This post is sponsored by Regions Bank.
Did you have student loans while in college? How did you pay them off? Maybe you still are. A fresh fall semester just started here in the small university town where we live–which happens to be the same University Chris and I graduated from nearly ten years ago. While we may be in a different life stage now living here, we got married 2 semesters before finishing our degrees and we came into the marriage with two different college financial experiences. I had a full-ride scholarship so I had no student loans, about $300 of credit card debt (which I remember feeling like felt like so much!) and worked as a waitress all through college which allowed me to have some savings, but not a ton. Chris had accrued about $23,000 in student loans before we got married, had about $700 in his checking account and was the manager of the cell phone store in town where he earned about $19K a year (which, again, I remember feeling like like that was so much!). While we both believed that the student loans were a good investment in his future career, we wanted to make a plan to pay off the debt as soon as possible and start a good savings account. So how did we got from meager beginnings to paying off tens of THOUSANDS of dollars in one lump sum? Here’s how:
The first thing we did, (which is actually one tip Regions Bank recommends in this Money Tips article from Grads to Freshmen) was I applied for another scholarship. It was for upperclassmen and it ended up being enough money to cover both of our tuition bills that final year and even covered our living expenses which meant we were accruing no more debt.
Above: Our college days
2. We made a budget, tracked our finances and lived below our means–we’re talking $100 in groceries for the month and getting creative with date nights (we used to have “iron chef” cook-offs at our apartment) and even low-budget vacations (here’s a bunch of great ideas for those). This allowed us to save way more money while still in college. It’s also how we got into DIYing. ;)
3. Once we graduated we had to start paying off the loans, which, you may know first hand, was a blow. It felt like even with both of us working we were only able to barely pay the minimum payment every month, and it seemed to only cover the interest accrued. It felt like we were throwing our money away paying only interest and rent on top of that. So, we assessed whether buying a house was a better option for us versus renting and ultimately decided to buy a house to earn some equity.
Above: Us at the closing of our first home!
4. We applied for grants for first-time homeowners, looked for a house that needed some TLC and was within our budget, and only put $1000 down of our own money (plus, $5000 grant money) on our very first home. We fixed up the home ourselves over two years (and yes, documented the whole thing through blogging), while we continued to make payments on our student loans. After 2 years, the principle on the loan had only gone down about $2000. But, in that same amount of time, we were very fortunate because our home and the work we put into it increased the value over $50,000!
Read more about our first home’s transformation here.
5. Although it came in the form of an unexpected job opportunity out of state, we sold our first home after 2 years and paid off our student loans, approximately $21,000, in one lump sum with the earned equity and still had enough money to put a sizable down payment on our second/current home…another fixer upper, of course.
Of course, this isn’t the only way to pay off student loans, and I know that the fast appreciation of our first home’s value is not typical, but I can’t tell you how amazing it felt being able to write that big check and remove the student loan weight from our shoulders, while also improving our former neighborhood’s home values. I’d do the exact same thing all over again. Buying and fixing up a home, however backwards it felt as poor, newly graduated college students, changed our whole financial life.
Whether you’re just starting college or graduate school, a young professional, a growing family, empty nester or retiree, I know you would benefit from checking out Regions Bank’s Personal Insights page here. It’s divided into life stages and I came away with lots of tips, innovative solutions and articles for our family and finances that I’m genuinely excited to implement. Check out www.regions.com for more information.