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If you think paying off $80,000 worth of student loan debt in three years is impossible – you need to meet Lance and Tori Cothern.
While Lance managed to get through school without going into debt, Tori graduated with a nursing degree with over $80,000 in loans. When they married, they decided that they wanted to pay off her student loan debt as quickly as possible and worked together as a team.
In the interview below, Lance tells us how they did it and how you can accelerate your repayment as well. Lance also created the blog MoneyManifesto.com where you can learn more about their student loan repayment journey.
How Did You Pay Off The Debt So Quickly?
We did a few things that really helped us pay off the student loan debt quickly. First, we continued living like college students as much as possible. Most all of our furniture was hand-me-downs and some rooms in our home were very sparsely furnished.
We kept a strict spending plan and spent very little money on ourselves during the repayment. We had about $50 every two weeks for our fun money. Everything else went toward the student loan debt.
We also focused on making more money. I started a blog which sometimes brought in thousands of dollars per month. My wife would also work overtime shifts at work when possible to earn some extra money to put toward the debt.
Did You Have Any Major Setbacks?
We have a couple of major setbacks and a couple of other opportunities we took while we were paying back her student loans.
Unfortunately, Tori had to have foot surgery which kept her away from work for quite a few weeks. Luckily, she had short term disability through her work, but it only covered a percentage of her normal income. Since we were putting so much money toward the debt repayment, we didn’t go into debt but we couldn’t pay quite as much on the student loans.
A few months later we found out the foot surgery failed and she had to have a second foot surgery which caused similar problems.
Also, along the way, we decided to buy our first home and then 18 months later we decided to buy our long-term home while turning the first home into a rental. That took up a lot of cash that we could have used to pay the debt down even faster.
What Advice Do You Have For Others With Significant Amounts Of Student Loan Debt?
$80,000 is definitely a ton of student loan debt. We were frustrated and overwhelmed in the beginning, but we did a few things that helped us figure out how to make the best of our situation.
First, we completely understood our situation. We made a list of every loan my wife had. We looked at how much was owed, what the interest rate was, how many payments were left, if the interest rate was variable or fixed rate and any other information we found useful.
Then, we quickly found out one of the high interest student loans was by far the worst loan and decided to pay that one off first. So, we put all of our extra money towards it.
After we figured that out, we had a game plan and knew exactly what we needed to do to begin paying down the debt.
Then, we just had to make as much money as possible to pay off the loans as fast as possible.
How Did The Student Loans Affect Your Relationship?
You won’t think it would be the case, but the student loan debt brought us closer together. I knew about it going into the relationship, so once we started paying it back it gave us something to work towards together.
It also helped us get serious about our finances early on in our relationship. Being on the same page financially has helped us avoid the most common fight in marriages: the money fight.
What Do You Wish Other People Knew About Student Loans?
We wish people knew how the student loans they are taking out will affect their future finances. People should have to calculate how much interest will accrue while they stay in school and what the payments will be when they graduate.
They should know roughly how much money they can expect for a job in their desired field and if that income can cover the student loans they are taking out.
On top of all this, people should understand the ins and outs of all their options. People should know that you can shop around for private student loans if you have to take them out to cover your education. You have a chance of getting a pretty low interest rate as a result. Additionally, you should know how to consolidate federal student loans. You could end up consolidating your loans with a private lender and not even realize it doesn’t help – only qualified applicants might benefit from these private student loan consolidation rates.
>> Read More: How to consolidate student loans
For instance, there are two options for student loan consolidation with both the private market as well as the federal government. One of them saves money while the other may end up costing more. Both options can be useful, but if you don’t know which is which or how to go about either, then you may be in for some trouble and confusion. These are just a couple of simple questions that most student borrowers should know.
Author: Dave Rathmanner