How Tim Paid Off $71,000 of Student Loan Debt in Only 23 Months

We recently published a post about how Carl, Co-Founder at Gen-Achievers, was able to pay off all $32,000 of his student loan debt in less than 18 months. Although impressive, it didn't take long until we found another savvy individual who was ready to claim their reign as champion. Tim, a graduate of Temple University ('15), was able to find the effort, commitment, and willpower within him to wipe away his student loan debt once and for all. What's amazing about Tim's story isn't just the fact that he paid them off. The true reason is that he took down $71,000 in student loan debt in only 23 months thanks to committing just a few hours of his time to learn more about tackling debt.

We'd like to thank Tim for sharing his incredible story with us, as we hope all of you who are reading this and still have student loan debt can: 1.) Learn something new about paying off debt, and 2.) Use this story as motivation to tackle your own debt.

---

Like myself, you've been able to pay off all of your student loans at a young age. Can you go into detail about how much you owed, what types of loans you had (i.e. subsidized, unsubsidized, etc.), and the moment you realized you had to get rid of your debt once and for all?

Overall, I had a total of $71,000, and was able to pay it all off in only 23 months. For the record, I had unsubsidized, subsidized, and private loans. About 60% of my loans were private and 40% of them were federal (i.e. subsidized & unsubsidized). The moment I realized I had to get rid of them was early January 2016, or less than a year after graduating from my undergraduate studies. I graduated from Temple University's School of Business back in May 2015, and had just come out of the grace period. At this point, I was beginning to make payments back on my loans. I remember when I first realized how much I actually had in loans - it was completely overwhelming. With this burden constantly on my mind, I went in and decided to make an extra payment of $100 that January. Although I expected this would lower my total amount, I soon realized that the principal balance on the loan that I wanted the $100 to go towards did not decrease.

Surprised at this, I called Discover to ask why the principal on the loan did not change. The representative on the phone assured me that it was applied to the principal. However, what I saw on my screen showed that it wasn’t applied, so I pushed back. After I was put on hold for about five minutes, I was transferred to one of Discover's managers; only to listen to an explanation that I was hoping would have gone in my favor: According to policy, any outstanding interest on a loan must be paid first before additional payments directly effect the principal.

I was extremely frustrated at the outcome, and more so disappointed at myself. I realized that I dug myself into such a financial hole just from simply not paying attention to the amount of loans I built-up during the four years I was in college. I knew at that moment after talking to Discover, I needed to pay all of my loans back immediately - that started with educating myself on how I should tackle this huge burden.

---

For every individual, the methods each uses to pay off debt differs. What were some that you utilized when you were paying yours off? Are there any tips can you provide others on paying off student loan debt faster (such as the snowball effect)?

After I got off the phone with Discover, I did what most do when looking for information - I went browsing for answers on Google. I searched far and wide for articles mentioning anything about methods to paying off debt. After a few searches, I came across the man who changed my perspective on debt, Dave Ramsey. Dave Ramsey’s story about his journey to financial success is nothing short of incredible, and if you are reading this right now - you should go to YouTube and watch some of the videos about his story. The one I'll mention for now is his 7 Baby Steps. Dave recommends 7 baby steps to building wealth, which his first two steps pertained to my situation

Step 1 - Save $1,000 | Step 2 - Take all other money you have and throw it at your smallest balance

As mentioned in Step 2, the snowball method is the term used by Dave. If you don't understand this step, I'm going to provide an example of what this means:

Loan A - $2,000 with a minimum monthly payment of $50 | Loan B - $3,000 with a minimum payment of $80

If you pay off Loan A, you no longer would have the minimum monthly payment of $50. This means that you can use the money you were originally pushing towards Loan A towards Loan B. I would be lying if I said I followed this method exactly, but Dave's philosophy made sense. I had one private loan that was $24,000 with a variable interest rate of 8.5% (yikes). I decided to tackle this one first – it took about 10 months and was gone in October 2016. Knocking out the biggest private loan I had in 10 months gave me the confidence that I needed to get rid of them all.

Some other tips I have include putting all your numbers in an Excel spreadsheet or on an organized piece of paper. If you do not know exactly what you are aiming towards, how will you be able to hit it? Set an ambitious, but realistic goal. During this time, I was making about $30,000 after taxes (I eventually switched jobs which gave me a raise, and I also caddied on the side - so that is why the math of $71,000 in 23 months doesn’t seem to add up). Overall, my goal was to pay everything off before I turned 25 (January 2018). I then broke out the amount per month that would be needed, and got a total of $2,840. Luckily, I was living at home during this time, so I had minimal expenses. I would make paying off my loans almost like it was a game: let’s see how much more I can pay per month, and continuously track my progress until each loan reaches zero.

When you look at it month-by-month and focus on one loan at a time, it is a lot less scary than looking at something like $71,000 as a whole. Metaphorically speaking, I was climbing 25 ladders (i.e. months) instead of the Empire State building all at once. So, to sum it up, I listened to Dave Ramsey’s podcast daily - it helped me remain constantly educated, entertained, and motivated to keep going.

