When your student-loan lender comes a-knockin'...

I came out of college with nearly $50,000 in student-loan debt. Six years later, I'm just a little more than halfway through.

It seemed like the process would be never-ending, but after a lot of moping (followed by self-reflection, followed by Excel spreadsheets) I finally got my act together and put together a — dare I say, vigorous — plan to pay of the remainder of my loans (a little over $21,000) in two years.

Here's how I'm getting it done:


I started paying more than the minimum

For the last six years, I had only been paying the minimum monthly payments ($350 a month) toward my student loans. Even as my career advanced and I started earning more, it stayed at $350 — which I realized was ridiculous, when I sat down to examine my finances. If I can afford to pay more, why not just pay more? Then I can keep the interest from piling up, and pay off what I owe that much faster.


I set my monthly payments to "auto pay"

Now I pay $500 a month on my loans — that's a lot of money, obviously, but I make sure it comes out of my bank account as soon as I get my paycheck by setting up an "auto pay" option online with my lender. At the start of every month, the lender withdraws $500 from my account so not only do I have to remember to make payments, but the money is already gone before I can think to spend it on anything else.


I allocate payments toward the highest-interest loans first

The $21,000 and change that I owe is the sum of a few different loans. Previously, I shelled out the monthly amount and distributed it evenly among each loan... until I realized that each loan has a different interest rate, and the higher ones will accumulate more quickly than the lower ones. Now I pay more toward the higher-interest loans so I can kill them off faster (and I pay less in the long run).


I reduced my retirement contributions

student in debt
photo: iStock photo/CREATISTA

I used to contribute $250 a month toward my 401(K) account, but when I upped my student-loan payments, I also decided to decrease my monthly retirement contributions. I'm still contributing, but I'm contributing a LOT less (for now) so that I can pay down my debt quicker. Then, when my student loans are gone, I can go ham on saving for the future again.


Any surplus income goes to my student loans

At work I get quarterly bonuses based on my performance. It's not something I'd had in every previous job, but since I have it here, it's going straight into my loans — on top of the $500 a month that I already pay. So four times a year, I'm usually able to pay extra and make more of a dent.


I pay off my credit card statement in full every month

I'm already in debt from college — why take on more debt by making purchases on my credit card that carry over month to month? Not only are the interest rates a lot higher on my credit card, but I also don't want to let credit-card debt affect my credit score. When I use my credit card, I never pay more than I have in my bank account, and I pay off the balance in full every month. Interest never accrues.


I looked for ways I can cut other expenses

Buying lunch out (at least in New York) can cost around $10 a day — that's $50 a week... $200 a month! It's a huge waste of money. I started shopping smarter at the grocery store and bringing my own lunch to work, which saves me up to $100 a month. 

And I limit my spending when I go out with friends, which means switching to water or soda after a drink or two, or suggesting free outings instead.

I also paid a bit more money up front on Amazon to get my own router and modem, rather than renting the ones that come from the internet provider. I (and my roommates) save money every month on the internet bill by having my own equipment.

At this rate, I'll be debt-free by fall of 2018!