Paid Off Student Loans: $262,000 in Student Loans to $0 in 4 Years

In November of 2016 my wife and I had a combined student loan balance of $262,000.

As it stands today, we have less than $50,000 in student loans with an estimated student loan debt free date of November 2020 – four years into our journey.

At one point, the balance was even higher with over $300,000 in student loans prior to getting married. In other words, we have paid off student loans like it was our job.

All this to say we have learned quite a bit as it pertains to student loans and paying off debt, which is why we started Money Life Wax in the first place – so we can help others do the same through our story.

Over the years I have published multiple student loan articles tracking our debt payoff journey and to help others who are looking to get debt free, I decided to make one comprehensive mega-post detailing our journey from 2016 to the present day.

I hope you enjoy! ~Josh

The Paid Off! The Journey We Took to Pay Off $300,000 in Student Loans

Warning: This post might contain a very conversational tone and some improper grammar. Don't be alarmed, the advice and story about paying off student loans that amount to six figures are all very real and helpful!

Here are some useful resources that might help you before you start:

1. Debt eBook & Guide – 17 pages with workspace
2. Google Budget Template – customize however you want!
3. How to Pay Off Student Loans article with REAL actionable tips (coming soon)
4. 23 Creative Ways to Pay Off Student Loans – like selling your poop (not kidding)

Here is the story in chronological order, starting with 2017:

2017: How We Paid Off $57,000 in Student Loans

In February 2016, we made it a personal mission to put our heads down and set out to pay off close to $300,000 in combined student loan debt.

Needless to say, it was an amount of debt that at one point, we never thought we could ever dig out of. Six figures worth of student loan debt no matter how much you make is crippling.

Now, fast forward two years, and I am sitting here writing about how we were able to knock out $57,000 in student loans in just 12 months.

Paying off the debt of any kind is a step in the right direction, but knocking out over $50,000 in student loans in one year doesn’t happen without a progression (If you don't have a six-figure debt problem as we did, don' be afraid to hustle and see how you can make and get $100 now to help you!).

Is having student loan debt a problem?

A couple of months back I wrote an article on the things I wish I did differently right after graduating from college. My biggest recommendation in that article:

Pay off your student loan debt as fast as possible!

Student loan debt was a 1.3 trillion dollar problem when I started writing about them. Fast forward to today (2019 update) and they’re at $1.6 trillion. To put that in perspective, prior to enrolling in college back in 2005, college debt was about $250 billion.

The 600% increase in student loan debt, in less than 15 years, has many student loan borrowers much like us asking, “Can we ever pay off our student loans?” 

Well there is hope.

Over the last 22 months, my wife and I have made it our mission to pay off our student loan debt. The good news is we paid off over $57,000 in 2017 alone. Even better news – the average graduate only has $37,000 (I say only, that is still a lot, but not like multiple six figures).  

Believe it or not, you’re only a short year or two away from paying off your loans with just a few simple tweaks, here is how! 

How We Paid Off Our Student Loans

Before I show you the breakdown of how much student loan debt we paid off, I like to point this out – my intentions are to never come across as bragging.

Trust me, I would much rather tell you we put $57,000 towards savings not towards our student loan debt. I will also be the first to tell you that while rewarding, paying off student loan debt is challenging at times, and it takes patience.

Now, with that being said, here is the month by month breakdown of how much we paid towards our student loans in 2017:

As you can see in the chart above, we paid quite a bit of money each month in order to be able to say we paid off $57,000. 

Our goal depending on how the extra bi-weekly checks fell each month was to pay somewhere in between $4,000 and $5,000 each month towards our student loans.

Our biggest secret wasn’t really a secret, we just got really good at delaying our gratification.

Delayed gratification is magical…

Delaying gratification is something you can develop in a relatively short amount of time. To start, you just have to:

1. Be honest about your situation,
2. Realize that if you don’t act nothing will change, and
3. Start slowly reducing spending that isn’t getting you closer to your goals.

In 2016 we didn’t scratch the surface of being able to pay off $57,000…

In 2015, we made a total of 5 extra $100 payments. Like anything that is new to us, there is always a progression. The biggest piece of advice I can give is to just take some action, assess how you’re doing, adjust, and then take more action.

Also, develop a HUGE WHY (Figure out how to reward yourself when you accomplish your financial goals like 5 vacations in one year! See #4 below).

