How I Eliminated Significant Student Loan Debt
First and foremost, it was not easy. Debt payoff typically isn't.
The reason it is difficulty is because you have already spent money that you do not have. That's the way debt works.
It's confusing for most of us, especially the frugal-hearted.
We are all told we need to achieve the "American Dream" and are all led to believe that a college education is a must. That's a myth I plan on diving into further in future posts.
How did I accrue $96,000 of debt?
Actually, this is only the amount that I paid for graduate school. This amount doesn't even include the amount I paid for undergraduate.
I got to this amount because I became a doctor of physical therapy. As a DPT, we go to 3 years of schooling, during which you are not supposed to work.
Well, too bad because I chose to work full-time anyway, despite these "school regulations".
At the time I worked as a personal trainer. Being a personal trainer is actually quite a lucrative gig, but the hours are typically not that sexy.
For nearly 3 years straight, I would open one studio at 4am up to three times per week, and 4 times per week close a local health club at 10:30pm. Throughout the day I would travel from studio to studio, gym to gym, day after day.
During the weekends, I went to school all day, both days. Work during the week, school during the weekends. 3 straight years. Rinse and repeat.
Sound like fun?
Well actually it was. Let me explain.
The truth about debt payoff
See, it actually was fun for me.
I am very competitive person. I turned debt payoff into a game. If you have a significant amount of debt, especially student loan debt, I suggest you do the same.
You have to game it out. You need to be aggressive. You need to be a machine. Become an "animal" in the process and set your sights on what needs to be done - debt payoff!
Debt payoff is literally the goal. Debt is the enemy.
During debt payoff, there should be little else on your mind. You need to get focused. Do the math. Find out where your money is going. Calculate your life energy and where it all goes.
If you want a very detailed, impossible to beat formula for how to calculate your real hourly wage, you need to read Your Money or Your Life immediately! This will help put your hours and dollars into perspective.
My success in paying off debt is actually due to Dave Ramsey's Total Money Makeover book.
After reading this book I understood how to become focused on the objective. The only thing that mattered was freeing up as much money as possible so that it could all be used to aggressively pay down this student loan debt.
Every extra dollar, whether it be cost cutting or selling shoes on Craigslist, needs to be contributed to getting this toxic debt out of your life once and for all.
How exactly did I payoff $96,000 of grad school
Truth be told, I paid for some of it along the way.
For the exercise-minded folks out there, personal training can be a lucrative gig. In 2012 I was actually averaging a little of $30/hr as a wage. The lowest wage I got was from a health club making $12/hr, however having this experience on my resume allowed me to land some gigs as a personal trainer in a private studio paying up to $60/hour.
The cost of school was about $30,000 per year and I was making a bit over that.
However, at the time, I also had other expenses including but not limited to: insurance, utilities, groceries, cable/internet, phone, fuel, maintenance, and some miscellaneous expenses such as laundry, travel, occasional entertainment, and a few other odds and ends.
Notice what I did not have: car payments or housing payments. I did this on purpose to free up as much money as possible.
The way I was able to avoid housing payments is I stayed with my parents for 2 of the 3 years in graduate school. In the third year of PT school, I moved into an apartment where I negotiated an agreement to trade labor/maintenance on the building itself as a rent payment.
Move back home. Get a roommate. Negotiate a bartering agreement. Airbnb.
The way I avoided toxic car debt was I drove a '96 Toyota Camry with 200,000 miles that I paid for in cash. Get a grip. Unless you have extreme concerns about safety ratings for a family of 5, swallow your pride and drive a cheap used car. Period.
If you already have a new car or car payments, call the dealer immediately and see what you can get for it. Decide if the amount you get offered is worth cutting bait and getting out of that monthly payment to free up that extra 200, 300, or even $400 plus per month to hurl into that debt.
My final year of PT school I needed to take out loans because I was on my clinical rotations to finish my doctorate.
I borrowed $34,620 the final three semesters. I did not need to look this figure up. I remember it because it was a focus of mine everyday. It was part of my game. It was part of my life.
When I made that final payment I realized that I had the option to do whatever I wanted with the extra money that I was using to pay the debt. Of course, I also saw a dramatic increase my annual salary because I was a doctor of physical therapy at the end of graduate school.
What happens after the debt is gone?!
The choice is yours. Many people celebrate at this point. I didn't.
I chose to invest my monthly payments- that I was previously making to the school or federal lenders- into low cost index funds. Only 4 years later, I have a net worth (with my wife), of over $300,000 even with a massive correction in the recent financial markets (at the time of this writing, in 2020, the COVID-19 virus and shutdown is in full-effect).
I am not special. My circumstance is not extraordinary.
We paid for our own wedding, in full. I paid for my entire undergraduate, in full. My wife paid for her schooling, in full. My wife even paid off a brand new SUV approximately 4 years ago.
We paid for a lot, by ourselves.
I remember my best friend telling me how much money I would "make" by having a wedding. What I did not realize at the time is that he did not pay for his wedding.
Remember, focus on yourself. Eliminate the outside stories that other people tell you because you have no idea what their circumstance is. You have no idea if they had houses paid for. Weddings paid for. Travel paid for. Honeymoons paid for. Cars paid for. We had none of those. We paid for all of those ourselves.
Why would I tell you this? To brag obviously. No, that's not actually why I told you this. I told you about my story because I want you to write your own, equally extraordinary and unique story for yourself. It can be done. Find a way.
Make extra. Save extra. Cut costs. Get creative with housing and cars. Take on a second, third, or fourth job the way we did. Remember, it only has to suck for a little while until you get this debt paid off.
Share your story in the comments below. Let us know if this motivated and lit a fire under your ass to do better and get more aggressive. I write for you guys. I am telling my story to motivate you.
This is certainly not professional financial advice nor do I know what the hell I am talking about. That said, look at my results. They speak for themselves.
Until next time,
Dr. Jon is a physical therapist by day, and a dedicated frugalist by night, deeply enthralled in the thrill of "pinching pennies" and investing the margin.