When I told people I was going back to school to become a physician assistant, I got a lot of raised eyebrows in response; no one understood why I would go back to school in my late twenties only to graduate with six figures of debt. However, as a web designer trying to make ends meet in Chicago, I knew I had found my passion after working on a pro-bono project with a public health organization. After a lot of research, I decided to pour my savings into taking prerequisite coursework, and I made the jump from a career in design to a career in healthcare. It was a challenging (and expensive) decision, but ultimately one that paid off.
In 2013, I went back to school at Carroll University in Waukesha, WI for a 2 year program to receive my Master's of Science in Physician Assistant Studies, and now I live and work in New York City's Upper West Side as a physician assistant specializing in cardiac surgery. Even though I am not a full-time designer, I can still flex my creative muscles through freelance design projects, DIY home decor, and my favorite project, converting a school bus into a tiny home on wheels (affectionately named Hugo the Skoolie) with my partner, Joe.
Making the jump from design to healthcare was the right decision for me, but my career switch also came with a hefty price tag: When I graduated with my master's degree, I had over $100,000 in graduate school debt, which included $85,000 in federal loans and $15,000 in loans from my family.
What felt even more alarming than the sheer volume of my debt was that I didn't know the first thing about how to tackle that debt. I had spent the last two years focused on getting my education and moving to a new city. I wasn't thinking about the true cost of my student debt and how it would affect my financial future.
Luckily, it wasn't long before I had my perspective completely changed by my partner, Joe. He works in tech accounting and finance and crunched some numbers on my student loans. He demonstrated how much money I'd be throwing away in interest payments if I continued making just the minimum payments each month, and I was floored. It became my goal to pay off my student debt as quickly as possible.
I started putting a significant portion of every paycheck towards my highest interest loan while making the minimum payments towards my other loans. I stopped contributing to my 403b retirement plan, cashed out on my Roth IRA from my old job, and canceled additional investments like my life insurance retirement plan (LIRP), so that I could pay off a larger portion of my student loans each month. I opened a Mint.com account to monitor my spending and started a blog to document the highs and lows of my debt-free journey and to help others be more financially savvy.
Joe and I moved in together in September 2016, so cohabitating and splitting costs has been a huge help. He is debt-free and is very supportive of me paying off my debt so we can focus on building a future together. We used the following principles to guide us through all of our personal finance and spending decisions:
Do the math: See how much you could be saving on interest with a 2 year versus 5 year or 10 year student loan repayment plan. This was the ultimate motivation for me – I hate waste!
Be disciplined: Living in NYC, or really any costly city, requires a lot of self control when you're trying to stick to a budget, particularly when it comes to impulse purchases. I've been able to avoid most unnecessary purchases by always asking myself two things before I buy: Do I want this or do I need this? What is the return on investment of this purchase?
Live below your means: Cook your meals instead of eating out (meal planning has worked wonders on our wallets and waistlines); use those credit card points instead of paying for a flight out of pocket; DIY when possible; buy things second-hand or in bulk.
Even with disciplined budgeting and aggressive payments, I still wasn't making much of a dent on my total principal of my student loans. I re-examined my debt and realized that I needed to explore other options if I really wanted to pay off my student loans quickly. It was Joe who recommended looking into refinancing to a lower interest rate since my federal rates ranged from 5.16% to 7.64%.
CommonBond came through with a huge decrease in interest: they enabled me to refinance my existing student loans at a lower interest rate of only 3.4%. I ended up refinancing my $66,000 in federal loans with CommonBond in May 2016, and was determined to pay everything off in 2 years or less. Just 8 months later, my interest-bearing loans are paid in full! I now have $11,000 left in an interest-free loan, which is on track to be paid off by June 2017. That will be $100k in student loans paid off in 21 months!
The amount I was able to save in interest by refinancing with CommonBond is incredible. I paid a little over $1,100 in interest on my $66,000 principal in these past 8 months, versus the $15,000+ in interest I would have paid if I had not refinanced or continued aggressive payments. I'm also very thankful for Joe and highly recommend others find an accountability partner to keep you on the path toward financial wellness. This could be a significant other or even a friend – all you need is someone who will provide positive reinforcement when you stay on track, and who will motivate you when you're feeling discouraged so you can focus on building your future.