I graduated from business school in 2010 without really understanding what it was like to have debt and not understanding how to manage my finances. I was lucky enough to have not have any college loans and basically spent all that I made prior to business school, including taking a 3-month long trip throughout Southeast Asia and India before starting class.
I landed a full-time job at a bank and was excited about my $100k starting salary. Business school was already paying off in the form of a 6-digit salary! What I found out quickly, and to my surprise, was that I wasn’t able to make ends meet even with that salary. After graduating, I decided to live on my own in NYC and I spent frivolously – on upgrading my wardrobe, on going out every weekend, and on little life conveniences, like daily coffees and lunches, as well as frequent cab rides. My lifestyle didn’t support the $1k monthly payment I had to put towards my student loans, which carried a very hefty 8.625% interest rate that started accruing the moment I started school. And as a result, I extended the term of my loans to 25 years, so that I could reduce my monthly cash outflow. This was followed by moving to an income-based repayment program that resulted in me paying far less per month, but in which the majority of my payment went solely towards interest, with no reduction to my principal. For nearly 4 years, I lived essentially paycheck to paycheck and made not a single dent in my $140k in loans. And during this time, I racked up nearly $10k in credit card bills as I continued to live my post-MBA single gal in NYC life.
I was a financial disaster.
This continued until the day that I knew I was going to marry my now husband. Before we talked about whether we were going to get married, there was one more topic we had to discuss. What was the state of our finances? How did we manage money? Are we financially compatible people?
The night we had the big discussion, I revealed my truest self. I was in a lot of debt and I had a spending problem. It was embarrassing but it set me in motion. I refinanced my loans using SoFi, lowering my rate to 6.875% and shortening the term of my loan to 15-years. I went cold turkey and stopped buying stuff. My now husband moved in with me and we started sharing a lot of our expenses.
And slowly but surely, I started making real progress. However, I would be oversimplifying if it was just about spending less. I changed my career in 2014 and became a real “banker”, with a substantially higher salary trajectory and much meatier bonuses. We moved to Texas, where we stopped paying city and state taxes and the cost of living was considerably lower. I started earning side income from renting out my little studio apartment in Brooklyn. I refinanced my school loans again, down to a 3.25% interest rate and a 5-year term.
Now nearly a decade after my graduation, I have finally whittled my school loans down to $30k, with a full $110k of loan repayment only taking place in the last 5 years. I can finally see the light at the end of the tunnel. My goal for 2019 is to pay everything off. Here’s to a (school) debt-free future!