How I Paid Off My $20,000 Student Loan with a Poverty-Level Salary

In only 3 years, I achieved what seemed like an impossible goal

Not going to college wasn’t an option for me, my siblings, or my cousins. My grandfather was passionate about higher education — so passionate, in fact, that he set up college funds for each of his grandchildren after we were born so that we could go to school without accumulating debt.

Unfortunately, I wanted more than a bachelor’s degree — more than what my grandfather’s money could afford. I decided to pursue a master’s degree in teaching. At the time, the most affordable program I could find cost almost $30,000 — not counting books. It took me months to decide whether or not to take on that kind of debt, but eventually, I dove in. It felt like the right thing to do.

I’d be able to pay it off in a few years, right?

The Recession

I was scheduled to graduate with my M.A.T. in May 2008. Maybe you might remember what happened that spring, when the country realized it was spiraling into a major recession. It seemed like it happened overnight. School districts froze all hiring, cancelled the upcoming job fair, and gave hundreds of local teachers the notice that their contracts were not going to be renewed the following year.

Our professors told us it would be very unlikely that we would find jobs outside of subbing once we had graduated. A pall fell over our cohort — after 16 months of grueling work, night classes, and two sessions of unpaid, full-time student teaching, we no longer felt we had anything to celebrate.

Just as predicted, I ended up substitute teaching for years after I graduated. Though subbing pays fairly well, there are no benefits, and the work is not consistent. Month after month, I struggled to pay the bills, including my $170 student loan payment.

I felt like I was suffocating every time that loan bill arrived. I had thought I’d be free of it in 5–10 years, but with so little of my payments going to the principal, I calculated it would take closer to 20 years. (In fact, research shows that it takes the average person 21 years to pay off a student loan for a bachelor’s degree.)

That wasn’t, at all, what I had anticipated. I had dreams of finding a decent-paying job, getting rid of the student loan debt immediately, and buying a house. Before enrolling in graduate school, those dreams didn’t seem that far-fetched. But suddenly, they felt impossible to achieve.

By the time my relationship ended with all the financial mess that comes with a breakup, I left education entirely and started working at a nonprofit, where I made almost half of what I used to make as a teacher.

I was grateful for the steady work and for not having to substitute teach anymore. But I stopped believing I would ever get out of debt.

The Turn of the Tide

After a few months at my new job, I began feeling confident in myself. Life was rough — I missed my old house, I missed my ex, my dog had just died, and I was struggling with depression. And yet, I was okay.

I became more and more determined to get myself out from under my student loan. It had been seven years since I’d taken out the loan and I still owed $20,000.

I didn’t know how I would do it. My take-home pay was $2,000 a month (an income that is just below the poverty level in my county) and in our ridiculously bloated housing market, I was living in a tiny duplex that cost $1,000 to rent. With all the other expenses I had, I was lucky to have $20 to spare at the end of the month.

I read articles constantly that claimed to enlighten readers with the secret of how to dissolve student loan debt. But none of them taught me a thing. I knew I had to rely on myself if I wanted to pay off that debt.

Here are my “secrets:”

Attitude

I can’t explain this one, but nothing really moved for me until I became so determined to get rid of that debt that nothing else was as important. I can be extremely tenacious, and I used that to my advantage, making up my mind that I was going to figure a way out of that financial mess, no matter what.

Tracking Every Penny

I’ve always hated recording what I spend. It made me feel so scared to actually see what was coming in versus what was going out. I suppose that’s strange for me to say, considering the fact that I am a very thrifty person — my addictions are more around food than around shopping. But I’ve always been drawn to industries that don’t pay well, and as such, I’ve struggled financially for most of my adult life. With teacher wages and then a nonprofit salary, being underpaid and barely able to cover the bills each month was just my reality.

However, I knew I had to start tracking my expenses and learning where I could cut back so I could make bigger payments on my loan each month. I had an old version of You Need a Budget software and began using that to track every penny — and I mean that literally. Nothing went by unrecorded.

I know from experience that this practice can sometimes feel magical, despite the anxiety it might initially cause. How can you explain that you have an extra $50 when your mental estimates put you behind by $75? Where did that money come from? The trick is, the more you start tracking your money, the harder it becomes to spend frivolously. And before you know it, you have a surplus at the end of the month.

Pinching Pennies

As I said above, you start naturally saving money when you pay attention to your spending. And if you’re disciplined enough, you can speed this process up by cutting back on little luxuries or postponing purchases for a later date.

Thankfully, I’m a Cancer, which means being frugal comes naturally to me. But I really doubled down on this, putting off purchases and passing on my favorite expensive chocolate bars at the grocery store. Admittedly, I got into a bad habit of wearing pants until they were literally threadbare and avoiding coffee shop meetings with friends ($4 for a cup of tea seemed so expensive!).

But it was important to me to allow myself some fun — like keeping kombuchas in the fridge. Even as determined as I was, I knew that being too extreme might endanger my efforts in the long run.

Working on Financial Literacy

I decided that I wanted the process of paying off my loan to be an opportunity to become more financially savvy — and in order to do that, I had to learn a lot more about money. This was not easy for me. I think many women — especially single women — are used to being treated like idiots when it comes to money. So much so that we start to believe in our own incompetence.

Despite my lack of confidence, I started taking free financial literacy classes offered by a local nonprofit. I started reading books on the subject. I even tried to talk about money more often with friends and loved ones. It’s such an important part of our lives, I realized, yet something I tended to ignore.

Always Overpay

This one is a no-brainer, I know, but it’s important to keep in mind. If you want to pay down a loan fast, throw more money at it than the minimum payment. It will take ages to get out from under it if you don’t do this.

Month after month, I put every last penny I had left over toward my loan payments. There were months when, incredibly, I was able to save $500 — all of it went toward the loan. Whenever I worked overtime, that money went to my loan. If I made extra money from my side hustles, it all went to the loan.

It didn’t take long to go from $20,000 to $10,000, and once I hit that number, I was filled with excitement. I knew I was going to make it.

The Final Payment

It still feels like a miracle to me, but I made my final payment on that loan in June 2018 — exactly 10 years after I got the first bill. That had been my original timeline, but somewhere along the way, I’d come to think it would never happen.

And yet, I did it. With only my poverty-level paycheck and the occasional hundred dollars I made from my side hustles.

It was one of the most liberating feelings I’ve ever experienced and I will never forget how proud I was to make that final transfer from my bank account.

There’s No Magic Formula

I made more progress in paying off my loan in three years than I had in the previous seven. It wasn’t because I made a killing in the stock market. It wasn’t because of tricky maneuvers or manifestation mantras. And it definitely wasn’t because I was raking in the dough from my new job.

In the end, there’s really only one thing I did that got me where I wanted to be: I simply made the decision to do it. No excuses. No whining. No trying to find an exit strategy or dreaming about loan forgiveness.

I just had to do it. One penny at a time.

© Yael Wolfe 2019