I'm excited to welcome Jane from Jane Saves to share some of her debt payoff story and what she has learned! I'm always inspired to read about people paying off big debt! If you would like to share your own debt payoff story, check out my guest post submission guidelines! Take it away Jane!
I hit a monumental milestone recently. I pressed “pay now” to submit my FINAL payment for my student loans that totaled more than $45,200 two short years ago.
After seven years of paying the minimum balance, I had only hacked away 35 percent of my student loan balance. The thought of having the loans hang over my head for another decade was nauseating. I felt trapped.
Thanks to an opportunity at work that created a “bigger shovel” (as Dave Ramsey refers to additional income), my husband and I went all-in to pay off the remaining balances on all of our loans.
I was able to pay off my student loans of $26,200 in 10 months. Then, we paid off $19,000 from my husband’s graduate degree. I don’t say this to brag or boast. But I want to share the amount to let you know that we weren’t dealing with a pretty, little student loan.
Our loans were big and ugly and took major sacrifices to destroy. No cable, downgraded cell phones, no gym memberships, very little dining out, cheap coffee at home and many (many, many, many) tears while transporting my young kids to and from their preschool when I just wanted to be home with them. (Which I am now. Woot woot.)
I’m living proof that there is light at the end of the tunnel – even if your tunnel is very long!
To commemorate my journey, I want to share 5 things that no one told me about paying off student loan debt. (So you won’t be shocked like I was!)
1.You’ll be in denial. It won’t feel real.
If your student loans have been lurking around every corner as long as mine, it may take a while for you to wrap your head around the fact that you are student-loan-debt-free. I pressed submit on the largest loan several months ago and it still doesn’t feel real.
I honestly thought about my student loans every single day for the last decade. Actually, longer than that because I thought about student loans in high school knowing that I was on the verge of going into debt to pay for my education.
So for fifteen years those pesky loans were taking up important real estate in my head and now, they just don’t exist anymore.
It is a very surreal experience and a relief that can’t really be put into words.
2. The last and final student loan payment will be very anti-climatic.
Student loan companies won’t celebrate with you when you pay off your debt. Remember in solitare when the cards cascaded down the screen when you won? Now THAT was what I was expecting from my loan company. After all, we had been working together since 2003 when the first payment was dispersed.
Some months, I had more contact with my student loan company than friends with our monthly payment dates. And now, my student loan company couldn’t even produce a pop-up – “Congrats! Your loan is paid in full!”
The last payment will just be another payment. Of course, we all know that student loan companies don’t want you to pay off early. They lost years of interest on me. And I’m okay with that!
My advice from the “other side” is to expect nothing. And plan a celebration for yourself later. 🙂
3. Your Student Loan records will vanish ASAP. (So, save a record of your payments to remember your accomplishments!)
Not only did the loan provider NOT celebrate with me when I paid off my final debt, but they completely disabled the “Payments & Billing” section of my website.
How rude! Of course, I did not want to be billed again, but I did enjoy looking at my “Payment History” to see how far I had come over the past year. Make sure you screen capture your own progress before the record of your hard work disappears.
Luckily, I had taken screen grabs before to capture my progress.
Look at all those $1,000 payments! Woo-hoo!
4. Your credit score may go down.
The month after my final loan payment, I logged onto my Credit Karma account and expected my credit score to go up. After all, a final payment should be a measure of the highest achievement between a lender and a debtor. (As you can see, my knowledge about credit scores was limited!)
I do know that on-time payments help your score go up because you’re deemed a trust-worthy debtor. So wouldn’t a final payment be very good? Like, add bonus points to your score or something? Unfortunately, my student loan company changed my loan status to “closed” and my credit score fell from “excellent” to “good”. For the first time in our journey, I had an “a-ha!” moment. Lending institutions and credit card companies do not want you to be debt free.
5. You will realize that paying off a loan early didn’t happen to you. YOU had to make it happen to the loan.
When I graduated, I always thought, “I will definitely pay this off early.” (The same lie we all tell ourselves to justify debt right before we signed a loan agreement!)
But, it just never happened. Month after month, I submitted a several hundred dollar payment and watched the balance remain high year after year.
We’ve all heard that you have to tell your money where to go and it is so true. You need a concrete goal and a reason NOT to go to Panera for lunch, grab that cute shirt on sale at Target or buy that mocha cappuccino. Every single month I knew the exact amount of money that I wanted to pay to my loan. Even then, I didn’t meet my goal every month (okay, most months), but I steadily made progress. And now, my loan is completely paid off and student loan debt will never to “happen” to me again! Adios!
How about you?
- Have you paid off a really big chunk of debt? Did you encounter anything unexpected?
Jane and her family were able to pay off $81,400 in consumer debt in a little over 2 years through a combination of good old-fashioned frugality and flipping a fixer upper. She blogs about saving money in creative ways at JaneSaves.com
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