Wipe years away from your student loan repayment with the IDR Waiver

Did you know about the IDR Waiver?!

The income-driven repayment (IDR) waiver is a one-time account adjustment that was implemented by the Biden Administration and it is a BIG DEAL! Millions of borrowers could see their entire balances wiped away completely, including you.

Any time you’ve spent in repayment and many periods of forbearance or deferment can now be counted toward the 10-year Public Service Loan Forgiveness and 20- or 25-year IDR forgiveness programs. To qualify, many borrowers may need to consolidate their loans. But hurry! The Administration’s April 30, 2024 deadline is fast approaching. Do not miss out on this opportunity to cut years off your repayment journey.

Our friends over at Student Loan Planner are the experts in all things student loans. You can take action on your own, but if you want to discuss your student loan situation with a professional CFP® or CSLP to make sure you’re picking the best option for you, we highly recommend Student Loan Planner!

Without knowing the nuances of student debt, you could make a mistake or miss an opportunity that is COSTLY. Make sure consolidation is the right move for you.

The Debtist readers can get $100 off a 1:1 consult by booking through my link!

If you thought this post was interesting, check out my post on how to adjust your 2024 tax returns to optimize your student loan repayment with the SAVE program.

Tax Filing Changes with the SAVE Student Loan Repayment Program

If you haven’t already heard, there is a new student loan repayment program that replaced the REPAYE program. It is called the SAVE program. It has better terms than REPAYE and I wrote a diddy about it here if you want to learn more about it. I like it so much that I switched our aggressive repayment strategy to the SAVE program for the time being! The pandemic changed my focus from debt annihilation to growing my wealth and I have been enjoying this track. If I switched gears again when the loans came back, I would disrupt my momentum like I did in 2020. I am just not ready to relive that. The snowball is snowballing, my friends. Don’t get in the way. Now, there are some tax filing changes we had to make in order to get the full benefits of SAVE’s terms. Did you know about it?

Tax Filing Changes for the SAVE program

Previously under REPAYE, monthly payments were calculated as a percentage of the household income (the borrowers and their partner’s combined). The SAVE program has the ability to consider only the borrower’s income, even if they are married. Since student loan programs work best by paying the LEAST amount possible every month, SAVE helps borrowers by reducing what the borrows pay back during the program period. However, the minimum monthly payment is calculated from the most recent tax return. If you are married and in a two income household, you need to file Married Filing Separately in order to only count one income. Otherwise, the SAVE program will count your spouse’s income when deciding how much you pay back.

This is a painful point for us in 2024. My repayment starts in April, and the last tax filing which for us was 2022. And yes, we filed Married Filing Jointly at the time since SAVE didn’t exist until Fall 2023. My 2023 tax return will not be filed in time for them to recalculate my 2024 repayments. My husband and I have similar incomes, so for this year, we will be paying a larger sum than I would like under SAVE. Moving forward, we will file Married Filing Separately, which will cause us to lose out on a few thousand dollars in tax benefits. But it will cut our monthly repayments to my student debt in half, and save us more money in the long run.

Save Money with The Student Loan Planner

I think this was worth mentioning. You could be losing thousands of dollars if you aren’t considering your student loan repayment when you file taxes. Since I am not a student loan repayment specialist (only an avid geek about the subject), I would highly recommend professional services when making financial moves around student loans. It is nuanced, sometimes convoluted, and sometimes vague. But with the right guidance, you could be saving thousands of dollars. My favorite advisors are with Student Loan Planner. They saved me tens of thousands of dollars, just by pointing me to the correct repayment plan. Schedule a call with the Student Loan Planner team to see how they can help you. Your financial future rides on the way you handle student debt.

Photo by Tyler Franta on Unsplash

How I Saved Enough to Pay Off $575k of Student Debt in Under 7 Years

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.

Lessons Learned While Aggressively Tackling Student Debt

The student debt repayment journey has taught me a lot about myself. Choosing to tackle it head on, difficult as it was, is the major event that I attribute my personal growth to. That’s what happens when you choose the untrodden path. The challenges help you grow. At the time, it was an act of desperation. I wanted out. The reasoning to throw all my money at the debt was that simple. Looking back, I realize it was also courageous, determined, inspiring, and powerful. But if I am being very honest, I only felt shame, sadness, and defeat at the time. I’ve learned a lot about myself since then. I’ve learned that I have more power in my hands than I thought. That I can shape and mold the future to some degree. That willpower and a good community can get me there. I’ve also learned that I was naive. I knew nothing of the financial world. My viewpoint surrounding money was shaped by my narrow and negative experiences. I didn’t know that finance could be a wonderful thing. Not that scary monster I once envisioned it to be. Often, I think to myself, if only I could write to my past self and send the letter back in time. Here are lessons I’ve learned while aggressively tackling student debt.