Why did the student loan payments vary?

As you can see, there were some months where we paid $3,000 and others where we paid $8,000. 

Just like you, we had life come up. For example, in March the student loan interest capitalized, the paperwork for income-based repayment had not been processed so we owed more on the monthly minimums.

In April I had an engine failure and bought a used Kia while the recall was done on my Hyundai. Two months later I was able to sell the Hyundai and put the cash towards extra payments in June.

Over the summer we also had to take care of some family matters that required income. My point is this, no matter what, even though we were not as consistent as we like, we still always kept the goal in front of us.

Once you have a clearly defined goal, ala paying off debt, saving, or maybe just getting on a budget, you will find a way to make it happen!

So here are a few suggestions, tips, pieces of advice to help you if you want to pay off your student loan debt as fast as possible.

1. Shift your mindset about student loan debt.

If you haven’t read our story I suggest checking it out here, but long story short we started with $300,000 worth of student loans. We were once kicking the idea around of just paying the minimum and using the Income-Based Repayment option, or IBR,  for the next 20 years (With IBR you can apply to have the remaining balance removed after 20 years, you are taxed on the remaining balance because it is counted as income). 

Paying the minimum didn’t sit well, what is worse, that was the recommendation we got from quite a few people, see #3 below.

Not sure if anyone has heard the horror stories about IBR or even worse PSLF, but public service loan forgiveness might not be as awesome as some thought. A U.S. News poststated PSLF could be eventually cut and in 2017 nearly half of the 700,000 initial enrollees were disqualified due to small bureaucratic infractions. 

As we saw the interest accruing every month we quickly realized we needed to do something about our student loans. Not to mention, we signed up to go to college last time I checked and we were not going to wait until our late 40’s to hear some news that our loans were not going to be forgiven. 

2. We Got on a BUDGET.

The next thing we did was we got on a budget. Simply put it is the most underrated personal finance tip of all time. A Gallup poll shows that over 6 in 10 Americans do not use a budget. 

With 78% of people living paycheck to paycheck, the sheer fact that only 1 in 3 people use a budget is just crazy. If someone were to ask me how much money I spent on something I would know the answer.

Just looking at our loan payoffs from last year, we realized we needed to get more consistent. We made a decision to use my wife’s salary for student loans, my salary for living expenses.  

It is just what works for us. The pay yourself model keeps us consistent and on budget. 

3. Stop All Comparison

Lauren and I quickly realized if we wanted to pay off student loans that were in the six figures we could no longer compare ourselves.

Just like that, we stopped. We did not worry about the size of our wedding, the cars we drove, or the house we lived in. Long term we knew we could do more if we did not have to worry about debt.

If you are caught up with constantly trying to keep up it will be more challenging to pay off debt. Like anything, you might have a few fans and a few haters. In the end, you just need a clearly defined why.

Which leads me to my fourth and final point when it comes to paying off debt.

4. Start with WHY to pay off your student loans.

Why are you paying off debt?

Are you like us and want to have more freedom and control?

Or are you looking to buy the home of your dreams but you can’t do it because your debt to income ratio is all screwed up.

I recently read a story about a couple with $600,000 in student loan debt! They have a goal of paying off by 2021… but their work is cut out for them. But I have no doubt they will get there because… THEY WANT TO. 

Like us, they have a reason to pay off their debt. Once you figure out your reason, you will stick to it and nothing will throw you off course.

Final Word on Student Loans from 2017:

At the end of the day, we all just want options.

Most of my life the idea of being told what to do has not sat well with me. Being saddled by debt, whether student loan or consumer debt, takes away the freedom of choice.

I want to travel, I want to have a wife who stays at home with kids, and I want to say yes to our kids more than I say no. Our WHY is crystallized. It is what motivates us to payoff $57,000 in student loan debt in 12 months. Our motives are clear and they are the reason we aim to pay off $100,000 this year alone.

You never know what can happen when you set your goals high and put your backs against the wall! As always, hope you enjoyed it and thanks for reading.

March 2018: How We Paid $17,152 in Student Loans in One Month

In one month we managed to pay down $17,152 worth of student loans.

Yes… you read that correctly. We paid nearly half of my first ever salary in student loans in a single month. 

Now bear with me for just a second, because truthfully this is not normal. In fact, it is 100% abnormal for us too. 

