A Year without Student Loans

Sunday marked the first anniversary of paying off my student loans. I’ve been thinking about this milestone since the new year. A year ago then, my debt repayment accelerated rapidly. It felt natural to reflect on what changed in the last year.

1. I’m in an unusual financial position. 

As a recent law grad, I’m expected to have student loans. I knew going into my payoff that I would be an anomaly, but it has been harder to face than I expected. I used to seek out the topic, but now the topic finds me.

At a gathering earlier this month, one of my fellow law grads brought up how he’s never had a lower net worth. He commented to our friend, a waitress, that she likely had a higher net worth that he and I do because of our student loan burdens. I didn’t correct him. His loans are his to bear. He’s a smart guy and I’m sure he’ll figure it out.

I don’t mind outsiders assuming I have an enormous debt burden because of my education. It helps my own frugality. However, it’s frustrating to have the presumption presented to my face. I can’t relate to the weight of their loans. It’s hard to talk about it with people that don’t want to do anything about it.  I haven’t found my place in where to talk about it with people who aren’t already planning to tackle their debt early.

2. Saving doesn’t feel as good as paying off debt. 

I hate to say this, but I enjoyed paying off my student loans.* When I graduated, $45,330 felt like an insurmountable sum. Every payment got me closer to something unbelievable. I didn’t think it was possible to do what I did, but I did it! Had I believed in myself earlier, I would have been done even sooner.

Paying off debt was an incredible confidence builder when it came to my money. I kept track of so many little details and nothing fell through the cracks. If I could manage that, I knew I could manage anything. I felt like a debt slaying warrior.

Saving doesn’t evoke the same feelings. The first few thousand were tough. I didn’t feel like I was getting anywhere with saving. It has been more fun as I stockpile more cash. The $20k and $25k milestones for the house fund had more weight than earlier accomplishments. Those felt like worthwhile savings amounts. I saved something! I’m excited to cross into $30k and $40k. Hopefully, I can get there before I buy a house. Starting over from zero is going to feel pretty cruddy.

*Hubs thinks I’m crazy for this. He hated paying off debt and loves saving. Each saving milestone brings him incredible joy. To be clear, I didn’t enjoy the debt; I enjoyed the journey.

3. Investing is where the fun is.

I was old for my grade and I stayed in school forever. I didn’t enter the working world until I was 27. Add to that, I had that pile of loans to address. I didn’t start actively investing until April 2015 at the prime old age of 28.5.

A lot of people may not sympathize with my tardiness to the investing game. So many start investing much later than I did. The problem for me was that I knew all along what I was missing. I knew about compound interest. I understood its power. Though, apparently I didn’t understand it enough to do anything about it.

Because of all this, I felt and still feel incredibly behind. Now with my student loans behind me and a small, low interest car loan (I can’t wait until this is done), I’ve been able to do something about my investing inadequacies.  I’ve maxed my IRA for the last 3 years. I’ve maxed my HSA for 2 years and I’ll max my 401k for the first time in 2016. Next year, Hubs and I will max out everything. That will be a glorious occasion.

I love investing because I can feel that I’m doing the right thing. I’m taking care of myself for today’s worries and tomorrow’s reality.

4. I’m in a better place now, on the road to a new end.

It’s easy, when paying off debt, to think of the payoff date as your end goal. It’s a great goal, but it should never be the end goal. For a while during my payoff, I was so focused on my payoff date, I believed my payoff date was the end goal. I’m here to tell you it’s not.

For the first 6-8 months after I was free, I struggled. I have no shame in admitting that I didn’t know where I wanted to go. I spent an incredible amount of time spinning my wheels, getting no where. Getting rid of my debt was a huge goal. When I accomplished it, I didn’t know what to do.  I played around with several ideas: minimalism, fitness, zero waste, early retirement. Less, more, less, more. None of these ideas filled the hole left behind by my drive to rid myself of student loans.

Today, I accept all of those pieces as a part of my next journey. I will never own 100 things, but I actively choose to own less. I will never be in amazing shape, but I choose to move more. I want to waste less and save more, a lot more.  I haven’t filled all the space yet, but I’m working on it.  The best news is that I’m more confident and at peace with myself than I’ve ever been.

 

I have no regrets about paying off my student loans. The process helped me learn a lot about myself and where I want to go. I’m excited about what the future holds.

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18 comments

  1. This is a great perspective and you are not alone on #1 and #2 – no one knows quite where they fit in a conversation about personal finance with people that don’t want to do anything about their situation – that’s not exclusive to debt. And Yes, saving is a lot less fun than paying for debt. I agree with that statement. I didn’t have excessive debt, but there’s a momentum that happens with debt that doesn’t happen with savings – research shows that!