Getting professional help is worth the spend.

As someone afraid of spending money (and accumulating debt), it was surprising that getting professional help was the first thing I did. Probably, I was too lost to know where to go. I had to turn to someone. Looking back, that professional help saved us tens of thousands of dollars. It changed the trajectory of our lives, and allowed us to live exactly as we envisioned without giving up on our debt. Why do I leave it up to the professionals? Because I can’t know, learn, and do everything. I have realized that the team I create to support me is even more important than any determination or skill I can possess. Professional help can be expensive but you’ve got to approach it from the net profit you gain. I have always recommended Travis Hornsby from The Student Loan Planner for student debt help.

Tracking things diligently is the only way to measure progress.

You can get farther when you know just where you’ve been. Paying off debt is like shaving off a few pounds. People who wish to lose weight won’t do so if they aren’t tracking calories in and calories out. Without data, you lose the control. It goes the same way with finances. It’s difficult to consistently pay down the debt each month if you don’t know how much you make and (more importantly) how much you spend. Unless what you earn is grossly more than what you spend, you will unlikely hit your aggressive monthly student debt payment every single month. We use YNAB to track all our finances. It is my favorite budgeting tool!

Constant method evaluation is key.

Unlike investing in stocks, the set-it-and-forget-it way is not an efficient tactic for aggressive debt repayment. Constant re-evaluation of my methods helped me to improve them tremendously. I continually ask myself, “How can I do this better or more efficiently?”, “Is this the best use of my time?”, “What am I missing?”, “Where am I failing?”. So many times, I have stumbled across more creative ways to approach money. I’ve run a micro-bakery, built a dog-sitting business, and created a blog space that makes passive income. I’ve also found fun ways to be frugal, and made it a game to become 1% better every day.

Understanding personality matters. Knowing your weaknesses and strengths is an advantage.

I am an Enneagram Type 1. My biggest financial weaknesses are fears of not having enough, the pull to keep up with the Jones’s, and my resistance to facing difficult times head on. My strengths are the community I’ve built around me, my creativity and curiosity around ways to be better, and my ability to do without. Even though I give up easily, I have found that the best way to get around tough times is to do without. Reduce my needs, reduce the obligations, and reduce the stress. All of this while also reducing spending. YAY! I wrote about personality types and how it relates to money here. I recommend analyzing all of your strengths and weaknesses, and then going from there.

Feeling like you’ve reached financial independence isn’t the same as reaching financial independence.

This comes to me as a double-edged sword. I felt like I reached financial independence way before I thought I would. Even though our student loan repayment has been on pause since the pandemic-relief 0% interest rate went into effect, I felt like I reached financial independence when I quit a job that I hated while my husband was also out of work. That was the moment I stopped fearing money, or lack thereof. It was also the moment I stopped being dependent on work. I used to force myself to go in when I was sick. I used to choose work over family every single time. It wasn’t healthy, but I feared being seen as less than and ultimately losing my job because of it. Times have changed since then. The younger generation is teaching me a lot about mental health, live-work balance, and setting boundaries. Meanwhile, I am building my life around things I value, rather than the money itself.

So why is it a double-edged sword? Because perceiving I’ve reached financial independence takes away the motivation to PHYSICALLY get there. Mentally being there isn’t the same as physically been financially free. After two years of taking a break from paying down student debt, I’ve realized that our trajectory has plateaued since quitting that job. And while I’ve broken the shackles that kept me in fear for so long, I am now starting to know that the loans are still very much there. Luckily, I’ve come to this realization now, which has sparked a newfound interest in continuing on with my aggressive repayment journey!

Dreaming big gets you farther than those who think realistically.

Last but most importantly, dream big. Have AUDACIOUS goals. The more impractical the better! And believe in them too, whole-heartedly. One of the only reasons I was able to pay off my student debt aggressively was because I believed in it. Realistic thinkers will only go as far as the limitations they set themselves. Limitless dreamers will go even farther than that. Dream, believe, then act. You WILL surprise yourself!

