The collective United States owed $1.3 trillion (with a T!) in student loans at the end of 2016. And with more student loan safeguards going the way of the dinosaur, this number is probably only set to increase.
If you have student loans, trying to pay them off can feel overwhelming or even impossible. But one couple is paying off a staggering $600,000 in student loans, and you can do it too.
Interest Blows Up Student Loans
But before we start, let’s talk about loan interest.
That’s how Amber and Danny Masters found themselves in six figures of debt. They each make a good living as a lawyer and a dentist, respectively. But private school and massive interest rates caused their debt to balloon from $400,000 to $600,000 in just a few years.
Happy 8 years to my forever boyfriend, traveling buddy, bff, fave dentist, therapist, eye candy, workout partner, house cleaner, baby daddy. There's no one I'd rather spend my life getting out of #studentloandebt with. I made Danny promise that we would #travel somewhere every year on our anniversary and so far we've held up the tradition! Sometimes in unexpected ways- Mexico, Vegas, Thailand, 3 St George trips, Bahamas, Goblin Valley, And this year Moab. But it's not always glamorous. Today Danny has the plague/flu and I spent most of the morning cleaning up Max's blowout diaper. That's marriage. Happy anniversary @dannymmasters!
They thought waiting a few years to start chipping away at the debt would work out fine. That wasn’t the case.
The moral of the story is this: If possible, start paying your loans while you’re still in school. Don’t wait. Even the small step of paying the minimum amount every month can help reduce your ultimate costs in a very significant way. The quicker you get your balance down, the less interest you’ll have to pay in the long run.
Paying Off Loans Step-By-Step
Looking at such a massive collective balance overwhelmed the couple. So, they decided to tackle the challenge one step at a time. Here’s how they’re moving toward getting rid of those student loans.
1. They prioritized
Once Amber and Danny Masters decided to get serious about paying down their debt, they chose those payments over everything else, including eating out and extracurricular activities.
“We made debt a priority,” Amber Masters wrote on their blog Red Two Green. “It had to be a family affair. If you share money with someone, you can’t pay off debt unless everyone involved is on board, and willing to prioritize the debt above all else.”
2. They budgeted – HARD
This sounds obvious, but the Masters took budgeting to a whole new level. They moved to the Midwest, where the cost of living is cheaper. They also took up a number of side jobs to earn extra income.
“I painted houses, babysat, mowed lawns, and took online surveys,” Amber Masters writes. “There were few things that I wasn’t willing to do for a little extra cash. And in the end, it paid off big time. It would have taken me MUCH longer to pay off my debt if I only had my day job.”
Amber runs a photography business in addition to practicing law at a firm, and they use a number of free cash back apps for shopping.
“Danny and I keep a strict monthly budget,” Amber Masters told the website Student Loan Hero. “We live off $2,500-$3,000 a month, and everything else goes to debt.”
Pro tip: If budgeting and saving are difficult for you, check out the service You Need a Budget. It will help you learn how to significantly minimize spending, get a handle on how to budget and basically prepare you for financial security if you’re not quite sure how to get there on your own.
3. They keep their eyes on the prize
Paying down $600,000 in debt is exhausting. Despite working side jobs to make extra money, using every cash back and budgeting app known to man and also having a full-time job, getting to zero can still seem impossible.
Amber and Danny hold weekly finance meetings to keep track of their progress and discuss their bank situation. This helps keep them organized and motivated, and prevents the dreaded debt fatigue.
“It’s really hard to stay motivated,” Amber told Student Loan Hero. “We’ve been in school forever and are just now making real money.”
Even though it can be frustrating, Amber writes on their blog that keeping track of progress can really help get you through those tough times and keep saving. Checking the balance of your loans and watching the numbers drop can also be extremely rewarding.
“We reminded ourselves about interest and how each day, interest is accruing and accruing,” she wrote. “We also set goals for things that we will do after our debt is paid off.”
Don’t Ignore Those Loan Statements
Ultimately, she and Danny are on track to pay down their loans in just five years. Considering the amount they owed, this is pretty astounding. Amber just celebrated paying off $47,000 of her own loans, but they still have a long way to go. And for those struggling with their own student loans, Amber says you should NOT employ the Masters’ previous strategy of burying their heads in the sand.
“The best thing you can do is take the bull by the horns, open up the loans on your servicer’s website, and figure out how much interest is accruing each day,” she told Student Loan Hero. “Just start making whatever payments you can to bring down the interest.”