You read that headline right. I paid off all of my student loans. And I went to graduate school. And it took me 2 years and 6 days to pay it all off.
Cost of Private School
Tuition for the University of Denver is currently $1,026 per credit hour plus fees, book, and other incidental expenses. The estimated total cost of attending is $91,994. When I was a student, I paid for everything out of pocket except for about $40,000 in student loans and an employer contribution of about $3,000.
I worked full time while I was going to school full time, and I made every effort to cut back on my expenses so I could pay for everything possible out of pocket. I even made payments on my student loans while in school to get a head start.
I used the debt snowball plan to pay my minimum on each loan and put everything extra into the one with the lowest balance. That gave me a victory feeling as the balances started to drop quickly. I had four loans total, a subsidized and unsubsidized Stanford loan for each year.
I found that I could afford to put $700 per month into my loan and did everything possible to hammer away at it and put extra income into the loan. My online income went to my loan on top of my $700 monthly payments.
Over the last two years, every dollar I earned from my annual bonus and every dollar from my tax refunds went straight to either my car loan or student loan payments.
Success in Sight
I set a goal on my life list to pay off my student loan in 2012. When I did that, I calculated exactly how much I would need to pay monthly to kill of my loans by the end of the year. The $554.83 plus interest seemed like a lot, but that is what led to my $700 per month plan.
I then used the goals feature in free web app Mint.com to track my progress. Watching the progress meter go gave me inspiration to keep the pressure on. I started to really look at wants vs. needs to find extra cash to put to the loan.
It was not until I calculated my annual bonus for 2011, which was paid out in March, that I realized how close I was to the end. On bonus payday, I clicked the button and my loan was gone.
Future Cash Plans
It feels like I am about to have an extra $700 per month. I have to remember, though, that I lived without it before and I can keep living without it. I have big plans for my money going forward.
Build Up the Emergency Fund
I feel like I am a bit financially insecure unless I have $5,000 in the bank for emergencies. I have $3,000 in the savings account now, and I plan to bump it up to $5,000. That gives me about 6 months of living expenses assuming I cut my spending to a minimum.
Pay off The Mortgage
Mortgage loan balance – $102,264.96. I am coming for you. Prepare to die.
Invest Like a Madman
I have never maxed out the Roth IRA. The maximum contribution is $5,000 per year. I am going to start a direct deposit from my paycheck for $192.31 to ensure I max out every year. Extra cash will go here to make up for the January-March deficit.
Anything extra is going to my regular stock account. I currently have shares of WMT, GE, and PM in the account with $100 in cash. Every time I hit $500, I am going to buy a new stock to build up a nice, diversified portfolio.
I was excited to hit the button to make my last payment. I felt liberated. I felt free. However, I felt the same. There were no fireworks. A band didn’t start playing an inspirational song. The debt was just paid. Now I don’t have to pay it anymore. Maybe when I pay off my mortgage, I can arrange an F-16 flyover?