Photo by Zach Ramelan on Unsplash

What to Do Now That Student Loan Debt Forgiveness is Blocked

I came on today not to spew about my thoughts on the blocking of Biden administration’s student loan debt forgiveness. There are enough opinions, from both sides, on the subject matter on the web as is. This space isn’t meant to polarize people by differences anyhow. I am here to offer what we can do in the meantime. My purpose here is to help. The likelihood that we face student loan repayment resumption sooner than debt cancellation is all too probable. It would be a shame to leave millennials on the stranded hope that their debt would disappear (even partially so).

I recognize that whatever advice I could give today is the same old song and dance, but it’s what has helped my family survive. If anything, I hope it serves as a reminder, an inspiration, or the last threadbare bit of community for you. At the very least, may it help keep your sanity intact. In my opinion, what shall we do now that student debt forgiveness is blocked? Prepare for the worst. Fortify our savings. Limit our spending. Rely on thyself, thy community, thy loved ones. Trust that you have the power to get through.

What to Do Now That Student Debt Forgiveness is Blocked

Increase your savings. Put as much as you can in the proverbial piggy bank while the interest rate is still at 0%. Lucky for you, the High Yield Savings Account rate at Marcus is at an all-time high of 3% APY! Compare that to Chase Saving’s measly 0.1% APY. Plus, my referral link here gives my readers an additional 1% APY for the next 3 months. Meaning right now you can sign up for 4% APY return on your savings. If you’ve been saving this entire time like we have, you can get a generous monthly return on your savings. Looked at another way, this interest earned can be like adding to your income earnings. You can read my article here about why Marcus is great for short-term savings.
Limit your spending. Inflation is very high right now. Holidays are coming up. The market is down. There are so many things going on right now that the savers are going to benefit a lot during this time. I would advise what I always do, which is to curb your spending. I wrote how to reduce spending during the holidays. I collected frugal challenges for you to try. I also wrote about budgeting and how it helped us tremendously pay down my student debt! We use YNAB to budget. It has been five years, and I still check in each week to look at our numbers! You can sign up with my referral link here to try YNAB for FREE.
Know what your payments will look like. I was on a call with my sister a few weeks back. She lives in Madrid, Spain and is more out-of-touch with the current student debt situation in the States. However, she herself still has debt from her Grad School program in California, ten years ago! I was filling her in, when she said to me, “I’m just going to pretend like it’s not coming back and the 0% interest will be extended again.” My sister and I are polar opposite beings. But I was shocked to learn that she did not even know what her payments will look like when it resumes. In fact, she didn’t even want to calculate it with me. I would highly recommend the avoidance technique. I get that it’s what a lot of you need in order to mentally get by. As if life wasn’t overwhelming enough! Having to carry the burden of student debt is taxing on the psyche. Trust me, I KNOW. But the one thing that saved me from depression, anxiety, and utter madness, was the feeling that I was in control of my finances. It made me human and alive again. I proved to myself that it wasn’t up to the rest of the world how my life played out. It’s going to be easier to assume there is nothing you can do, but I promise you there is. Now is not the time to shut down and give up. It’s the time to live to the fullest. Reading this book helps.
Speak to a finance person about your options. Look, I am not a financial professional, nor do I pretend to be one. I’m just another millennial trying to be 100% me while navigating my student debt. The truth of the matter is, there are a lot of financial paths to take. Shall you pay down your student debt while it is still at 0%? Shall you invest in long-term investments and prepare for retirement because time is on your side? Shall you place everything in short-term savings accounts and then pay the loans aggressively when it resumes? Are you all on the right repayment plan? I mean, I’ve got all the questions. As always, I turn to Travis Hornsby and his team at The Student Loan Planner. Travis saved us thousands of dollars by turning us onto the correct plan. I have full faith in his team and expertise.

I hope this list of what to do now that student debt loan forgiveness is blocked was useful.

Here are other student loan things I’ve written:

Photo by Siora Photography on Unsplash

Where We Are At With Our $575,000+ Student Loan: An Update

Hi there! If you are new to the space, welcome! As you may or may not know, my name is Samantha Tillapaugh and I am known as The Debtist. I graduated from dental school at 26 years old in 2016 with more than $575,000 of student debt. Upon graduation, I was told by multiple financial professionals that the smart thing to do was to wait 20-25 years for student loan forgiveness (see options here). But the decision didn’t sit well with me. The debt was a psychological burden that caused me a lot of angst, anxiety, and made me depressed. I searched for a financial planner until I found one that listened to my desire to pay back debt and supported my decision. Since then, I have never turned back. Here is my personal student loan update.