Truthfully, I could also see how someone paying over $17,000 in student loans in one month might be completely unrelatable, but just keep reading. 

How we paid $17,152 in student loans in March:

Truthfully, paying off a few thousand per month in student loans is unrelatable to us, considering two years prior just making a $900 monthly payment each month was killing us. 

If you have never read our full story, we started our marriage with over $275,000 worth of debt.

I will be the first to admit I was really torn as to whether I should even write about how we did it. However, I quickly realized that while maybe it might seem unrelatable to some, the fact that you can accomplish anything you put your mind to

Now keep in mind a few things before I go into exactly how we paid off so much in one month:

1. We typically pay an average of $4,500 – $5,000 per month towards our student loans
2. Our minimums are $1,200 combined per month
3. It is tax season and our tax refund was the bulk of our payment
4. We use a very unique approach since we had so much that I detail below
5. At the end of the day, you have to figure out ways to make extra money to really crush your student loans

At this might, you’re probably asking, where did all this money come from?

You need extra money to pay down student loans.

The way I see it, there are three goals to have when it comes to money (These 18 experts agree with me):

1. Save more
2. Spend less
3. Make more

Now, you can interpret those however you would like, but typically I find some will do 1 of the 3, a few will do 2, but very few will do all three. The most common one most will leave out?

Making more money.

We quickly realized that in order to pay down our student loans as fast as humanly possible, we needed to spend less and make more.

Here just some of the things we did so we could throw more of our income at our student loans each month but also make more money:

• Downsize cars – we drive Kias that are paid off, sold my brand new truck.
• Wedding- we had a small wedding we could afford.
• Honeymoon & Vacations – none.
• Kids – none (Very difficult to delay on)
• Going out – virtually zero.
• Renting a room out in our home
• Eating out – on a budget
• Filling out surveys to make $100 extra per month
• Found niche side-hustles to make an extra $1,000-$2,000 per month
• Cut out all wasted spending

We streamlined almost every area of our life in order to be able to pay off $4,000-$5,000 worth of student loans each month.

We have essentially managed to live off my salary and use my wife’s to pay down student loans (It also doesn’t hurt that March was the month we got our tax money).

Breakdown of the payments we made towards our student loans.

As you can see our minimum payment to Great Lakes is $390.

Actually, there is another $790 that is deferred because we are paid ahead so much on that particular grad school loan. That just frees up an extra $790 to specifically target loans.

We managed to pay $40,000 ahead to put our loans in deferment using a HELOC (Read in full here). This drives the student loan principal down faster, thus saving $1,000’s in interest each year.

The whole process is really easy once you understand our interest and cash flow truly works. We just transfer money from our checking right to the line of credit as soon as it hits each month and this keeps our student loans in deferment.

As you can see we managed to use the majority of three checks and our tax refund to pay down our loans in March.

That random $12….. I seriously have no clue.

March was a good month paying down student loans…

I said it earlier, this was not normal and I am not sure if we can ever match this again.

But that doesn’t take away from the fact that we worked diligently for two years to be able to get to this point.

1. We got our tax return and because we own a home, another piece of real estate, have student loan interest, and a small business – so we typically have a nice return each spring.
2. It worked out that I got an extra check in March since I get paid every two weeks (26 checks a year). So we contributed both of Lauren’s checks and one of my checks.
3. Our side hustles pulled through, one of the best months ever. In addition to renting a room in our home, we also made over $2,000 with my digital marketing company. 

My take on student loans (In general):

While March was an awesome month, I personally can not wait until we no longer have student loans.

We are about 2 years away if things continue to progress. In 2017 I didn’t have a side hustle bringing in $1,000 a month (or more) and we didn’t have a blog (I would like to also add that blogging helped me make $5,300 in 2018, so it isn’t a bad source of income).

I think it is important to realize that not every month or year will go well. In the spring of 2017, we had a month where my car’s engine failed and our washing machine failed.

In March 2019, two days after my birthday my dog ate chocolate and almost died, costing $4,3000 – thank you emergency fund.

My point is that life happens to everyone. So while we may have had an awesome March in 2018, our March in 2017 and 2019 wasn’t so friendly.

But that is exactly why it is worth doing something now, so you can set yourself up to enjoy life later. For us, this means paying down student loans and becoming debt free.

