My Plan To Eliminate My Student Loans – Crushing The Debt
Similar to many millennials, I have student loan debt. And similar to every millennial, I hate my student loan debt. I want to eliminate my outstanding student loans.
My plan to eliminate my student loans (aka take an axe to it or some other sharp object) is to ideally put that debt elimination on hyper speed in 2018.
I am grateful for the education I received because of this $34,000 debt and the many life experiences, adventures, and friendships I got along the way. I would never have moved across the country and met my amazing girlfriend if I hadn’t taken my specific career path and schooling.
However, every time I log into my bank account I am slapped in the face with the reminder of this debt balance.
It used to make me feel a lack of control over my finances and future, but I soon realized…the only one truly in control of this was me.
This is my plan to eliminate my student loans.
My original student loan balance once I graduated was $34,000. Rather than starting payments right away I took “advantage” of the 6-month grace period I had. During the same time frame, I accumulated more credit card debt and basically acted like a financial dullard.
At the start of 2016 I have my personal aha moment.
Since that moment I’ve made some small strides by consolidating this debt to secure a lower interest rate (it would save me close to $2,000 in interest over the full term of the loan, but that won’t be happening…this debt isn’t making it to then).
Also, after finally getting to a $0 balance on my credit card (F#$K credit card debt) I was also able to increase my total monthly payments.
With the 5% interest rate on my student loans, I feel comfortable also investing 12% – 15% of my salary every month to retirement. If my student loans had a higher interest rate, I would scale back those investments and go all out on the debt.
The wonders of compounding interest, starting retirement saving young(ish) and wanting to developing the investment mindset drive me to this hybrid kill debt and save approach.
But here we are in early 2018 and my plan to eliminate my student debt gets expedited with hustle and a vested effort.
The 2018 Plan
Okay, time to assess the situation and figure out the goal for 2018.
- BALANCE: Student Loan Remaining Balance Jan. 2018: $25,000
- GOAL: Total Payments Contribution Amount By Dec. 2018: $20,000
This will put me almost 3 years ahead of the original end date and allow me to move into the next stage of my financial life.
Here are the sources of how I plan to get that $20,000 contribution.
- Regular Biweekly Payments ($6,000) + Additional Monthly Payment ($2,400) = $8,400
- Spike Single Payments = $5,000
- Freelancing My Skillset For Additional Payments = $6,000
- Smaller Side Hustles For Additional Payments = $2,000
That’s runs to a total of $21,400. Above the $20,000 goal but I want to have some wiggle room incase of unforeseen expenses, slower months, etc.
Saving & Paying Off Debt
As I mentioned above…
I’ve made the decision to continue to invest in retirement as opposed to routing every single dollar towards this debt.
So with that said, I am going to take a deeper dive into each of these 4 categories of my plan to eliminate my student debt.
Regular Biweekly Payments + Additional Monthly Payment = $8,400
This is a pretty self-explanatory section of the plan to eliminate my student loans. As I mentioned earlier, since consolidating my debt into a lower interest rate, paying off my credit card and getting this kill debt mindset, I’ve been able to increase my regular payments.
- Original Payments: $167.67 biweekly (or $335.34 total monthly)
- NEW Payments: $250 biweekly + $200 additional at the start of the month (or $700 total monthly)
Outside of the changed mindset and killing my credit card debt, I’ve made some other cost of living savings to help me more than double these payments:
- Cable: $50 per month savings
- Groceries: $125 – $175 per month savings (wrote about this here with 13 Easy Ways To Save Money On Groceries)
Spike Single Payments = $5,000
Next up are a few larger sum one-time payments that I plan to use when those ‘spikes’ of cash do come in for various reasons across 2018.
What are these sources? Corporate bonus for the most part. Plus, one of my small guilty pleasures is Fantasy Football, this year I was lucky enough to 5x my investment for a nice ROI at the end of the season.
I should end up directing $5,000 total in larger one-off payments towards my student loans; a portion in February, April and September.