Where We Started

In 2018, I first shared my personal story with Choose FI. I then learned that there were others who struggled with the psychology of having debt. So I dedicated my spare time writing about shifting mindsets around finance, and using lifestyle choices to reach financial independence. I surprised myself in 2020 when I reached independence BEFORE I paid back my loan. At the time, I quit a job that I struggled with, even when my husband was also without work during a pandemic which we knew nothing about. But for the first time in my life, money did not dictate what I did. I followed what I knew in my gut to be right, and it was the most liberating feeling I have ever felt.

My Money Story

Money psychology is deeply rooted in the narratives around money that we were told growing up. A lot of my fear of debt came from financial traumas as a youth. In choosing to face that fear head on and tackle the debt that I was afraid of, I gained not only financial literacy, but also a confidence and understanding of money that allowed me to have more control of it. Instead of being reactive to money, I know view money as a tool to get to where we want to go financially.

An Update on Student Loan Repayment

Today, I wanted to give you my student loan update and talk about where we are at with my student loans. I just released a second podcast episode with ChooseFI which details some of the things we have done since 2018. The Ever Growing List of Things I Have Done to Get Out of a Student Debt can be found here. We started at over $575,000 when I graduated from dental school. When the pandemic hit, I stopped making my aggressive payments since we didn’t know what would happen! My husband was without a job for the rest of 2020, and I quit my job November 2020 using the FU money we saved. At the time, we were somewhere between $430,00 to $440,000. Instead of spending the money, I continued to set it aside as if we were still making payments to our debt. Student loan repayment is set to resume January 1, 2023. At that time, we plan to make one lump sum payment that would bring our debt down to $200,000!

How We Got Here

To be honest, the first step was finding a financial planner who supports your loan repayment strategy, whatever you choose. I recommend Travis Hornsby from Student Loan Planner, not just for his expertise but also because he was one of the people who paid back a massive student loan aggressively. He had to deal with student debt personally, and can speak from experience and knowledge. My consultation with him saved me thousands of dollars, just by helping us choose the appropriate repayment plan. (We were on the wrong one!)

The second thing we did was cut our spending. Raising earning is fine and all, but lifestyle inflation is real. We learned how to use a budget for the first time with YNAB. To this day, my husband and I have budgeting dates and use YNAB to keep track of where our money goes. I highly recommend the YNAB app to all new budgeters because it is intuitive and easy! This step was so crucial to our journey that I even wrote an entire course on How to Master a Budget. It’s free and available on my blog.

Third, I changed my mindset to a positive one! I first found gratitude towards my debt and money story. This is a debt that is my privilege to own. I then approached life with a growth mindset. After realizing I had a lot of learning to do around money, I poured over books and binged podcasts. I also tried to find ways to make money doing the things I love. This led me down a rabbit hole of side-hustles which include being an early morning baker, opening my own bakery, being a wholesale director, creating a dog-sitting business, monetizing the blog, and more. My love for learning hasn’t stopped. Currently I am taking a teacher training course at CorePower Yoga to get my yoga teacher license.

Our ultimate goal was this:

To be free from student loan debt enslavement by facing my fear around money head-on without allowing money to dictate our life’s happiness. We wanted to focus on our goal of financial independence, while maintaining autonomy over the present moment. We wanted to built a life around freedom, both from debt but also from job dependency. At it’s core, we wanted to be free to do what made us both happy.

My only hope with sharing my story is to help others do the same.

Thank you for being here.

XOXO

The Debtist

The Ever-Growing List of Things I’ve Done to Get Out of Student Debt

I graduated from dental school at 26 years old with $575,000 of student debt. That fact alone was mind-blowing enough to land me a podcast interview on Choose FI back in 2018. I then became the first interview with Travis Hornsby on Student Loan Planner Podcast. Since then, I have partnered with Student Loan Planner and Student Loan Advice to help young grads tackle their debt. Because the shocking reality is that big debt exists for almost every new-grad out there. Which is why this blog was originally born. I wanted to share my path towards financial freedom in the hopes of helping others maneuver past their student loans. I really hope it has helped thus far. Today, I decided to write a round-up post on everything I have done to get out of student debt. I’m sorry it has taken this long.