So here is my parting advice:

Don’t get caught up in what others think. Be sure to never compare yourself financially and to do what is best for your situation.

If I read that someone paid off $17,000 in one month prior to 2016 I would have said it can’t be real. Just like I couldn’t believe some people made six figures in one month.

Remember to keep things in perspective and recognize that taking action is the key:

1. Start by setting a goal to increase your savings or debt pay off by 2% and do it automatically if possible
2. Have a goal to make sure 10% of your income is being saved or used to pay down debt by the end of the year
3. Get used to checking your finances and consider tracking your networth to motivate you.
4. Delay the good for 1-2 years and just see what happens
5. Think of HOW you want to live when things don’t go your way!

April 2018: We Paid Off $3,803

Hey there, in April of 2018 our goal was to have $5,000 in student loans paid off.

Did we hit it this month?

We actually fell short. As you can see in the title, we only managed to pay $3,803 towards our student loans this past April. This is on the heels of paying $17,153 in March. 

Our running total since March 5th, 2018 is currently $20, 956. 

While March may have been abnormal, April was equally as abnormal – just not in the way, we would like it to be. 

In April we paid off $3,803 in regards to our student loans. Not terrible, but not good (for our goals) either. Admittedly, we had some distractions and some expenses that took away from our ability to reach our normal goal of $5,000.

I explain in detail how much, however, leave no doubt we will get our goal in May!

And while someone might be reading this and saying I wish I could just make an extra $400 payment I hear you…. and trust me I have even been there.

I don’t like to sound like the old grandpa who said he used to go uphill both ways on the way to school every day, but believe it or not, prior to meeting my wife I was really bad with money.

Like AWFUL with money.

I had money coming in, money going out. Honestly, I didn’t have nearly enough saved for what I made and just about the only smart thing I did with my money was pay off my civic in 2013.

Then the dumbest thing I did was take that paid off civic and buy a brand new gas guzzling truck.

I didn’t jump into consumer debt, but I did know how to spend some money. Because I made more than most of my friends right after college (as a teacher mind you) I thought I was living the high life (I really wasn’t, I just thought I was).

So long story short – you can improve your financial position, keep reading!

Here are our student loan payoff goals:

So I realize that everyone’s goals are different. I also realize that not everyone has a student loan bill the size of a monthly mortgage.

In reading, you might be saying this really doesn’t apply to me. And true it might not. But at the same time, the thought process behind paying down debt is pretty much always the same.

However, one cool thing we do to pay off loans is equity optimization.  If you didn’t read my article making a one time $40,000 HELOC payment on our student loans you should check that out. 

We basically pay off huge chunks of student loans in $40,000 increments, then take our income and pay down that line of credit each month as fast as possible. It is what works for us and it is how we went from paying $17,000 in interest in 2016 to $6,000 in 2017.

Lauren and I have also become really good at delaying gratification and putting things on the back burner. Learning to delay some gratification will actually make you more motivated in many areas of your life.

Here is a breakdown of the student loan payments.

Not included in the above photo is our minimum payment to My Great Lakes, which is $390.

(Actually, there is another $790 minimum that is deferred because we are paid ahead so much on that particular grad school loan. That just frees up an extra $790 to specifically target loans or in our case pay down the HELOC).

Like I said earlier, we pay extra towards our line of credit, aka HELOC, and drive the line down as fast as possible to make another huge payment towards the student loans.

This actually makes it really easy, we just transfer money from our checking right to the line of credit as soon as it hits.

April was not an ideal month as far as student loan payoffs for several reasons.

While we were able to crush some student loans in March, April was a little different, here is why:

1.  Check timing – the timing of our checks didn’t work out so well in April. We are on a bi-weekly pay schedule (I wish I just got paid on the first of every month). Because of the timing more went to bills this month in the beginning.
2.  Unexpected expenditures: This happens to everyone. Just to name a few – $500 car maintenance on my wife’s Kia. $270 in personal property taxes for our cars for the year. $75 in pet meds.
3. Quality of life expenditures: $350 to fix drywall and paint in our kitchen (I elaborate on this below). $120 to have a cleaning service deep clean from all the drywall dust and dog hair from this spring. $150 eating out & $300 for a mini getaway.
4. Remodel costs – $230 in material expenses.

Our side hustles pulled through, $2,700 in total, but I saved some for tax purposes and actually put a lot back into Money Life Wax!

