Pay Off Student Loans Faster: How I Paid Off $30,000 on a $18,000 Income

You read that right: I was able to pay off student loans- $30,000 in student loans- in three and a half years as a low income earner.

Let me paint you a picture: it’s 2011 and I’m graduating from college. My cap and gown are bright red. The commencement speaker is Paul Farmer, a doctor who has dedicated his life to bringing healthcare to poor, rural areas all over the world. My future is wide open in front of me.

And all I can see coming down the road is my $25,302 in student loans. 

My Financial History

When I graduated college, I entered a job market very much still grappling with the financial effects of the 2008 financial collapse. (Solidarity to all my 2020 graduates!) Full time, salaried jobs that came with benefits were scare, but my student loan debt didn’t care. Payments had to be made. 

I grew up in a low income household, and I stayed that way for most of my adult life. For the first three years out of college I waited tables, since that was the only job I could find.

For me, waiting tables was not lucrative.

I made my loan payments and I paid my rent, and I got by. But financial progress remained out of reach. Investing? Financial freedom? Wasn’t even on my radar. 

Until the day I had my quarter life crisis. It was June 2014. I was three years out of college, and depressed as hell. My life felt beyond stuck; it was like I was going backwards. My debt hung over my head every day. I felt like I would never pay it off. I was watching my friends move forward with their careers; getting raises and promotions. People were beginning to get engaged and talk about buying their first house. 

And I was about $20,000 still in debt, working as a caterer 10 hours a week and watching Netflix that one of my roommates paid for. 

I literally broke down in my kitchen. I cried to my roommate and best friend that I felt like I was fucking up my life. Was something wrong with me? Why was everything so hard?

To me it was clear that money was the biggest problem in my life. I had to pay off student loans faster. I had to learn about money. So I figured “if I can just learn about money…the rest of my life will get better right?”

The First Step to pay off student loans

My first step to pay off student loans was to start learning about money. 

I was starting with no financial literacy. I grew up in a single parent household and my mother didn’t teach me about money beyond “We don’t have a lot of it.”

So when I looked at my debt, I felt stuck. I knew people were doing things with their money but like…what?

Just like any self respecting Millennial, I went to Google to try and get my answers. I typed in “how to pay off student loans faster” and that search introduced me to the world of personal finance. 

Google showed me stories of people paying off their mortgages years early. I found couples who had paid off $100,000 in student loans. 

These blogs and news stories blew my world wide open. And simply SEEING other people who had paid off their debt showed me that surely, there was something I could do to pay off mine!

paying off my loans on a low income

The first actual concrete step I took was to sit down and list out all the stuff I was spending money on. I did this in a notebook but I suggest using a spreadsheet. Seeing all my spending in one space showed me two things: I went to Target ALL THE TIME, and I was going out to bars kind of a lot. 

For someone making under $20,000 a year and crying about how broke she was, these two things didn’t add up. 

Now, when I say a lot, I don’t mean I was one of those people who are spending $1,000 a month on food without knowing it. I mean I was spending about $20 a week at $2 Tuesday at my favorite bar.

BUT AGAIN- I made under $20,000 a year! $20 a week, or $80 a month, was a relatively large part of my income! 

Listing out all my spending was the first step to creating a budget. And that’s why I include a 31 day spending tracker in our values based budgeting workbook. Some of your own spending will truly blow your mind!

cutting my spending

Next, I decided to cut back drastically. Since I was so low income and since work was hard for me to find, the more immediate tool I had in my tool kit was to cut back my spending. 

I decided to put myself on a Target ban- I wouldn’t go into the store AT ALL until I had paid off my debt. I decided that I was going to cut way back on my time spent at bars. 

Additionally, I also completely cut out any clothes shopping, gifts for friends and family, eating at restaurants, and any “just because” purchases. 

(You know, things like an extra bottle of wine at the store “because it’s been a long week” or a new book “because I’ve been meaning to read it.”)

By getting clear on what I wanted to spend money on and what I would eliminate, I created my first budget! I now had a monthly spending plan that I could follow. 

cutting my student loan interest rates

From my budget came the ability to start thinking strategically about debt payoff. I logged into my lender’s website and found out that if I signed up for automatic payments they would reduce my interest by .25%

That wasn’t a huge reduction, but it motivated me! If I could pay the lender one single penny less in interest I was excited. 

My minimum loan payments were also pretty small- in the $50- $90 range for each loan. I changed the payment due dates so that they were all due on different days, which gave me more of a chance to insure that I had the money in my bank account for the automatic withdrawal. 

earning more money

That was pretty much all I could do for myself in my current situation. What I really needed was more money. $18,000 in income would only take me so far!

My next big step, and the one that I believe mattered the most, was to bring in more money. For me, that mean piecing together 5 different part time jobs for the next two years. 

I worked as:

-a social media manager

-a high school coach

-a freelance writer

-a non profit fundraiser,

-a caterer.

I did other random things for money too- once I waited in line for someone for hours to get $150 in cash. I nannied on occasion. 

Since I had slashed my expenses to the bare minimum, all the new money I was earning could go directly to my loans. 

In 2014, I earned $18,423 before taxes. By picking up this assortment of jobs, I increased that to $32,249.63 by the end of 2015. 

becoming debt free

Working those five part time jobs, seven days a week, I was able to pay off student loans faster than I planned. I paid off my last $18,000 in student loans in ten months. It was a debt SPRINT- I’ve never worked harder in my life. 

The day I paid off my student loans I felt reborn. I went out with all of my friends to my favorite bar (that $2 Tuesday bar!) and got absolutely sloshed and it was amazing. I woke up the next day hungover but DEBT FREE. 

All told, I paid off about $30,000 in student loans in 3.5 years as a low income earner.

For me, a combination of budgeting, increasing my income, and total focus on one goal helped me pay off student loans.

I didn’t invest as I was paying off debt, which I do regret. (If you’re ready to start investing, get our free guide right here!) If I had invested even a few hundred dollars a year back then, I would have thousands more right now.

Have you paid off debt? How did you do it?

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