Paying off student loans can happen in a variety of ways in today’s age. You can actually pay off your student loans quickly (with or without) earning a lot of money. Here’s how you can pay off your student loans when you don’t earn a lot of money.
How to Pay Off Student Loans When You Don’t Earn a Lot of Money
Have you ever wondered if you’re going to be stuck paying off your student loans for the next decade?
With Americans holding over 1.5 trillion in student loans, there are many of us who feel like we don’t earn enough money to get ahead on those dreaded payments.
I was in the same boat. I borrowed over $42,000 to finance a couple of degrees only to start out earning $36,000 per year. But with some money management hacks, I was able to pay off all those student loans in just 34 months.
Here’s my story and what worked for me.
10 Things I Learned from Paying Off $42,000 of Student Loans
Here are some of the most important things I learned from paying off $42,000 of student loans on a teacher’s salary.
CALCULATE HOW MUCH INTEREST YOU’RE PAYING
Borrowing money isn’t always the thing that gets people in trouble. It’s the interest fees that really bites a big chunk out of your wallet.
For example, when I decided to go onto graduate school, I estimated I’d borrow $50,000 total. Knowing I’d earn around $35,000-$70,000 throughout my career, this didn’t seem like too much to borrow.
When the time came to look at the different repayment plans, however, I noticed the total amount I’d repay with interest. I can still remember that shock. It was nearly $100,000! This was probably the single biggest factor that motivated me to pay off my debt as fast as possible.
If you haven’t yet, use a student loan repayment calculator and plug in your loan amount, interest rate, and loan term. Just make sure you’re sitting down when you click calculate. The number might shock you too.
FIND INSPIRING DEBT PAY OFF STORIES
I thought once I got a degree and started working a real job, I’d have a lot of money. Unfortunately, once I realized how small my Friday paychecks were and how big my student loan interest fees were, my American dreams of a big house, nice car, and frequent travels started fading away.
However, after I found The Dave Ramsey Show podcast and started listening to it during my commute, I was inspired. I realized there were lots of people out there who wanted to become debt-free.
And some were paying off debt while earning even less than me. These stories and Dave’s money advice helped me believe even though I didn’t earn six figures, I could attack my debt more aggressively.
Not everyone is into Dave Ramsey. Thankfully, there are lots of great financial podcasts out there, such as:
- Student Loan Planner
- The His & Her Money Show
Find one or two you like and tune in regularly. Consistently listening to inspiring stories and wise financial advice can slowly change your perspective on money.
SET DEBT PAY OFF GOALS AND TRACK YOUR PROGRESS
“When you aim at nothing, you will hit it every time.” That Zig Ziglar was a smart guy.
Of all the debt-free success stories I’ve heard, I can’t recall any of them being accidental. Each journey has a unique path, the end goal is always the same: Pay off debt.
Until I set specific goals and wrote them down on paper, I was “kind of” paying off my debt. Just like my husband was “trying” to pay off his loans faster before we got married. He had good intentions, but he had no real plan: just throwing an extra $20 here and there. When we inspected his account, we realized it had been two years but he hadn’t made much progress at all.
When we decided to set a concrete goal to pay them off in X months, it happened. The same thing happened to mine. To stay motivated during the long haul (because it will get tough and you’ll want to throw in the towel) using something motivating as a debt thermometer can help.
I use goal sheets for both money saving and money earning goals. It works best when I hang them where I can see them remind me what I’m aiming for. And even though my loans were on a 20-year repayment plan, we paid them off in less than 3 years. Goal setting and tracking your progress works.
MAKE A BUDGETING HABIT STICK
When I first started paying on my student loans, I didn’t really budget. I wrote down when my bills were due, paid them on time, and hoped there was extra left at the end of the month.
This changed after I listened to Dave Ramsey long enough. Even though I’m not on board with everything he teaches, a key takeaway I took from his show was zero-based budgeting and joint monthly budget meetings with your spouse.
As I established a habit of preparing a budget ahead of time, I started really digging into where all our money was going. I inspected each line on our checking and credit card statements.
Although it was tedious at first, it helped us become more aware of our spending. We started to think twice before buying mountain dew at the gas station or another sweater at the department store. Budgeting helped us become more disciplined with telling our money where to go—instead of spending and hoping for the best.
STOP ADDING MORE DEBT
Did you catch that I said credit card before? Yes, I used credit cards then and I still do today. I’ve always paid off the balance each month so credit card debt has never been a problem for me.
But if you charge more to your credit cards than you can pay off each month, you should probably consider using a cash envelope or debit card system. There’s not much use in paying off your student loans if you’re adding debt in other places.