My take away for paying off student loans:

We all have good months and bad months. We all have great days and not so great days. We were not close to our goals and that is OK.

While paying someone $350 to paint our kitchen and fix the drywall I tried to do by myself may have not been ideal for debt payoff, it was worth it.

Typical Josh, I took on more than I could do by myself and at the end of the day, I needed help. Painting the kitchen by myself would have taken me forever and looked bad I am sure, and in the long run the $350 should come back to us when we sell.

If you have never done home remodeling (we hadn’t) you can not imagine the dust. It was everywhere even with plastic. Compounded with the dog shedding and the fact that we hadn’t deep cleaned our home in some time, we decided it was worth the $100 to just have professionals clean the house for us.

If you haven’t learned from most of my posts, my goal is to teach others to be debt free to have the choices to do what they want. 

Lauren and I value our time more than money, so we decided the $470 to have someone fix the drywall, paint the kitchen and then have the entire home cleaned was worth it.

I’ll be honest it felt great to say yes.

The quality of life expenditure is out of character for us and we spent a lot this past April. Part of my reason for writing a student loan payoff report is transparency. 

Sometimes I read people’s things online and see how well they are doing and I am like, “Man I cannot relate.”

Yes, we decided to splurge on dinner after a 3-month weight loss competition. However, we were still frugal – we bought $200 worth of gift cards for $150. So we still have another meal coming soon.

We also took a trip to Baltimore for the weekend and the hotel was $300 for the weekend and another $80 for parking. I think if I knew about the parking ahead of time I would have gone elsewhere.

Final Word:

Normally we delay delay delay. In fact, we have been delaying heavy for 2 years, and halfway delaying for another year prior.

But the point of delaying is to allow you to do what you want down the road. 

I must admit it was cool to just stroke a check to have someone paint the kitchen instead of spending a week doing it myself and then not being happy with how it looks.

The kitchen remodel will end up costing about $1,000 – but refinished cabinets, a new floor, the removal of the wall, a painted kitchen, new counters, and all the other features will help when we sell in 2021.

May 2018: How we paid $5,348 in Student Loans

With my student loan payoff reports, I like to include some cool tips about personal finance as well as share the fact that my wife and I are actually human and don’t always reach our goals. For example, just look at our March and April payoffs below and you’ll see a huge difference. 

In order to hold myself accountable and be wide open transparent with readers, I started writing down how much we paid off each month with regards to our student loan debt. 

Our bare bone minimum goal each month – is $5,000. Did we hit our student loan payment goal this month?

Just keep reading…

Our background:

We started focusing on paying off student loan debt in February 2016. We had an upcoming wedding, 2 car payments, and close to $300,000 in student loan debt. My wife Lauren and I quickly realized we needed to do a few things differently.

Since 2016, we have been able to pay off over half of our student loans. In 2017 alone we paid off $57,000.

How we paid $5,348 in May 2018:

Since March 5th, 2018 we have been able to pay down $26,304 worth of student loan debt.

In May we were finally able to get back on track and rebound from a lower April ( less than $4,000). We actually finished the kitchen remodel that cost $1,600 over the span of 5 months.

However, April was a heavy month in terms of the kitchen half-remodel, because that is when we bought most of the supplies and paid a painter.

And while someone might be reading this and saying I wish I could pay a painter and pay off more student loans, that is actually my biggest message with debt.

Pay off all the debt you can now, and you can do what you want later.

We have honestly delayed on so much over the last 2+ years and it was rather nice to just say… “Hey, let’s just pay someone to repaint the kitchen instead of doing a bad job ourselves.”

It helps that we got an extremely good price and he had to fix my mess up from the drywall :).

I realize that everyone’s goals are different. I also realize that not everyone has a student loan bill the size of a monthly mortgage like we do.

In reading, you might be saying this really doesn’t apply to me. And true it might not. But at the same time, the thought process behind paying down debt is pretty much always the same.

Payoff student loans, paying off cars – you name it – putting things in perspective is always step #1. Followed by really learning how to delay the good for the great. Then lastly, implementing some strategies.

For example, in order to pay off student loans we use equity optimization.  If you didn’t read my article making a one time $40,000 HELOC payment on our student loans you should check that out. Use my exclusive link here to learn about the program we used.

