We interview Rebecca from Stapler Confessions to find out how she is paying off $125,000 of student loan debt and learn how we can pay off our debt too.
Rebecca escaped her four year college with zero debt but things changed when she graduated law school. She came out with $125,000 in student loan debt.
Rebecca married her law school sweet heart and he had the same amount of debt so all total, they were a quarter of a million dollars in debt. The couple used the snow ball method and every month threw every extra dollar at the smallest loan payment.
Rebecca’s husband works for a non-profit and uses an income based repayment plan. If he works for the non-profit for 120 months and makes every payment, the rest of the loan will be forgiven. This option is only available for federal loans, not private. Eventually, he stands to have about $50,000 in loans forgiven.
Income based repayment is a good option for a lot of people. Your monthly payment is based on your income. It will generally extend the life of your loan but if you’re in a tight spot, it can help.
Rebecca has an IRA and will max that out and then start tackling the next loan. Rebecca does a budget, as we all should. She keeps it on an Excel spread sheet and tracks the family spending in Mint.
When it comes to the question of whether you should pay off low interest rates loans or invest in the market, Rebecca advises going with your gut. Those loans, even the low interest ones, can be a heavy psychological burden.
Student loans are burdensome but there are ways to pay them off faster and even have them partially forgiven. Good luck to all us borrowers.
Stapler Confessions: Rebbeca’s blog about personal finance and her love of Staples office supply stores!
Mint: The easy way to track your spending.