I graduated from college in May 2008 with degrees in Math and Electrical Engineering and $33,850 in student loans.
I paid off the last dollar of those loans on June 15th, 2012.
My road to paying off student loans was a long one with many twists and turns. I had considered finding a company that would refinance student loans. I will begin a three-part series tomorrow that expands on my three main phases of paying off my student loan debt:
- I started by paying off high interest debt very aggressively.
- After that I made minimum payments while I invested any extra money in the stock market.
- Finally, I got back to aggressively paying off all the debt when I lost faith in big stock market returns and wanted to increase cash flow and reduce risk.
I’ll hit more on how I did it over the next few days, but today I want to focus on my new debt-free life ahead of me.
Now that I’m completely debt free (with the exception of about $2,500 in 0% loans for furniture and electronics), I have a lot of things I’m going to do:
Have a Student Loan Payoff Party
Tag and I went out to dinner over the weekend in a celebration of Father’s Day with her dad, finishing her parents’ garage sale, and my student loan payoff. Okay, so it wasn’t much of a student loan payoff party, but I didn’t want or need a big celebration.
I will have my own private student loan payoff party every time I don’t have to make a monthly student loan payment, look at my net worth, read an article about the ballooning cost of higher education, watch college football, drive by a college, talk to someone in college, think about someone who is in college, eat Ramen Noodles(or any other “college” food), play video games instead of doing something productive, watch “Saved By the Bell: The College Years”, or anything else that would ever remind me of college.
I’m gonna be doing lots of partying.
Start Saving for a House
Now that I’ve finally paid off all my student loans, I need something new to save up for. And what better to save up for than a house?
I love renting. I love how I’m not responsible for repairs or yard work or anything else. However, I hate that I can’t blast my music for fear of bothering my neighbors. I hate that I can’t invite out of town guests to stay with me because I don’t have a spare bedroom. I hate that I can’t build a man cave.
I need a house.
Of course I want to have a 20% down payment before getting into a house so I don’t have to pay PMI. Considering the fact that I’ll probably want a house that costs $200,000 to $400,000, I will need $40,000 to $80,000 in liquid cash. Right now between my Roth IRA and my checking account, I only have about $15,000.
My goal for the end of the year is to have $40,000 between my Roth IRA and my checking/savings.
Let’s see if I can pull it off.
More Student Loan Goodness This Week
As I said in the intro, I’m going in depth on my three stages of paying off student loans this week. Make sure to come back and read about how I paid off over $33,000 of student loans in about four years!
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A huge Congrats is in order!!! I am so happy for you. While I don’t have any student loans my girlfriend has a ton hopefully we can make a similar post in a couple years after we are married and they are paid off! Good luck saving for the house. It is worth it if that is what you want.
Good luck paying off your girlfriend’s loans. If I end up marrying my current girlfriend then I’ll have to start this process all over again to pay off her loans.
Congratulations!!!
Don’t forget about closing costs when you’re looking to buy a house. They can run anywhere from 0-3% of the purchase price of your house, depending on your lender and the terms of the loan that you choose. Plus, you have to pay for an inspection and an appraisal and then you also have to move. You might have to pay both rent and a mortgage payment in a month depending on the timing of your closing date.
So if you buy a $200,000 house, you’re going to need $40,000 as a down payment, plus probably about an extra $6,000 on hand to cover closing and moving costs, for a total of $46,000. If you buy a $400,000 house, I would probably set aside $10,000 for closing and moving costs, for a total of $90,000.
Yeah, I definitely know houses are really expensive. I just want to get locked into a 15 or 30 year mortgage while interest rates are really low because that will save me hundreds of dollars a month.
Here’s hoping I can save up enough to get something before interest rates go up again.
CONGRATULATIONS! And how impressive that you tackled them do quickly. I hope to have mine paid off this year, and I graduated in 2003.
Party on, Kevin.
I hope you do get yours paid off this year. It’s a nice feeling!
Congrats on your student loan payoff! Buying a house is very exciting.
I can’t wait to get a house. The first thing I’m gonna do is start building a man cave. I hope I can move up north a little bit to get a house with a basement. The man cave should always be in the basement!
Congrats on paying yours SL off and good luck on your savings goal.
Thanks! Saving for a house is a lot more exciting than saving to give all your money to Sallie Mae!
CONGRATS KEVIN!!!!!! That is amazing! I love that you don’t have to have negative connotations with Saved By the Bell College Years and Ramen Noodles hahaha. I eat a lot of ramen right now to save money, and it does suck!!!!
As for your down payment – are you thinking of taking out your contributions from the Roth once you have enough?
I do plan to pull from my Roth. In fact, if I leave my job and roll money from my 401k into a Roth IRA, I’d probably use that money too.
I don’t have a whole lot of faith in the value of the dollar over the next 50 years with the way our government is going. I’m more interested in having my wealth in physical stuff like houses and precious metals than having a bunch of dollars that could become worthless anytime the Fed wants to print a bunch of money.
Well done sir!
Having a new goal is fun (and so is looking at houses). I do enjoy having my own house and being able to be louder than when I had shared walls, but I still keep it down when it gets late since I like all my neighbors and want them to like me too!
That is a huge milestone Kevin! Congrats. I got my first home in September and paid off my loans in March. It feels great to be in such a strong financial position.
Congrats kevin! that is such awesome news – and BTW, the man cave is totally worth it.
Congrats. I have similiar loans from college and have roughly $12k left on them. Betweeh saving for a wedding, engagement ring and now a home I’ve taken my time to pay it down. I figured I wouldn’t be able to get a better deal on the cash so why throw cash at it.
Congratulations! That’s awesome. I’m going to have a similar party when my student loan gets paid off. Way to rock it, and pay it off just four years after graduation!
Nice work! I know that good feeling!
Perhaps a trip to Vegas is in order??
Congrats! I can’t wait until mine are gone.
Congrats! My loans are at such low rates right now that I’d rather have the flexibility. But some the wife’s are at insane rates (7.5+%) that what I haven’t put toward mine can go toward hers immediately.
Congratulations! I think you should have an actual physical party with your friends to celebrate. You may motivate a few of them!
Great work!
Big congratulations!!! I graduated in 2005 with approximately $36,000 in debt, and we paid the last of it in September 2010. Woohoo!!
Since you want $40,000 between Roth and savings, does that mean you would pull money from your Roth for part of your downpayment?
Congrats! That’s completely awesome!
Congratulations! That’s a terrific accomplishment in very little time. I hope I can say I paid off my student debt in 4 years!
Congratulations Kevin! This is a huge accomplishment, especially considering how many of us still have student loans weighing us down. My wife and I had over $65k in student loans, and because of other debt, we are still working on it.
Hey Kevin, that’s an immense accomplishment paying your student loan off so quickly! Congrats. It’s a great feeling being debt free, you get a great sense of relief knowing there is nothing hanging over your head financially.
Way to knock down debt! With that kind of personal finance grit, you’ll have your $40k saved in no time.
I don’t have a spare bedroom. I hate that I can’t build a man cave.
Excellent job over again! Thumbs up.
Congrats on paying off your loans Kevin!! 🙂 I am in a similar boat…I had $50k in student loans after graduation, and I hope to have them payed off by December! Only 2 years and a lot of dedication! 😀
I know you like saving money, so start looking into foreclosures…we bought a foreclosure that was super cheap! They took really good care of it, but they took all the appliances / light fixtures..that just left us room to customize! 🙂 http://www.har.com has a really cool app where you can map out the area that you want to live. I think they have some Dallas houses listed, or maybe you can find the Dallas equivalent?