January 2019 Student Loan Update - $57,345 Paid Back in 4 Years

In the first student loan update of 2019, see how much we paid toward Josh’s student loan debt and how much we still owe. Plus, see my best tips for paying off your debt quickly too!

Here's how we're paying off a giant student loan debt on one income! | student loans | paying off debt

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It’s time for another student loan payoff update! These monthly updates are where I share our progress as we work toward a debt-free lifestyle.

We decided to pay off our debt early after taking Dave Ramsey’s signature Financial Peace University course. Dave gave us the valuable information we needed to pursue a life of financial freedom. Since taking that course, we’ve been working hard to reach our big dream of being completely debt-free. If you’d like to pursue financial freedom too, I highly recommend reading Dave’s book The Total Money Makeover. It’s a wonderful resource that will change your life!

So let’s get back to today’s student loan payoff update. If you’re new around here, let me fill you in on our particular student loan situation. If you’ve been here before, feel free to skip this section.

Our Student Loan Story

I graduated from college without any student loan debt. My cosmetology diploma, associate’s degree in business administration, and bachelor’s degree in business administration all came from affordable schools. I even took most of my classes online, so I didn’t have to pay for expensive student housing!

My debt-free education was a blessing since Josh had enough student loan debt for the both of us. Growing up, he didn’t have the same support system I had. He didn’t have anyone there to help him pick an affordable school, so he ended up at a very expensive for-profit university.

Don’t get me wrong. We’re very grateful for his education. His bachelor’s degree is in computer information systems, so he was able to get a good job one month after graduating. But that education came with a hefty price tag, one that he wasn’t fully aware of when he signed up.

The Grand Total

In all, he ended up with $75,000-$80,000 in student loan debt. We aren’t sure what the exact amount was because he had been making payments toward the private student loan before we got married. I didn’t keep track of his payments back then, and he doesn’t know how much he paid from March 2014 to August 2014.

When we got married that September, I began paying the bills and keeping meticulous payment records. That month, we paid off the remaining $11,000 private student loan out of our savings account and focused all of our energy on the federal loan, which totaled $64,000.

It’s kind of cool to see how much we’ve been able to pay from year to year. Here’s what our payments in 2014, 2015, 2016, 2017, and 2018 looked like:

2017 and 2018 total student loan payments

So let’s talk about our most recent payment!

January’s Payment

When I made January’s payment, the student loan balance was $29,095.67.

I made a payment of $620 which brought the balance to around $28,475.67. This is just an approximation since the loan still accrues interest during the few days it takes for our payment to process.

So far, we’ve paid a grand total of $57,345 in just four years and four months! That’s pretty good considering we’ve been a one-income family for the vast majority of that time!

Thoughts on January

January was an interesting month.

If you remember from the last student loan update, we tried our very first no-spend month in December, and with fantastic results! We squeezed a whopping $1,000 out of Josh’s regular pay just by eliminating a few of our regular budget categories like restaurants, new clothes, fun money, and household items.

I was so surprised that we didn’t really feel deprived during our no-spend month…we were just as happy not spending money as we are when we do spend money! We even decided to permanently lower some of our budget categories because we simply don’t need to spend that much.

So what happened in January?

Why was our student loan payment so much lower than it usually is if we decided to spend less money than we normally do?

Did we completely fall off the bandwagon and kick our budget to the curb?

Well, not really.

Actually, our normal living expenses were right on the money! We stayed within all of our new spending amounts for eating out, groceries, fun money, etc.

However, we decided to make a couple big investments in Simplify this Home so I can grow it into a profitable business. Those investments rang in just under $800, so if we hadn’t spent that money on the blog, we would have paid around $1,400 towards the loan.

the cost of Running a business

Can we talk shop for a minute?

Simplify this Home is my business venture. I started it in 2017 after reading countless income reports that I found scrolling through Pinterest. I’m sure you’ve seen those pins before, haven’t you? They’re the ones that boast things like “How I made $100,000 my first year blogging!” or “How I made $25,000 in one month blogging!”

Pretty enticing, huh?

Yes, blogging can be a lucrative business. I know lots and lots of bloggers who make incredible money from their blogs.

But blogging is also a lot of work, and it costs money.

I don’t share much about the behind the scenes stuff because I don’t blog about blogging. I’m not trying to teach you how to blog; I’m trying to teach you how to simplify your homemaking routines, get your finances in order, and live a healthier lifestyle.

But since I’m also sharing our journey to becoming debt-free, I want to be transparent with you by showing you where a lot of our money goes. Okay, where Josh’s money goes. He’s the big money maker around here. At least for now. 😉

The Truth About Blogging as a business

Blogging is not cheap. Yes, it’s cheap to start a blog, but actually growing it into a successful business can get pretty expensive. Granted, it’s a heck of a lot cheaper than starting a traditional business, but it’s still a business. You have to spend money to make money.