We basically pay off huge chunks of student loans in $40,000 increments, then take our income and pay down that line of credit each month as fast as possible. The HELOC is at a 4% interest rate, and the student loans are at 6% or higher.

(I really just love the above strategy because it has helped us so much. I actually reached out to the company’s owner to be an affiliate because more people need to understand how to leverage money against debt, instead of constantly being controlled by debt. Rant over).

Ok, Now to the May Payoff Report.

Here is a breakdown of the payments we made towards our student loans in May:

Not included in the above photo is our minimum payment to My Great Lakes, which is $390.

For starters, we got back on target in regards to paying off our student loans.  After paying all of our monthly bills and what not we were able to use Lauren’s income to throw some significant coin at student loans this month.

I would love to say that in a perfect world we just automatically take money from Lauren’s check and throw it right at the line we use to pay off student loans, but we are human. I think part of what is challenging to get ahead in life is when all the bills hit. 

We have done a good job of streamlining most bills – but it is not always up to you. Which is one reason why I think money slips in between the cracks so often. You have to stay on top of every dollar and every bill, which can be a chore in itself at times. 

This month we have very little “financial distractions” as I like to say. Two wedding gifts and a graduation gift. Other than that – we won’t have any painters or cabinets to payoff. 

However, like everyone else we got some sort of bad news this month….

Our income-based repayment plan, or IBR increased and took our loans out of deferment… all in the same month. I will touch on this in the takeaway portion below, but this was a huge bummer.

My Takeaway when it comes to Student Loan Debt:

Our goal is to pay off a lot more so we can just be done with them. I made a pretty bold claim on my 31st birthday that we would pay off $100,000 worth of debt in 365 days.

That is our goal and we are going to try our best to hit it.

But when it comes to student loans, my big push is to pay them off. In some cases it could be more reasonable to invest and pay minimums and make it all work, but honestly, that is few and far between in most cases. 

I alluded to the fact the income-based repayment plans typically increase the amount of interest you owe over time, thus you end up paying more if you don’t have PSLF work in your favor!

I understand why they went up… hence the income based part, but the deferment thing stinks. We had used our HELOC to pay significantly ahead on the big graduate school loans. That allowed us to take the $790 minimum each month throw it at the line of credit. 

Now we have $1,200 worth of minimums that we can’t dictate where they go. For the most part they just go to interest. 

Reasons like this are exactly why we don’t trust PSFL, IBR, you name it. I wrote in full detail about possible changes to public service loan forgiveness here. The most disheartening thing is that colleges market to people things like, “Get a degree here and then just pay minimums for 10 years and get it forgiven.” 

Let’s face it – this is a multi-layered problem and student loans is so different for every person. But I will never forget when my 60-year-old aunt told me that a college, “Wanted her to come get her criminal justice degree.”

There are people that know nothing about college and get excited about the opportunity to earn a degree. And they should, but not at the expense of taking out loans at a for-profit college!

A college degree is many things – rewarding, fun, exciting. What a college degree shouldn’t be is a death trap for your financial future. More emphasis and honesty with degrees and programs of study would be a great start. 

Awareness is key! In the meantime, we are paying these bad boys off!

Fall 2018:How We Paid Off $44,000 in 75 Days

Whether you have student loans or not – you are closer than you think from being debt-free, saving more money, and putting more towards your future, just keep reading….

My only goal is to share. 

This last 75-day window was abnormal, for a few reasons. But in starting, here are some of my recommendations to really help you get the most out of this post.

Here are a few recommendations before you get started:

1. Write a few things down that stand out to you
2. Use the Shopping Cart Method – Take what you can apply today, leave what you don’t use or maybe don’t like. Everyone has their own perspective. 
3. Second, if you are looking to refinance your student loans, I would wait.
4. Realize that some of this might not be where you are. For us, paying student loans is our sole focus right now financially. If you like investing keep doing that. The keyword in personal finance is personal.

September, October & November 2018 Student Loan Payoff total: $44,760

My Great Lakes Payment Totals:	$24,699
Pen. Fed Student Loan Payment Total:	$1,230
HELOC Payoff Totals:	$18,829
Total:	$44,760

To say that September, October and thus far in November were good months would be an understatement. However, there is a reason why we paid an abnormal amount, which I will explain.

So you can understand that table, I have attached screenshots of our accounts.

