Ok, so I know you’re wondering, how do I plan to pay off $92,000 and how long it will take me? Well, my plan is to pay off my student loans completely in less than 3 years!! This will take sacrifice, dedication, and discipline. But I am confident that I will be student loan debt free in 3 years or less!

My plan is simple because I consolidated my loans I now only have one gigantic loan. There is not much I can do strategically when it comes to saving money but I have a few simple techniques. I will continue to recertify annually for the income driven repayment plan until the loan is paid off. In order to have your loans forgiven through the PSLF program, you must be on an income-driven plan and make 120 qualifying payments (1 per month for 10 years). I plan to pay off the loans well before 10 years, but this is my back up plan. If for some reason (God forbid) tragedy strikes and I can no longer afford to aggressively attack my debt, if I continue to make the qualifying payments (determined by my income), my loan will be forgiven after 10 years.

Automate

One thing I plan to do to save money is continue with automatic drafts for two reasons. One, because it ensures the qualifying payment is drafted each month. Paying extra each month is what the servicer calls “paying ahead” and you will not be billed the full amount the next billing cycle. But the auto draft acts as a catch-all and will debit your qualifying payment amount each month regardless of how far you’ve “paid ahead”. Let’s use the same numbers we used in Part II of this series. If your loan is $50,000, your minimum qualifying payment is $300 per month, and you make a $400 payment this month. Next month’s bill will say you owe $200. If you only make a $200 payment, that month will not qualify as one of your 120 qualifying payments. Automatic payments will draft your minimum qualifying payment each month, regardless of how much you’ve paid ahead. FedLoan Servicing also offers a .25% discount off of your interest rate if you are on auto draft.

How much extra will I have to pay?

Although the minimum payments will be auto-drafted each month, I will make a total minimum payment of $1,500 -$2,000 each month. My qualifying payment will vary each year depending upon my income (if my income increases, so will my minimum payments). But regardless of what the servicer determines my qualifying monthly payments to be, I will make a payment of at least $1,500.

Ok I know you’re thinking $2,000 * 3 years (36 months), is only $72,000 (were you thinking that? Lol). In the last 8 years of employment, I have received an annual performance bonus, a holiday bonus, and a pay raise every year. None of these are guaranteed but if the next 3 years continue like the past 8, in addition to the $1500/month, I plan on throwing the mass majority of my bonuses towards the loan. I also have a few side hustles that will most likely generate more income that I will use to pay off the debt more quickly.

Map Out Your Journey

I created an excel sheet that calculates my $1,500 planned monthly payment, 1 annual bonus payment, and interest and by my calculations, it should take me 3.5 years to pay off the loan completely. I am hoping to pay them off much more quickly with all the other forms of cash flow I plan to receive over the next 3 years.

Speaking of annual bonuses, last month I was able to pay $7,800 toward my loan, my first extra payment thus far. So now, I no longer have $92,000 in student loan debt, I have $83,000. I am so excited to be on my way to debt freedom!!

What are your strategies for paying off your student loan? Have to calculate your debt free date? When is it?

I would love for you to continue to follow my journey on Instagram.

Until next time,

Mommi Mykal