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Tuesday, September 14, 2010

Twenty-Eight and Debt Free

Thank you all very much for your sweet comments and congrats on baby Luc's birth, and your birthday wishes for me! Tomorrow is actually my birthday. I'll be 28 and debt free. That is, I'll be student loan free!
Tonight I'm writing the last check to Sallie Mae to totally pay off my student loans. I graduated in May of 2009 and licensed as a pharmacist at the end of June. I started work in the middle of July and got my first paycheck in early August. It went straight towards my student loans. Now, less than a year since my first payment was due, I'm totally paid off!
How'd we do it? Trial and error and mistakes and clever tricks and smart saving!
What was working against us:
- I took the long route through school, changing my major from art to pharmacy and losing oodles of credit hours that I paid good money for.
- I went to private colleges for most of my school, only spending four semesters at state schools out of 8 years of school.
- My family has a million kids and could not afford to give me a dime towards school, living expenses, etc, so I was literally on my own. Yet I still had to apply for grants using their financial info, so I was ineligible for any Pell grants or even work-study aid or "need based" scholarships.
- Because I was homeschooled, I missed out on a state program called TOPS that awards students free money for going to college in-state. Only homeschoolers who are part of a certain program are considered eligible. It is also tough for homeschoolers to get certain scholarships.
- I took out loans at the historically high rate of 6.8%
What was working for us:
- We're lucky enough to have two salaries. However, do not think all lawyers are rich! They're not!
- I am very cheap.
- I've always been very cheap.
- I was able to win scholarships every semester of school, some bigger than others, but all helpful.
- I didn't take classes I didn't have to. If I could test out, I did. I CLEPed 8 hours of trig and calculus and took departmental exams for English, history, and sciences. I saved over $5000 by testing out of 17 hours of classes.
- I am a workaholic and I require little sleep. Plus I am one of those "deferred gratification" types. I did not mind being miserable and working my tail off in school so I could live easy later ;-)

Here's a step by step of exactly how we pulled this stunt, money figures included. TACKINESS ALERT!

1. While in school, as mentioned, I entered every scholarship application I was eligible for and tested out of every credit hour that offered a test option. Most of my scholarships were small (from $500 to $5000) but added up, it made a big difference. Never hesitate to apply for a scholarship or take a CLEP test!
2. Also while in school, I worked full time. That includes pharmacy school. Yes, it can be done! I actually had two jobs; one was a night job with an hour commute. I earned over $20,000 a year every year of school, breaking $30,000 twice. I picked up every extra shift I could and saved every dime for school.
3. I pinched pennies. I ate cheaply (lots of canned beans), drove an old car, and shopped at thrift stores. I never spent a frivolous cent. During finals, I'd allow myself a one-time treat of Starbucks coffee. Plain coffee. If I did the math and I was running short on cash for my next tuition payment, I'd skip meals. I was poor but focused!
4. I invested. Much of the year I had extra money that I was saving for my next tuition payment. I put all my money in CDs or money market funds to earn interest.
5. I did not take out any private loans.
6. I did not take out many federal loans, either! Since I worked so much, I was 6 years into school before I had to take out my very first loan. Even then, I didn't HAVE to take the loan out; I took it out because I was scared from Katrina and wanted a financial cushion. Plus since your last year of pharmacy school is clinicals, you can't work as much and I knew I'd have to decrease my earnings. I took out under $60,000 total - and I was at a school that is $27,000 a year just for tuition. We actually took out more than we needed and used the extra to pay off a higher-rate private loan of the hubby's. Clever!
7. Once I graduated the hubby and I tightened our belts and lived off his salary only. This whole time I'd payed all my expenses myself. We got married with 2 years left to school, but I wanted to be responsible for this burden myself. So every dime of my salary - except my car insurance payments - went straight to my loans.
8. We didn't buy any of the awesome stuff people buy when they graduate: house, fancy car. So not worth it right now.

So now, we're debt free! By paying off my loans early, we saved $20,000. I am beyond thrilled and can't wait to treat myself to the big extravagance that I've been promising myself throughout all those hard years of school...
Laser hair removal! Ha! Yes, I am sick of shaving my legs!!!

:) Sorry this post is long but I wanted to share my good news and hopefully some tips for students out there - or loan-payers! You can do it!!!!


  1. Impressive! I wish I could put more of my paycheck toward paying off my loans, but my husband isn't currently employed, and we were both unemployed over the summer....

    Happy birthday!

  2. What a great feeling! We're the same way...I hate paying interest on anything and once you see how much you are saving by paying down as quickly as possible, it feels great!

  3. Wow!!! That is so awesome!!! Happy Birthday!!! Laser hair removal is the best!!!! I will say and they better tell you this, if children are in your future you will have to go back at some point. But I promise it's totally worth it!!

  4. Hi Grace,
    I've never commented before, but have been a longtime reader and always enjoy your posts. Having just graduated from law school, I wanted to say a big congrats on getting your loans paid off so early! At this point I really can't even imagine the feeling, but it must be amazing!

    Enjoy your birthday!


  5. CONGRATS and Happy Birthday!!!!

  6. That's awesome! Congratulations!

  7. YAY for you!

    I'm a "banker's" daughter so this debt free thing was beaten over my head all my growing up years. SO happy it was!!

  8. Thank you all and Erin, thanks for saying hi...and congratulations on graduating from law school! You'll be paid off before you know it. And I hope you rapidly become one of the RICH lawyers! :)
    Charbelle - I really need more laser info and advice. I still have to do my research. Should I go to a dermatologist or just the best deal??? Share, share!

  9. Emz: Good for you, for sure! I'm petrified of debt. I mean, I live in mortal terror of owing any man anything. I'm actually completely debt-free under my name but we still owe student loans for hubby; his rate,however, is 1.8% and is currently beating inflation so we're not too inclined to do a quick pay off. I'd still feel better with it paid off though!

  10. Seriously, I am SO IMPRESSED. How many years of college did you live like that pinching pennies (not eating much when tuition was due)? That is so impressive that you paid them off so quickly. I'm just proud that I'm able to make the monthly payments and occasionally send in an extra check. I have seen the loan amount go down the past few yrs so that's nice. Slowly chipping away.

  11. Awesome! I'm glad to hear you owned your responsibility of paying debts. You'll be so happy and it says a lot about your character. My husband and I both paid for our own college and both worked double jobs while doing it. It can be done and we didn't owe anyone anything and still don't--It's a good feeling.

  12. Holy. Moley. I am uber impressed. Being debt free at 28 is AMAZING. i probably won't be student loan debt free at 38! But hopefully by 48. Ha. Grad school cost me a pretty penny... and I did not live as frugally as I could have (aka I traveled alot in my 20s). But oh well. I get anxiety attacks when I think about my student loan debt sometimes...

  13. Yay for you! That's fantastic. We've been through financial hell and back again, and now live on cash. If we don't make it, we don't spend it. It's not easy, but it's SO MUCH better.

    And happy birthday!

  14. Happy Birthday and congratulations!!!