My Great Lakes is our student loan servicer for one loan. And as you can see below, we dropped balance from $72,687 to $47,988.

Next, I think it is important to point on this HUGE change for us – we refinanced out student loans. We only refinanced 50% of the balance at the time.

This worked out great considering Penfed is the company we run our HELOC and checking account through.

The refinanced amount totaled $78,000. The current balance is at $75,000. I aim to come back to refinancing student loans in a second.  

Here is where things start getting a little weird… so I don’t want to lose you.

We do something extremely different than most. We leverage the equity in our home, ($40,000 of our equity at time) to pay off student loans. Sounds crazy, but its not really. Because it is not about rates, it’s about principal balances.

This concept of leveraging dormant assets, aka equity, to pay off huge amounts of student loans has revolutionized our payoff plan.

Our goal is to take as much extra cash and payoff the HELOC as fast as possible. Thus dropping the balance in 6-9 months to then wash rinse and repeat. For the fall of 2018, we actually drew some out of the HELOC as you can see in the screenshot below:

The reason why you see the balance drop, jump up, then drop again is because at times we will draw from the line to pay off our credit cards. No, our credit cards are not run up on stupid stuff, we put everything we can on them so that we get tons of cashback rewards.

We also streamline everything as much as possible to keep the balance in the HELOC as low as possible at all times.

This month we did two things differently though. The early September Advance of $3,400 was actually used to pay the new Penfed loan down from $78,000 to $75,000. Why??

Well because we wanted to get the loan into deferment (until March at this point) so we could take the $615 each month and throw at our HELOC.

Did I lose you yet? Keep going…!

I hope not. While I find this entire thing interesting and amazing, in fact one reader has started implementing this same concept with his mortgage and it looks like with in a few years he will be mortgage-free.

If you want to readup on how I learned this concept visit Truth in Equity or check out my blog post on leveraging $40,000 to pay off student loans.

Cash is king.

When it comes to making significant student loan payments on six figures worth of student loan debt you have to realize that emphasis on cash flow is more important than interest rates.

Some people will argue tooth and nail that interest is so important – and while yes it is – cash flow is imperative!

When roughly 65-90% of the student loan payment is going towards interest, it is not that interest is killing you, it is the principal balance. Throw in income-based repayment plans, and sometimes 100% of payments go to interest and nothing touches the principal.

All the unpaid interest capitalized and gets added to the principal balance!

At the end of the day, if you are saving $50 hear and there and lowering your payments, in the grand scheme of things if you are not paying the principal down rapidly, it really doesn’t matter. But that happens to be what has worked for us. And as you can see…

We are paid ahead pretty nicely:

January 1st, we will implement another $40,000 HELOC payment, not sure whether we will drop the $48,000 loan or the $75,000 loan, but we got some time to decide.

Sold Real Estate, Used the Money to Pay Off Student Loans.

So while we use our HELOC approach, and we delay gratification, at the end of the day we had such a huge fall because of one thing: we sold some real estate.

The net proceeds from selling a parcel of land I purchased with my brother some 4 years ago netted us $34,000 that we threw at our student loans.

In March we paid off $17,000 with our side hustles, tax return and incomes doing well. Just March and October alone allowed us to payoff $51,000 in student loans.

However, for the coming future we will be right around our normal $4,000-$5,000 per month payoff. Which, if we are being serious is still a crap ton of money considering 3 years ago we maybe had $1,000 laying around that was discretionary money.

Like everyone life happens to us too. We had over $1,000 in car expenses come up suddenly after getting a routine inspection. But we drew it form the line of credit.

I also increased my roth IRA and 403B contributions in September after getting a raise. I figured we had everything streamlined, why not just take the new cash and throw more in our brokerage/retirement accounts.

My take on student loans. 

When it comes to student loans, everyone and every situation is unique. I don’t have student loans, my wife does. But when you get married they become OURS.

So we choose to pay them off. Some people say what the heck, pay the minimum and continue on with there life and don’t change much.

This might sound crazy, but I am glad we have student loan debt.

I wish the number of student loans wasn’t multiple six figures, but I am glad we have learned how to take advantage of assets, lose liabilities, and delay our gratification.

My wife and I have never thought more long term then we do now. Our thirties are looking good…but we made changes in our late twenties… !

So I hope you enjoyed if you found this useful, feel free to share it with someone who can benefit.