But before we get to it, you might be interested in The Ever-Growing List of Ways to Earn Extra Income, The Ever Growing List of Things I’ve Given Up in the Name of Frugality, and The Ever-Growing List of Things I Have Given Up in the Name of Creating Less Waste. You may also want to read my interviews with other bloggers. The UnOrthoDoc shares how I am paying back my student debt in 7 years. I talk about the effects of our heritage on personal finance in an interview for the series Blood Debts. And Making Sense of Cents shared how I used side-hustles to catapult debt repayment.

The Ever-Growing List of Things I Have Done to Get Out of Student Debt

I worked three jobs during under-grad to support myself financially and to take as little debt as possible. This work ethic is what got me to start side-hustling my way to financial freedom. Check out these posts for ideas: 15 Early Morning Jobs To Jump-Start Your Day and 3 Early Morning Jobs I’ve Done to Earn Extra Money.
I chose a college that I could commute to for Undergrad. Even though I got into more prestigious schools, staying local was an intentional choice. I lived at home with my parents in order to save money on rent and food.
I finished Undergrad in 3 years. I was able to do this by taking more than 10 AP classes in high-school. These credited as college credits. My college classmates suggested I stay the fourth year to ‘get the full college experience’. I chose to graduate in three years so I could save on tuition and work full-time in my ‘fourth year’.
I moved in with my then-boyfriend, now-husband and two guy friends in order to save on rent during dental school. I lived near campus the first two years and was paying $1200 per month in rent. I asked to live with the boys in a city 30 minutes away to save money. My rent went down to $375 per month. After calculating in the gas, I ended up saving $600 per month the last two years of dental school. This equated to over $14,000!
I hired a financial planner who ended up saving my life. I spent my first paycheck to pay for his services. He listened to my needs and wants, and made a plan that worked for my goals. I owe all of my financial success to him. I always recommend interviewing a few options before choosing the planner that’s right for you. A few options are Travis Hornsby’s Team from the Student Loan Planner or Andrew Paulson’s team from Student Loan Advice backed by White Coat Investor.
We mastered our budget. I think budgeting is the most important life skill for financial well-being. It doesn’t matter how much you make, if you don’t know how to control spending. That’s why I wrote a Free Course on Mastering a Budget. We use You Need a Budget (YNAB) for our budgeting tool. It is my absolute favorite. I call YNAB our secret weapon. I recommend people create a budgeting tool that works for their needs. You can always try YNAB for free for 34 days.
I paid off all credit card debt within six months of graduating from dental school. If you have trouble paying off your credit card debts, you can always try The Credit Pros. They will help identify the most damaging and most helpful credit items, as well as provide advice and educational tools.
My husband and I got a roommate for the first five years of our marriage. Getting a roommate is the best way to save money on rent. In California, housing expenses are very high. By getting a roommate, we were able to save money to buy a home. Learn more about co-housing here.
We bought a home which gained equity. We then sold the home in 2021 to buy a better home. We took the equity and saved it for loan repayment. Find out How We Made Our Home Cash Flow Positive and How Home Ownership Sped Up My $575,000 Student Loan Repayment.
We travel-hack in order to see the world. One of our top life priorities is to travel. We spent the first five years of our marriage traveling to 10 countries and over 10 states. We did that without paying for air-fare. Learn how to TRAVEL FOR FREE in this post.
I worked midnight shifts as an early morning baker. It eventually led me to open my own bakery. When that shut-down in 2020, I became the wholesale director of the previous bakery. I had no experience as a baker, shop owner, or salesperson. But I ended up doing those things simply because I asked to learn.
I opened a dog-sitting business. I now earn over $1.5k a month taking care of other people’s pets. If you want to set up a dog-business, sign up below to receive my guide in your inbox. It walks you through the steps I took in order to set up my business and thrive within 6 months!

We placed all of our savings in a High Yield Savings Account with Marcus. A HYSA gives a higher interest rate than a savings account at a bank. When the pandemic caused a pause in student loan repayment, we held on to our money ‘in case of emergencies’ and stored it in a HYSA. It has grown with interest while the student loans are at 0% interest. It really catapulted our loan repayment journey forward! Sign up with my referral link to receive an additional 1.0% APY bump on the current listed APY for the first three months.
We invested money in I Bonds in order to beat inflation. On top of putting our savings in Marcus, we recently invested the maximum amount possible in I Bonds. Due to high inflation rates, I Bonds are currently at 9.6% APY until October 2022. This rate of return is unbeatable especially at a time when stocks are down. I really recommend I Bonds as a hedge against inflation. Learn more about it in this free email course.

