Education has become more expensive, yet salaries have stayed relatively stable over several decades. To pay for college, students and their families have had to take out larger and larger debts—many struggles to pay them off even after they leave the university. More than 45 million Americans have student loan debt totaling $1.71 trillion.
It may make a difference where you reside when paying off your student loans. Paying off your ConsolidationNow student loans may be easier if you cut down on monthly costs like rent or mortgage payments. To conclude, let’s visit Brooklyn, NY.
Shannon McMahon had a rough year last year, and you may have felt sorry for her. A coronavirus outbreak forced McMahon to lose her full-time position. Live music performances and other side hustles came to an end for her due to this.
However, even a few months may make a significant difference: With the government’s loan-repayment reprieve, McMahon is now earning more money than before. She intends to pay off her private college loans before she turns 28 in October this year, thanks to the increase in her financial flow (after paying off credit card debt and a federal Perkins student loan in 2020).
Furthermore, McMahon says she’ll pay off the $22,300 in federal student loan debt she still owes by the time she’s 30 – unless student loan forgiveness comes before.
A typical day in the life of a New Yorker in Brooklyn.
For a long time before the arrival of COVID[-19], I would spend my workdays traveling to and from a vast music magazine. I had a wonderful time and will never forget it. My team and the firm were a fantastic fit. On top of that, I used to play in other people’s bands and my own around New York City venues after work every week.
After I was laid off in October, it took me a few months of job-hunting to find a new position that would allow me to continue working in the entertainment sector, which is my true love. Aside from working from home and creating or rehearsing new songs throughout the day, I spend the evenings with my partner and tiny black cat Salem, learning how to cook fresh meals and hanging out.
What are the costs of living in your area?
It costs us $2,650 a month to rent the [one-bedroom] apartment, which does not include utilities. My partner and I spend $1,325 per month to cover this expense. We spend roughly $160 a month on the internet and electricity, which we share equally.
Are your current yearly earnings enough to cover the repayment of your school loans?
To be honest, it’s a huge blessing that I can now say this. In the past, it was tough to make payments since my wage was smaller, and I had $17,000 in credit card debt to pay off. Since the interest rates on my credit card debt were so high, I chose to start there and pay it off in two years to be debt-free by the beginning of 2020.
Getting laid off in October was a blow, but it allowed me to take stock of my skills and learn how to bargain for my wage properly. Now that I’m making more money, I can pay back my student loans far more than the minimum payment.
When and why did you first start taking out student loans?
When I was in high school, my parents could not pay for my college education out of pocket like many others in the United States. My parents didn’t go to college, so they had no idea what I was going through, and my mother eventually went back to school while I was still in school.
As one of six children in a low-income household, I was raised believing that education could lift you out of your situation. Although I’ve outearned my parents, I’m still tied to a spool of student loan debt.
I wish I’d done more research on low-cost college possibilities in New York City before deciding. In my opinion, 17-year-olds should not have to make these financial choices, mainly when their parents cannot use appropriate counsel. Our educational institutions must do a better job of educating students about financial aid and student debt.
Was your financial situation in a position where you could afford to repay your debts at the time?
After the six-month grace period granted to graduates, I began repaying my student loans. No payment was ever late, but I also paid the bare minimum. While I was working my first job after college, I was living in an inexpensive apartment with three roommates so that I could meet my financial obligations.
As soon as the Get on Your Feet program was launched in New York, I knew I had a chance. I wish I had understood more about money while I was in college because if I had, I could have paid more toward my student loans on top of what New York was paying, and I could have been out of student loan debt by now.
When did you begin to take a more aggressive stance toward resolving your debts?
For the first time since my credit card debt had been paid off in January of 2020, I was active in my payback efforts. Even though my student loan debt looked insurmountable, I was sure that I would never pay more than the minimum payment and die with the burden instead.
My outlook on life dramatically altered once I paid off my credit cards.
Debt reduction was made possible for me by dividing a large debt into manageable chunks. Being a part of the debt-free community has helped me stay motivated to finish paying off my student debts, which had become more complex and isolating. Thank you very much for that! In that group, I’ve learned how to be more deliberate in my spending, more aggressive in my loan repayment, and tipped off to side hustles that might help me make more money to pay off the remaining balance.
Is “shesdebtfreeby30” your Instagram username because you want to be debt-free in 30 years?
No doubt about that. When I first began paying off my credit card debt, something about setting a strict, aggressive target worked for me. As soon as I notified my family and friends, I was committed and had the drive to complete the task.
I’m not going to lie: I was exhausted once I paid off my credit cards. That’s when I decided to start an Instagram account to spur myself on and make a public commitment to achieving my objective. I’m sure that I will be debt-free by the time I’m 30.
It’s been a while since you’ve made further repayments.
I strive to pay off my one private student debt before I turn 28 in October by paying roughly $1,000 a month toward my student loans. The current balance is $8,900.
There is a $22,300 debt on the remainder of my federal student loans. I’m trying to pay my private student loan, which is not suspended and is still accruing interest, as those payments and interest have been halted due to coronavirus relief.
Refinancing your installment loan may be an option for you.
I refinanced my private student debt, and I’m thrilled with it. In the beginning, when I borrowed the money, it was for $10,000. Discover lent it to me. As a 17-year-old with no idea what she was doing, my mother did the best she could with the information she could find online regarding private student loans when the government loans weren’t enough.
That Discover loan’s interest rate was in the tens of percent. I chose to refinance with SoFi when it grew to $13,000. I refinanced with SoFi before the pandemic struck since my credit score rose so much after paying off my credit cards. Now my interest rate is substantially lower, approximately 3.9 percent.
In light of this epidemic, I would never contemplate refinancing my government loans, which come with much more safeguards than private loans.