We’ve spent a good bit of money on Simplify this Home. Between education, software, technology, and all the other things it takes to make this thing run, we’ve put about $3,300 into it just since June of 2017.

And since Simplify this Home doesn’t actually make any money just yet (we expect it to this year!), those expenses come out of Josh’s paycheck.

Blogging is definitely a long game. Like any other business, it takes a lot of sweat equity in the beginning before it actually starts making money. We’ll get there eventually, but for now, these blog expenses do cut into our debt-repayment a little bit.

Luckily, Josh has full confidence that I can turn this blog into a money-making machine, so he actually doesn’t mind the extra expenses. He’s just good like that. 🙂

How You Can Pay off Your Debt Quickly Too

If you’re in the process of paying off your own debt, then you may be interested in learning how we’ve been able to make such quick progress even though we’re a one-income family. Here are some things we do to maximize our student loan payments. They’ll help you pay off your debt quickly too!

Educate Yourself

You can’t make the best financial decisions if you don’t have a solid understanding of personal finance. But don’t worry; it really isn’t hard to learn. Start by reading Dave Ramsey’s book The Total Money Makeover. That book will give you the information you need to manage your finances and tackle your debt the right way.

Make a budget and stick to it!

If you want to maximize your debt payments, you have to have complete control over your money. The only way you can do that is by making a plan for every dollar you expect to earn before you ever get a chance to spend it. That’s where a budget comes into play.

A budget helps you prioritize your spending so you can reach your financial goals. If you need some help, I wrote a post that teaches you how to create a budget.

Use the cash envelope system

Making a budget is one thing, but actually sticking to it is another challenge altogether! In my personal experience, the best way to make sure you stick to your budgeted amounts for each budget category is to use the cash envelope system.

Basically, each budget category (with the exception of bills and gas) has its own envelope. You might have envelopes for groceries, restaurants, clothing, gifts, entertainment, pets, household items, etc.

Once you make your budget and decide how much money you want to spend on each budget category, you withdraw the total amount of cash you expect to spend that month and sort it among your envelopes.

When you go shopping, you pay for your purchases out of the relevant envelope. Once the money is gone, you’re done spending for that category for the month!

This system holds you accountable because you’re limited by the amount of cash you have in each envelope. It’s much easier to stay under budget when you have a limited amount of cash to spend.

Find ways to save money

In order to maximize your debt payments, you have to spend less money on your other living expenses. It can seem hard at first, especially if you’re not especially frugal. However, there are lots of little things you can do that add up to big savings. Check out these posts to get some ideas:

And if you need some support with the emotional aspect of saving money, be sure to check out these posts:

Build an emergency fund

Once you get a grip on your finances by creating a budget, using the cash envelope system, and finding new ways to save money, it can be tempting to throw all that money toward your debt right away. Please resist that urge.

While you do need to hit your debt with everything you’ve got in order to knock it out as quickly as possible, you shouldn’t jeopardize your financial stability in the process. Before you tackle your debt with gazelle intensity, you need to have an emergency fund in place just in case something goes wrong.

If you’re just starting out, save up $1,000 in a starter emergency fund while you make the minimum payments on your debt. This starter emergency fund will serve as a nice cushion in case you have a medical emergency, your car breaks down, or you have an unexpected house repair to pay for.

Related: How to Build an Emergency Fund

Once you have that emergency fund built up, you can shift your focus toward your debt. But don’t ignore your emergency fund altogether! Keep adding a little bit to it each month so it can grow to a fully-funded emergency fund.

As a general rule of thumb, a fully-funded emergency fund has between three and six months’ worth of expenses in it. This should cover you in the event of a job loss or some other big financial burden.

Wrapping It Up

And that wraps up another student loan update! Even though we didn’t pay as much toward the loan as we normally like, we’re still working hard to become debt-free. Part of that strategy is growing Simplify this Home into a profitable business.

However, we realize that until the blog starts generating an income to cover its expenses, we will sometimes have months like these where we need to make investments in the business in order to push it to new heights.

Persistence, patience, and a healthy dose of faith are what keep us moving forward even when it seems like it’s taking forever to repay this beast of a student loan.

Also, if you find yourself in a similar debt situation, be sure to do the things I just mentioned: educate yourself by reading Dave Ramsey’s book The Total Money Makeover, make a budget and stick to it, use the cash envelope system to control your spending, find new ways to save money, and build an emergency fund. When you do these things, you’ll be well on your way to paying off your debt too!

Student Loan Update: January 2019