I decluttered all my stuff and embraced minimalism in order to reduce spending. Here is a list of 100 things to declutter if you want to get started!
I try my best to resist the attention economy. I try to avoid a consumerist lifestyle. Instead, I engage in free activities that bring me joy and vitality.
I started this blog! I learned a lot about blogging and how to turn my writing hobby into a side-hustle. It all started with taking the course Making Sense of Affiliate Marketing. I learned how to make passive income through my writing. I really love this course and have taken it over and over again. It’s a one time fee for life-time access. It is the most life-changing course I have ever taken and definitely recommend it to anyone who wants to start a blog.
I’ve done everything on this list to save as much money as possible. All the money I saved, I put towards my student loans!
I’ve done everything on this list to make money. Saving only gets one so far, so making money is also key.
I invest in personal growth and learning. I read at least two books a month. There is variety in the topics I choose. I never assume I know everything about a topic. Plus I have embraced fiction as a way to learn more about the self. You can check out the recent books I have read on GoodReads.

Photo by Adam Bartoszewicz on Unsplash

How Home Ownership Sped Up My $575,000 Student Loan Repayment

Now that we have moved into our new space, I have a moment to write down a few words on home ownership as a tool to facilitate student loan repayment. If you haven’t been following along on my journey thus far, first, welcome to my little pocket on the internet!

My name is Sam and I graduated dental school at 26 years old with $575,000 of student debt. You can listen to my story in this interview. It was a crippling number and instead of waiting 25 years for loan forgiveness (which would put me at slightly over 50 years old), I decided to pay it back as fast as I can. I experimented with non-traditional ways of living, which included small space living, finding a roommate to live with my married husband and I, scrounging for hand-me-downs, living a minimalist life, and delving into side-hustles. However, one of the more traditional decisions we made was to buy a home. And it paid us back tremendously!

Why We Decided to Buy a Home

We live in Southern California, which is a fairly expensive place to call home. When we first rented a space, it was costing us $2,800 a month to live in a 1500 square foot live/work loft. Even after we negotiated with the landlord to lower the lease to $2,600 a month, we still felt like it was a big chunk to throw into someone else’s pocket. We decided it would be better to funnel that money into equity of our own. That way, we would be paying the same amount of money to put a roof over our head, but still be growing our wealth.

After a year of renting, we knew the next move would be to buy a home. I advise any young person to get their foot into real estate as soon as they can. Even if it is the tiniest home. If you can afford to pay the mortgage, put that renter’s money back into your own pocket.

How We Bought Our First Home with $575,000 of Student Debt

The first thing we did was negotiate with our current landlord a lower monthly fee. The second thing we did was get a roommate, to further reduce the monthly rent. The extra money we saved went directly into a savings account. I recommend a Marcus High Yield Savings Account to hold short-term savings. Meanwhile, we implemented the strategies of frugality (here is a list of Frugal life hacks) to save even more. We shopped for a good deal on a mortgage loan and within six months, we were signing documents for a live/work loft of our own. This was early on in my loan repayment journey, before I delved into side hustles. I probably could have sped up the process by earning more income with side hustles (here is my list of side-hustles).

How to Find a Deal on a Home

We chose a live/work loft that was similar to the one we were currently living in. It had 2 bedrooms, 2 baths, 2 stories, a 2 car garage and 1500 square feet of space. It was built in 2004. As a live/work loft, the property was commercially zoned, and the downstairs faced the heart of downtown. The exact same loft in the community we were renting from was going for $650,000. We found one that was in a more central location, listed at $499,000. In California, that is a steal.

My first tip is to be patient. Look for a long time and don’t jump on the very first opportunity. To be honest, I scoured the listing for 6 months while we were saving money. 6 months is a very long time if you already have the funds, but the best deals come to those who wait.