Not much else to say here outside of any larger sums incoming will go towards that debt.
Freelancing My Skill Set = $6,000
I estimate I have an additional 36 hours of feasible work capital available each week to earn additional income:
- Weekdays: 5AM – 7AM
- Weekdays: 7PM – 11PM
- Weekends: 8 hours per day
This could really be 60+ hours but I am not going to lock myself inside and direct every waking hour towards working.
That isn’t the lifestyle I want. I don’t think getting out of debt needs to include no social interactions, no pursuit of hobbies, R&R, time with your significant other, etc.
My baseline goal is to continue directing a minimum of 10 hours per week towards freelancing my skill set. This leaves a lot of room for growth to a higher figure but this plan to eliminate my student loans needs to be attainable and manageable.
So 10 hours is a nice target.
That should generate me approx. $1,000 per month (averaging $25 per hour after any fees) but to be safe I am estimating I can contribute $500 of additional freelance income towards my student loans.
That gives me the $6,000 target of contributions by the end of 2018.
What is the source of this income?
For the last 3 months I have been doing some freelancing on Upwork on the evenings and weekend. All the work I’ve secured revolves around my skillset and tasks I enjoy doing: marketing communications, social media management, content marketing, copywriting, Facebook ads, small business marketing strategy, etc.
I take a quality over quantity approach and don’t mess around with the low budget entry-level stuff or projects that draw dozens and dozens of applicants.
I’ve started with short-term projects so far and I try to research the prospective client as best possible through their reviews, money spent on the platform and any company info they share.
I still have lots to learn and am sure I could improve my process, but I will continue to use it and maybe write a more in-depth review in the future.
I would ideally like to make some stronger connections with respectable, ongoing clients that I could then take off the Upwork platform to continue the relationship.
Small Business Consulting & Digital Marketing
Similar to the last statement above, a goal of mine is to grow my freelance portfolio through small business consulting and digital marketing.
Building up consistent side hustle income through this avenue will go along way in helping me towards my future financial goals. Networking and improving pitches will be a key determinant in the success I will have in doing this.
Ideally I could secure 4-7 ongoing clients that deliver consistent work, are like-minded and easy to work alongside.
Smaller Side Hustles = $2,000
Last but not least on my plan to eliminate my student loans and crush my debt in 2018 are some smaller side hustles to help maximize incoming funds.
These are low investment level in terms of time, mind and money – easy to implement or perform to make some financial gains.
As I continue to seek out best practices and put some other side hustles into action, I will share updates.
So far I’ve seen great results from eBay.
As I’m sure you’ve heard from others, selling your excess, unused and unneeded things on eBay is an effective way to put some extra money in your pocket.
Throughout the years I’ve built up so much stuff – lots of which I really didn’t even need. It just sits there stored away likely to be donated or thrown out in the future during the next time I move.
I figured I would give this eBay thing a try since I had heard it referenced so many times but had yet to act on it.
I did a quick audit of my storage unit, closet and drawers and was able to compile the below list of items:
- Electronics: old TV, laptop, Xbox, old camera and 2 iPhones
- Sporting Goods: hockey stick, old golf clubs, memorabilia
- Textbooks: Books from University
There is money to be made simply by taking a few photos, writing a quick description, researching comparative prices and then pushing ‘List Now’.
I’ve been able to sell everything I’ve listed so far.
My most recent 60-day selling total as I write this:
After eBay fees, PayPal fees and shipping costs the net profit is approx. $1,250. Not bad for some stuff that was literally sitting in different storage spots unused.
I will be doing another audit soon to see what other higher ROI items I might have. I am sure I can identify some non-necessities or frequently used items to sell to hopefully keep the eBay money rolling in throughout 2018.
There it is, my plan to eliminate my student loans.
Getting out of this debt will be a major psychological gain and victory. Life is a wave so I am sure there will be challenges along the way in 2018.
What have you done to eliminate your student loans or other debt? Comment below and let me know.
What could I change in my approach or plan? I am always open to suggestions and advice.
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