How to Pay Off Your Student Loans FAST

A couple of years back, we were sitting on roughly $135,000 in student loan debt.

Are you in a similar place and looking for any possible way to eliminate a crushing student loan debt? Read on…

The silver lining of student loan debt is that it wouldn’t be there if you hadn’t received some form of education. Ideally, you got a degree and landed a job a little easier because of it. In the 2022 job market, opportunities for newly minted grads abound.

So often, it doesn’t even matter what you majored in. My degree has absolutely nothing to do with my current profession in IT project management. Still, I’ve somehow managed to parlay a social science degree into a relatively solid tech career.

I think employers prefer four-year degree holders because they make better interns. You can’t just up and leave your job with student loan payments hanging over your head, right? Well, now you can!

Here I thought they wanted me for this job because I took the time to learn Remote Sensing and Landscape Architecture at college. Right… 

The Financial Impact of Student Loan Debt

Knowing how your student loan interest rates impact your debt situation is key. That $75,000 chunk of our $135,000 total had a fixed interest rate of 4.6%.

Over 30 years (using the long-range schedule from our lender), that seemingly benign 4.6% results in almost $70,000 of interest ALONE. Ouch.

So it certainly makes good financial sense to try paying off student loans fast when you’re staring at a $75,000 balance with compounding interest at 4.6%. Sure, we could still get better margins with stocks or real estate investments (maybe, 9% and 15% respectively?)

But eventually, you’ll want to free up cash flow if early retirement is in your crosshairs. And having cash on hand helps immensely when down payments are needed for real estate properties.

The rest of our student loan debt, roughly $65,000, sits forever at 2%. We have no interest (pun intended) in paying off this loan ahead of time. That 2% is roughly equivalent to the rate of annual inflation, so it makes little sense to throw extra money at this debt when we could make significantly more money investing in the market or real estate.

By paying off $75,000 of our student loan debt at the higher rate, we eliminated over $300 in monthly payments that are now going towards the mortgage payoff. This is how a “debt snowball” works. It is rewarding to see our cash flow steadily improve over time and our net worth climbs out of the doldrums.

Persistence is priority number one. You may want to take fancy trips overseas to accumulate experiences, especially in a world of FOMO. Thanks, Instagram. But those student loans will be waiting for you when you return from the airport. Another cloud hanging over your head while you gear up for work on Monday.

Simple living might hold the key. Experiences matter, but having a purpose matters just a bit more. Strengthen bonds with family and friends with simple activities like game nights or potlucks. Enjoy travel, but consider road trips to places with cheap lodging or where you can shack up with friends.

So how did we make it happen in less than two years? While paying for childcare for twin infants? Looking back, I think we were on autopilot most times due to a lack of sleep. But here, let me break down the key actions we took. Hopefully, in all of the student loan debt stories you’ve already combed through, you will find ours useful…

Top 5 Tips to Eliminate Your Student Loans

1. Live SMALL. Don’t even think about renting or buying that bigger house. Mrs. Cubert and I almost made that mistake when we were expecting the twins. And that’s just what you do, right? WRONG! Thankfully (though we didn’t see it that way at the time), we got turned down for a mortgage on a $435,000 house just a few blocks over from our $275,000 gem. Why did we get turned down? Because you need to be a landlord for at least twelve months for the rent to count towards your income. We had only been renting ours for nine months, so we looked like over-leveraged stooges to the lender. Point is, we got lucky getting turned down. The twins are doing just fine sharing a room, and we find our 1,500 square feet of living space more than adequate.
2. Become a landlord. This one helped big time. If you’re able to scrape up enough capital and get that first property going, you’ll quickly yield some nice margins on rent. The hidden benefits come at tax time when depreciation and maintenance expenses help reduce your overall tax burden. We used a home equity loan on our primary residence to make the down payment on our first two rentals. It’s a small risk, but we quickly paid that HELOC off with rent money within six months. Now that our high-interest student loans are paid off, we can use the rental income to pay for childcare Get into real estate rentals – it’s a game-changer.
3. Be the employee (and/or entrepreneur) of the month. Something happens to you when you have kids. Yes, my wife and I became zombies there for a while with twin babies. But, we also became that much more responsible. And that translates to your work-life priorities. I managed to find work within my company that fit my attention deficit, high-distraction mindset. And I excelled. Bigger bonuses and raises, and promotions seem to come easier with a newfound responsibility back at home. This is a paradox when all you want to do is be home with your family. At the same time, highly successful Mrs. Cubert was landing more and more patients at her practice. I advise my team to focus on results and making friends in the process. Good things follow.
4. Use credit cards. Counterintuitive as it seems, credit cards actually can help so long as you pay off the balance every month. We used credit card hacking to our advantage. I was about to tell you we didn’t travel for two years but I’d be lying if I did. In truth, we’d go bonkers if we didn’t get out of the Minnesota cold at least once in the winter. I signed us up for a Chase Sapphire card and Chase Ink for our businesses. We combined our bonus points and flew to Nevada for free. We stayed with the in-laws, so there was no lodging expense. If you have to travel, don’t pay for it.
5. Sell things you don’t need. I can’t tell you how much crap we’ve accumulated over the years. Because I sold most of it. Seriously, we had a lot of stuff you just don’t need or care about anymore when you become parents. I sold a TAG Heuer watch on eBay, comic books, and my Honda Accord on Craigslist. I unloaded my sweet audio system and speakers. What am I going to blast with babies sleeping all the time? Certainly not “The Chronic.” There are two key benefits to minimalism: less clutter leads to less stress, and two, you make a little coin selling off that crap you don’t need.

Bonus: You may have the option of student loan consolidation, which essentially combines all of your disparate student loans into one single debt payment at a single interest rate. We managed to consolidate some 6% loans into a larger overall loan of 4.6%. So long as you can achieve a lower interest rate and a lower monthly payment, consider student loan consolidation.

Conclusion

Living within your means is probably the most obvious and least prescriptive advice you’ll get for reaching your financial goals. There’s much more to it than that. Certainly, you could live small, drive a used car (or better yet, ride your bike). You could even rent out an extra bedroom if you’re stuck with an oversized home and its burdensome mortgage.

The flip side of the coin is to focus on how to make more money at the same time. Don’t just focus on frugality. There are only so many pennies and dimes hiding in those couch cushions. If you want to deal with debt, and quickly, you’ve got to find side gigs that pay. Start a blog. Rent a house, condo, or room in your basement. Get a part-time job.

Even better, become the A-player at your cubicle job and focus on building strong EQ and relationship skills. You’ll find yourself indispensable over time if you focus on being the most reliable “can do” colleague on the team.

Eventually, your debt snowball rolls that much quicker when you emphasize the money-making side of the equation.