My second tip is to keep the search well-focused. I limited my search to live/work lofts because of the lifestyle we wanted. I knew I wanted two bedrooms because we wanted to keep our roommate (which we ended up having for 3 years). Having a roommate was great because it helped us pay for our mortgage. At the same time, we knew we wanted a minimalist space. A small space meant we could spend less to own a home. If I wasn’t this focused on what I wanted, I could have easily gotten carried away with buying a bigger, more expensive home. I made sure that the home fit our needs, and nothing more.

My third tip is to not let emotions get the better of you. Buy with your head, not your heart. Society sells us the idea of a dream home. But a dream home won’t make you free from student loans. A dream home will end up being a money pit. And dreams change. I mean, we sold our live/work loft and moved to a ranch community, and it has only been three years. I just remind myself, having a dream house is not my goal. It is a means to reach an end. You can read more about my thoughts on why property ownership is not about finding your dream home here.

How Much It Cost to Buy Our Home

You may be wondering how much it cost to get one’s foot in the real-estate-door. That depends on a whole bunch of factors, such as where you live, or what you are willing to live in. Our first home cost us $499,000. We put down 5%, which was $25,000. Added to that would be closing costs which was an additional $10,000. Total, we needed $36,000 to close the deal on our home.

We chose an online lending company that gave us better deals than a well-known bank could. I would definitely do some shopping around! At first, we thought the Doctor Loan would be the best move. But after doing the math (which you should always do!), we found that the Doctor Loan had a higher interest rate than a conventional loan, which made the monthly payments pretty high. It ended up being cheaper to do a conventional loan with 5% down (which is available for first-time home buyers) plus the added PMI. Moral of the story: do price comparisons.

How Much It Cost to Own a Home

Our monthly mortgage was about $3,000 a month. We had HOA fees that cost $222 per month. Utilities cost about $175 per month. We had a roommate that we charged $700 a month to have her own bedroom and full bathroom. Our total portion per month without utilities was $2,522, which is cheaper than when we were renting under a negotiated price. After two years, we refinanced and brought the monthly mortgage down to $2,500. After another five months, I refinanced a second time and got the monthly mortgage payment down to $1,900! I did the back-to-back refinancing because we were losing our roommate. It was all about bringing that monthly number down as much as possible. However, we ended up pivoting when the market took a turn for the better.

How Much Value The Home Accrued

To our lovely surprise, 2020 and 2021 ended up being pivotal years for us home owners. 2021 alone saw a 20% increase in home value in Southern California. To put it into perspective, in March of 2020, the value of our home was around $510,000. By October 2021, we were able to sell our home at $660,000. We had bought our loft in September of 2018. In three years, the value of our home increased by $160,000!

Why We Sold Our Home and Bought A Second One

We decided to sell our live/work loft and realize the earnings while the market was hot. So as not to miss out on the possibility of continual market increase, we purchased a townhome with half of the revenue from the first loft, and are funneling the other half of the revenue into student loans come February. Our townhome is newer (2018) and is five minutes from my job which nixes my commute. It is also in a much nicer community, down the street from my parent’s house, and within 5 miles of where I grew up. Since we lost our roommate, we bought a townhome that is smaller, but still has 2 bedroom, 2 and a half baths, 2 stories and a 2 car garage. We are using the second bedroom as Mike’s office now that he is WFH.

With the revenue we received, we were able to put 10% down into a $670,000 home. That’s right! We traded our first home for one with the same value. Both homes increased the same amount over the last two years. We gave up 200 square feet of space for a nicer neighborhood and no commute. And with 10% down, we placed more initial equity in this home ($67,000) than our initial home ($25,000). This is without us having to save money or anything. This is just half of what we earned from our daily living expense of putting a roof over our head. For this reason alone, I would definitely recommend buying a home.

How Home Ownership Sped Up My $575,000 Student Loan Repayment

Back to the original title of this post: How did home ownership help with my loans? It gave us an extra $75,000 to funnel into my student loans come February. (The discrepancy between the $160k earned and the amount used for the home and loans is attributed to the closing costs of the sale and the purchase of a home.) This additional $75k towards student loans reduces my student loan repayment timeline by one whole year! And to think, this money would have just gone into some other person’s pocket if we continued to rent.

The Moral of the Story

My advice for young people who are broke but want to own a home is to do what it takes to save the money. Buy the smallest home possible for yourself to start. Consider the possibility of having a roommate for the first few years. Stay determined to live frugally, and reap the benefits a few years down the road. Good things come to those who are patient and wait.

Photo by MinuteKEY on Unsplash