Finally! It has been a little over six years and we now have enough money to pay off my $575,000 in student debt! Although we haven’t paid it off because of the student aid deferment since the pandemic, it feels like a weight has been lifted from my shoulders. I don’t know how it happened, or when really. Which goes to show that little wins add up to big gains. It’s the everyday decisions you make that, in the end, pay out. Success isn’t so much the achievement. The achievement is the public recognition of that success. But success is made long before that achievement is earned. Every time you choose to take a step towards your vision, that is success right there. The crazy part is, we are considering not paying it off! But before I get into why, let’s look at the how.
How We Earned Enough $ to Pay Off $575,000 in Student Debt in Under 7 Years
I will start off by saying, I have never worked full-time in any one job. EVER. And when the pandemic hit, I actually quit my job with the thought of taking a break from dentistry. Alas, I soon found myself back in the office covering for a colleague 2-3 days a week. After her return, I ended up staying on part-time and have been part-time since.
All of this to say, we did not have to bend over backwards slaving away in the work force in order to earn this. Paying off debt doesn’t require deprivation. I didn’t accept a corporate job that might have given me benefits but would have wrecked my soul. I didn’t work over-time sacrificing family time. I lived my life exactly how I wanted to, worked the hours that felt comfortable to me, and prioritized my passions and personal life.
So how did I earn enough?
First, I made my vision and I always kept it in the forefront of everything I did. Second, we lived within our means. We were frugal, but not in the depriving sense of the word. We made good decisions, spending our hard-earned dollars on only the things that brought us joy. Third, we were valuists. We bought things based off of value, not price. I turned passions that I valued into money-making side-hustles. And fourth, we were true to ourselves. We did not compete with the Joneses, but rather, competed with ourselves. We spent energy trying to become better versions of us, rather than trying to one-up our neighbors and friends.
The main point is this: We created a plan to hit our goal and we stuck to it. It’s as simple as that. At the beginning of the pandemic, I had paid down my student debt to $425k. Today, it is at $400k and we have the money to pay it all off!
Where Did We Hold Our Assets?
Our assets are diversified and in multiple accounts. I never planned for it to be this way. When the pandemic hit, we didn’t really know what to do with left-over dollars that we saved. We wanted to be conservative, so we held most of it in cash in a High Yield Savings Account with Marcus. Currently, it is earning 4.65% in return. If you sign up with my referral link, your savings could earn up to 5.15% APY, which is 1% higher than the current Marcus rate. Over the past few years, we have saved $260k in a HYSA. By keeping our dollars in a HYSA, we are earning over $1,000 in free money every month!
We also have equity in our home. We started out by buying the best house we could find in the worst neighborhood in 2018. We had a roommate. Our down-payment was $25k. We sold that home and rolled the equity into buying a more expensive property in 2021. Currently, we have $150k in equity. Real estate has done well the last three years, and continues to do well. We listed our home on the market last Friday, on my 34th birthday.
Adding those two assets together, we are already at $400k! In addition to that, however, we have about $30k in cryptocurrency and $30k in stocks. We actually lost money by investing in stocks and crypto, but as long as we hold and don’t sell, we won’t realize those losses just yet. On top of this, we have $6k in an HSA account and $250k combined in our retirement accounts.
Therefore, if we rent a place to live or if we sold our investments, we would be free of student debt. So why are we not doing that just yet?
Why Have We Not Paid off the Debt Yet?
The politics around student debt have been shaky these past few years. Talk of student loan forgiveness during this prolonged deferment has kept everybody at the edge of their seats. Continued extensions of the 0% interest rate had us rolling our eyes. I thought it would be silly to pay the debt off while we were being charged 0% interest anyway. It was better to invest that money and realize the growth potential of those dollars. We benefited greatly from not refinancing out of the student loan repayment program that we are in (REPAYE). And now that student loan repayments are set to resume in September (????), I am not sure we will pay off the debt right away. Why??
As you may know, our first born son, Casey, was born in April. We decided to stray a bit from our frugal lifestyle in order to give him the best life possible. We want to roll the equity we’ve gained thus far to provide him a big home – one wherein he could have his own room. Our tiny home won’t allow for that. At the same time, real estate has been good to us. My husband, especially, likes being invested in it. And selling our current home in order to pay off debt without a foot in the real-estate game isn’t an idea we like.
What the deferment has taught me these past three years is that staying enrolled in the government’s loan repayment program afforded us more freedom than paying off the debt would have. Call it luck or chance, but I enjoyed that freedom and I think we could benefit from that one last time before the student debt repayment resumes. Which is why we are in the process of buying a $1M+ dream home in our beloved community before the first payment is due in October.
I Changed My Mind.
I changed my mind about what I thought it meant to give the world to Casey. I originally thought it meant choosing a smaller house in order to work less, so that I can be around him more. I originally planned to work 2-3 days total. During my maternity leave, while we were home every day, I realized that we had a lot of family members who could love and care for him as well as we can. In some ways, they can do it even better.
Meanwhile, we struggled to maneuver our tiny space. We were drowning in stuff he needed. We limited the toys that could help him thrive. It also became clear that our small space couldn’t house the people who came over because they wanted to love him and care for him. So I changed my mind.
I’m going to work four days a week in order to provide him and our extended family a bigger space. A place wherein we can all grow, thrive, and share memories in comfort. This provides opportunity for Mike and I to grow our careers, for me to regain a bit of my previous self, and for our family to spend quality time taking care of our son. I am trading my timeline of paying off student debt in under 7 years for something that I prioritize more: family.
For a moment, I considered the alternative. I quickly realized that if I chose to pay off the debt, it would be for self-fulfilling and vain reasons. Mainly, to show the world that I could. But in reality, I’ve proven it to myself, and that’s all that mattered. It will be repaid eventually, but not at the cost of what this journey was all about – to live the life we dream of without money dictating how we live it.
The New Plan
- Roll $150k from equity plus $75k from HYSA to cover our 20% down payment and closing costs.
- Keep the remaining $175k in HYSA for my student loans.
- Leave crypto and stocks where they are so as not to realize losses.
- Continue contributing to 401k and retirement accounts.
- When loans resume, start over and aggressively pay off debt.