My Student Loan Debt Drops From $49 Thousand to $46 Thousand in One Shot

After some careful planning and budgeting, I was able to make another big dent in my remaining student loan debt balance. You may recall last month when I finally broke the milestone $50 thousand mark in terms of the total balance remaining on my student loans. For a guy who started repaying a pile of student loan debt that once sat at about $121 thousand and as short as 24 months ago was sitting at about $100 thousand, breaking the $50 thousand mark last month was certainly big news.

But I’m excited about this month’s news, too. Not only did I move my student loan debt from $49 thousand down to $46 thousand, but I managed to do it in a way that did not have a negative impact on my savings and investments or my regular monthly cash flow. Now some of you might be asking, “Geez, Joe. How did you manage to do that?” Well, it’s actually relatively easy to do. All I did was redirect some of what I call my “excess” income to repay these loans.

And what exactly is “excess” income?

I define my excess income as the money that I make outside of my regular, daily job. Many of you know that I work like a madman: I own and operate a small website company which, in turn, owns and operates a few different web properties; I’m an adjunct professor at the local college; and I’m an online mentor for a very popular online university. One of the reasons why I work like a madman is not because I like being busy 24 hours a day, 7 days a week. I work like crazy because I direct all of that excess income that I earn from these activities directly towards repaying my student loans. Period.

And when the time comes that my student loans are fully repaid (by my estimate that could be as early as 12 months from now), I’ll have a few significant income streams coming my way. Unfortunately (or fortunately, whatever), I’m not going to be able to take an immediate break from working like crazy. The reason for that is because I’m going to have to work just as hard to rebuild, bolster, and dramatically increase my savings and investment accounts as I did to repay my student loans.

If I can repay the balance of my student loans over the next 18 months, then I’ll be 32 when my repayment is complete. By that point in my life, I should have been able to save (through investments, savings, CDs, and my 401k) a little bit over $150,000. While I definitely am on my way towards that goal, the aggressive student loan repayments obviously make it such that I have some catching up to do.

But I’m clearly not worried. I’ve knocked down over $100 thousand in student loan principal and interest in the last two years. With my income increasing each year and my now relative ease living with extreme budgeting to reach specific financial goals, I should be well above $150,000 in savings by the time I turn 33. It’s just a matter of stopping the useless, meaningless spending and directing your funds towards the things that really matter – like paying off debt! 🙂

In May 2006, I graduated from Rutgers University with a Masters Degree and $120,720 in student loan debt. After completely repaying over $61 thousand in student loans (not counting interest) from the federal Perkins loan program, the New Jersey Higher Education Student Assistance Authority, and CitiBank, I currently owe $46 thousand to the United States Department of Education’s Direct Loans program. Follow my student loan repayment story on JerseySmarts.com.