Lay out your numbers. This can be scary, but also liberating. And finally, track your progress and celebrate small wins.

---

If you were to go back before you started college and do it all again, would there be anything that you would change when considering the financial impact it had on your life? How important was obtaining a degree to your career, personal life, etc.?

Yes, I would do a lot of things differently. First, I would have gone to a community college for the first two years and then transferred to another institution for the last two. Community colleges' tuition usually costs less than half of a traditional university's. During my first two years at Temple, I was only getting my basic courses out of the way, which can typically be completed anywhere. Montgomery County Community College, for instance, costs $5,000 per semester for tuition. At Temple, however, it was around $9,000 per semester. Employers do not care if you went to a community college during the first two years. I also would have not taken out student loans at all, and would have actually taken a gap year if needed to save money and pay my tuition in cash. I honestly didn’t know exactly what I wanted to study anyway, so I could have personally reflected on what I wanted to do during this time.

I believe that any college degree holds incredible value as long as you are able to apply it in the right way. Take advantage of the resources and connections on campus, actually learn the material presented in your courses instead of worrying about just your GPA, and realize how certain degrees hold value in today's marketplace. In business school, for example, we learned about opportunity costs. I don’t think people look at college this way, but the reality is that you are spending four years (or longer) of your life in school. For most, they are probably not making much of an income, and if you are using student loans to pay for an education, then the overall total is even greater. If I took a job making $25,000 a year, I could have made $100k throughout my time in college. Instead, I spent probably close to $100k (i.e. tuition, rent, etc.) so college effectively cost me $200k.

With the success you've had paying off your student loans, has it impacted others close to you in doing the same?

Yes, throughout the process, I would tell people my story if they were interested. Since paying them off, I have been coaching my sister and my cousin to do the same. At the end of the day, though, I can only provide my insights, hold them accountable, and root for them to win. They are the ones who are making the sacrifices and working extra to knock them out.

---

As always, we like to ask this question to see how others in our generations perceive our position in society. It seems that a shadow is casted over millennials and younger generations in that we are "lazy" or "dependent" on others, and we are not striving to become tomorrow's leaders. What can you say to steer this perception into a positive picture for us all?

The word “millennial” is my most disliked word! I believe that if you asked most people to describe millennials, they would have more negative things to say than anything else. I know a lot of millennials who are on the constant hustle & grind, and are very disciplined. I also know many millennials who are also lazy, dependent, and entitled. I think every generation goes through both sides of the spectrum in some shape or form. My grandfather, for instance, was born just before the Great Depression and served in World War 2; of course his generation is going to think that ours is "soft". At the end of the day, every generation has those who have strong work ethics and are independent, while others are deemed lazy and dependent.

You've mentioned before about how uneducated people can be when it comes to paying off debt - I totally agree with you. Are there any articles, sites, or resources you recommend others use in order to learn more about tackling debt? What steps did you take to become well-versed in this topic?

I listened to Dave Ramsey’s podcast every day on my way to-and-from work. I also read his book titled Total Money Makeover. I also saw him live when he came to speak to an audience in Philadelphia. I have also learned a lot about personal finance in general from listening to his radio show. His website (DaveRamsey.com) has plenty of insightful articles and content as well.

---

How significant was budgeting when you paid off your student loans? What sacrifices did you have to make when you were paying more for your loans each month?

Budgeting is a key component to personal finance in general, and is especially true when you are trying to pay down debt. Like working out, there is no shortcut to losing weight unless you workout more and eat less/healthier - The same is true with money. If you want to pay off debt, do what you can to make more money and spend less. Budgeting is part of spending less. When I first started the budgeting process, I created a “90 day number”. In this system, I tracked every dollar I spent for the first 90 days, so that I could see where my money was going. This way, I was able to cut out any excess spending I was accumulating. Thanks to this, I stopped eating out and buying unnecessary things, but it made me sacrifice a lot in my life...

For two years, I did not go on vacations with my friends because I was working multiple jobs instead. From April to October, I would work my usual 9-5 job during the week, and then caddy on the weekends. I looked at it in this perspective: By going to the beach for Memorial Day Weekend, that meant I would lose pay from not caddying. Memorial Day Weekend may have put me down $500, but without caddying, the net loss would have actually been close to $1,000 since I typically make $500 working that weekend. There were times where I worked 20 days in a row. Every time I made an extra dollar, I was closer to reaching my goal.

Is there anything else you would like to share with our readers (e.g. tips, advice, etc.)?

I think it is important to have a reason, or intrinsic motivation, as to why you want to get out of debt. For me, it was because I wanted to start investing, and it didn't make sense to buy mutual funds when I still had student loans. Compound interest is a (positive) powerful weapon, and investing in accounts such as your Roth IRA, 401(k), or HSA at a young age is key to building wealth.