not bad, but according to the National Association of Colleges and Employers, the average salary for a recent college graduate with a bachelor’s degree was $51,022 a year in 2017.  Considering I am a recent master’s degree graduate, I could be doing better, but according to the Bureau of Labor Statistics’ 2017 report on state occupational employment and wage estimates, South Dakota’s annual mean wage across all occupations was $40,770.
  • I own my home (well, I’m paying the bank for it, I should say).  I pay about $930 per month for my mortgage/property tax/homeowner’s insurance.
  • I live in a relatively affordable state, yet a relatively expensive town.  Some people may think $930 per month is a steal, but also remember I live in South Dakota.  Generally speaking, the cost of living is pretty affordable here, but I could drive to another town in the state that’s an hour away and get twice the home for the price, and probably some land, too.  I’m not entirely sure what makes my town so expensive, other than it’s the state capital, but it is.
  • I do not have any credit card debt.  This is important because that frees up more disposable income to put towards my student loan or whatever else I am prioritizing that month.
  • I have an auto loan.  I bought a brand new (yeah, yeah, I know – this was before I got serious about my financial independence lifestyle) 2016 Honda HR-V in September 2015 and am still paying on it.  As of this writing, I owe about $13,000.  Now that my student loans are paid off, I’m tackling this debt next.

With that out of the way, here’s the secret to how I put an average of half my full-time job’s monthly salary towards my student loan for a year and half: I HUSTLED.  In other words, it’s not a secret at all!  I worked hard and made plenty of sacrifices.  I strongly believe in a work/life balance and not waiting years to enjoy your life; however, clearly I had to make some concessions to afford this.  Here are the three main steps I implemented which were most beneficial to me:

  1. My first step: MAKE A BUDGET.
    I cannot overstate the importance of this.  It was truly amazing to me how I managed to “find” extra money in my pocket every month when I simply tracked what I was spending.  I am very much type A and anal when it comes to this sort of thing, plus I love spreadsheets, so I tracked literally Every. Single. Penny. I spent (and I still do).  Every penny had a job to do.  At the end of the month, any leftover income would go towards the principle of my student loan.  I know that type of meticulous tracking doesn’t work for everyone, but I think it was critical to my success because in the back of my mind, I knew I would have to be accountable to myself with every purchase and enter it into my spreadsheet.  If I blew my money on unnecessary purchases throughout the month, ultimately the only person I was hurting was myself.  Unconsciously and unintentionally, I trained myself to be smarter about my spending.
  2. My second step: INCREASE MY INCOME.
    This was nearly as important as tracking my spending.  You can’t save or spend more than you make (without going into debt, that is), and the easiest way to have extra money to throw at debt or put into savings is to make more.  In my introduction post, I talked about my various side gigs: becoming an online adjunct instructor at my alma mater, waiting tables an average of two nights per week at a local restaurant, and nannying/house sitting for a family.  This past month (August 2018), I had nearly $6,000 in income.  That is by far the most I have ever made, and allowed me to make the final extra payment on my student loan.  Clearly, this required the most amount of sacrifices, as time=money.  I travel pretty regularly for my full-time job, plus my boyfriend lives two-and-a-half hours away from me, so I am not in town a whole lot.  The online adjunct instructing is most conducive to my lifestyle because I can grade papers and interact on discussion boards anywhere I have my laptop and internet access, but the other two gigs usually pay well and are a good use of my free time when I’m staying in town.  By picking up just the side job of waitressing, I increased my 2017 income by about $8,000 and this was not a huge time commitment.
    Probably the biggest way I did this was through couponing.  Stick with me here – I don’t think I would have ever qualified to be on the show “Extreme Couponers,” I don’t clear shelves of products, I don’t photocopy coupons or otherwise engage in coupon fraud (yes that’s a real thing), I don’t get thousands of dollars’ worth of products for a dollar, I don’t spend 40 hours per week clipping coupons, but I am always looking for ways to save money on my everyday purchases.  I have found that by setting aside an hour of my week to plan out my purchases and “deals,” I can often save at least 50 percent on purchases I would normally be making anyway.  This topic will likely be a future post all on its own, so stay tuned!

What are the best strategies you’ve found to pay off debt, increase your savings, or otherwise reach a financial goal?  Feel free to drop me a comment below, or interact with me on Twitter or Instagram!


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