    1. My biggest struggle with #1 is that I feel bad about not having the conversation. Sure, most people will keep their head in the sand about their financial situation, but what if I can be that one conversation that opens someone’s eyes. So many people are clueless and they’ve been told that’s okay because student loans are such a burden. They accept that burden. What if they don’t know there’s another way?

      #savingisboring

      1. Right. I usually try to find one phrase “you know, I figured out if you increase your payments by just $x/month, loans can be paid off ten years early!” – when they say “right, but finding x a month is impossible… you get it” – then you can back it off: “Right, student loan debt is rough!”

  2. Wow, I love the honesty. I definitely understand talking about student loans, while I do still have a ton of loans to repay, I’m committed to working towards more than just IBR payments, I don’t plan to continue with IBR for another 20 years, which is exactly what pretty much all of my law school friends are doing with very few exceptions. My loans really woke me up to my financial reality and I would love to see my friends wake up too, but it has to be their own journey and you can’t force personal finance knowledge on anyone, though I think by now most of them know I’m more than happy to have an honest conversation about money and student loans when they want to start talking about them.

    1. I’m so excited for you to get your car loan paid off so you can start leaning into your bar loan and that big monster. He’s an ugly one. I’m glad the monster woke you up. It does suck that we’re both in the camp where we have info and encouragement to share, but no one IRL wants to hear the good news.

  3. I can definitely relate to your #1, as I recently completed my medical training (at the ancient age of 38), and I’m working hard to achieve a positive net worth (1-3 months to go). I find it hard to relate to other new grads who are buying big houses and fancy cars instead of squirreling their money away like I am.

    1. Keep squirreling away cash! Good to hear you fought the pressure to join the spending patterns of other new grads.
      Good luck and early congrats on achieving a positive net worth!

  4. This is soooo exciting, Kate! What an important milestone. I’m looking forward to the day when I will have been debt-free for a year. And that’s also great that saving is starting to feel more rewarding. 🙂

    I love your 100 things paragraph. It’s important to remember that even if we’re not breaking records, our efforts are always worthwhile and make a difference.

    1. Thanks Sarah. You’ll get here soon enough.
      And yes, I totally agree about worthwhile efforts. The effort is harder to define outside of a concrete goal, but that doesn’t mean it’s not worth it.

  5. I love this post! It made me so happy. Congrats on the milestone, and on this self-reflection. I can completely relate to the lack of excitement around saving after debt payoff — that was how I felt for the first year or so post-debt, but then eventually I did find that fire for watching our numbers climb, and I’ve never looked back. Speaking of law school debt, did you see the profile on MSNBC and CNBC today about Root of Good and Go Curry Cracker? Justin @ RoG has a JD, and so many of the comments on the piece were some version of “This must be a lie, because no one can buy a home while in law school.” Or “We can’t possibly have saved all of this because he obviously came out of law school with $100,000 in loans.” Thought you might enjoy that. 🙂

    Most of all, I’m happy that you’re feeling more at peace, and that you’ve got a world of possibilities in front of you. We didn’t get truly stoked about early retirement until our early/mid 30s, and there is definitely something to be said for continuing to dabble and try different things.

  6. I think when you’re paying debt, you know where the end goal is. Whereas in savings, well… Saving more is always better so there’s no end really. That being said, I totally understand your husband’s excitement about milestones. I want to try to investing sometime down the road but perhaps when my job situation is better.

  7. I love your conclusion: “I will never own 100 things, but I actively choose to own less. I will never be in amazing shape, but I choose to move more.”

    Extreme goals are great, but being realistic is so important. It sounds like you have a pretty good handle on where you’ve been and the maintaining the right focus. Your future goals will materialize, just give it time. You’ll have flexibility to do a lot of different things with all of the progress that you’ve made with your finances.

  8. Hi Kate,

    Wow, I hadn’t even thought about this. I figured as soon as I no longer had a $80,000 balance hanging over my head, I’d run around hollering, “freedom”. I never even considered that I might not even know what to do next. Thank you for sharing your perspective because at least if I end up feeling the same way you did, I’ll expect it!

    I’ve been saving in my 401k since my mid-twenties, but I can’t say that I don’t feel the disappointment in not having any investments outside of the workplace. I always wonder what my investments would be like if I didn’t have student loans and I was contributing regularly to an IRA or brokerage account. Considering the disrespectful interest rates on my student loans though, I’m pretty sure I wouldn’t even break even.

    1. Hey Latoya,
      Don’t let any of this discourage you. Life without student loans is way better than with them. With that said, I strongly recommend planning for your student loan payoff to be part of your journey, not the entire journey.

      You don’t need investments outside of work to have a measure of success, especially with all that debt over you. You’ve got the hustle and it sounds like you are already mad at your loans. Get real mad and make them go away. Then after you can invest all you want!

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