This was another key reason I was able to “find” extra money in my modest paycheck each month. We did not have car loans. We paid cash for older cars. They weren’t the best looking cars in the parking lot, but they got us where we needed to go.
FIND CREATIVE WAYS TO SAVE MONEY
Tracking your spending in a budgeting app or spreadsheet is an easy way to see where your money is going. From there, you can get ideas on how to save money on things like cell phone bills, nights out on the town, groceries, housing, utilities and more.
My husband and I did the boring stuff you’ve probably heard before like packing leftovers for lunch, brewing coffee at home, and turning the thermostat down a couple of degrees in the winter.
As I got more sick of seeing that debt, I found even more ways to lower our living expenses. Some of the hacks we used to save money were:
- carpooling to work with co-workers (even though we didn’t know them well at first)
- refusing to pay for smartphones, data, or even texting (our phones literally called people…that was it)
- driving old cars (my husband’s car eventually qualified for classic license plates)
- threatening to cancel our satellite tv provider whenever they increased our rates
- furnishing our home with hand-me-down furniture from family
So rest assured, even if you don’t have a big income, there are lots of ways you can save money. I often found myself questioning what I wanted more: short-term item or convenience now or long-term wealth?
DON’T EAT YOUR PAYCHECK
The only specific budget category I’ll dive into is food because one change made a big impact for us. I was able to keep our monthly food budget well below the average American family’s grocery budget when I finally got the hang of meal planning.
The biggest game-changer for me was finding an editable meal planning template that fit my style for planning meals and snacks. Chances are, if you eat simple meals at home made from cheap whole foods, you can save a lot of money in this category. To this day, some of my go-to cheap foods are oats, rice, bananas, eggs, carrots, and lentils.
Fancy meals are fun and all, but do you really want to be eating so much of your hard-earned paycheck?
See Related: Creative Ways to Pay Off Your Student Loans
START A SIDE HUSTLE AND/OR ASK FOR A RAISE
While a budget is the best way to find categories where you can cut back spending, a side hustle or a raise are the best ways to earn more money. This way you’ll have more available to put toward debt.
If your wage is negotiable, you can start by showing how you provide more value at your current job by negotiating a raise or picking up extra hours. As a teacher, however, our salaries were not negotiable.
Between my husband and I, we’ve earned extra money in a lot of ways, including:
- proofreading and editing
- virtual assistants
- mowing laws
- driving Uber
- teaching summer school
- coaching athletics
- selling stuff around the house
If you’re willing to put in the time, you can accelerate your debt-free journey by earning more for your time or trading some Netflix hours for starting a side hustle, earning extra money online, or working some overtime.
KEEP UP WITH THE COLLEGE KIDS NOT THE JONESES
Most of us who successfully pay off debt fast have one thing in common: we stop spending so much money.
While not everyone takes it to the extreme that we did with carpooling and “dumb” phones, we didn’t increase our lifestyle much after college. We admired what other people had yet stuck to our financial goals.
I didn’t know it at the time, but I now realize behind most of the Joneses nice stuff are car loans, double mortgages, credit card debt, and student loans. Digging out of debt is not always fun, but keep in mind that it’s only a short phase of your life.
Plus, remember how much money you’ll save in interest.
CONSIDER LOAN REFINANCING
There was one area of debt repayment that I dropped the ball big time: refinancing.
As a fresh college grad, I only vaguely knew of this concept. So after I opened checking and savings accounts at our local bank, I asked the bank teller about getting a lower interest rate on my student loans. I’ll never forget the way she scoffed and said “Umm, no. You have no collateral.”
With that burn, I thought refinancing was out of the question. I never looked into it again and I wish I had.
If you haven’t looked into refinancing your student loans yet, I highly encourage you to check into it. While it’s not the best fit for everyone with student loans, a lower interest rate could be an easy way to save a lot of money.
You don’t have to earn six figures to pay off your student loans. A higher income can certainly help, but only if you have a plan that tells your money where to go.
With intentional spending, tracking our habits, some frugal living and delayed gratification, we were able to pay off over $42,000 in college debt in less than 3 years.
Our next step is to do what we can so our kids don’t end up with the same student loan mess. So no matter if your income is big or small, these tips will help you get rid of student loans faster.
The freedom that comes with not paying for a college degree for decades of your adult life is worth the short-term sacrifices.
Are you ready to pay off your student loans? Let me know in the comments below.
About the Author
Val Breit destroyed over $42k of student debt, then resigned from school counseling to become a stay-at-home mom. She’s a nap hustler who teaches the simple rules to win with money at TheCommonCentsClub.com. Recently she compiled a list of graduation gifts for college students that will help grads get a jump start on attacking their student loans.