How to Pay off Loans Within 6 Months of Graduating

Seven in 10 seniors (69%) who graduated from public and nonprofit colleges in 2013 had student loan debt, with an average of $28,400 per borrower.

If you’re like me, you’re sick of making the minimum payment every month, realizing that you’ll be tied down for the next 120 months. Rather than examine the postmortem of your college experience, let’s consider it’s a sunk cost and an awesome experience.

I’d like to also disregard the idealist who attended school on their parents dime, soliciting financial advice to recent graduates with debt.

Moving forward.

Having a cash flow positive mindset will not only help alleviate $28,400 of debt in less than 12 months but it will have a compounding effect on your ability to earn future monies.

There are two ways to solve this problem. The first would be to cut spending: stop eating out, ordering Starbucks, and drinking alcohol.

The second would be to supplement your current income enough to pay off the 30k outright and avoid interest charges.

Assuming you’ve already cut back on spending and gotten down to a reasonable baseline, we can focus on the latter in 3 parts.

Craigslist Economics

Selling on Craigslist is not something to fear. While a lot of people have given reasons why they don’t sell things to strangers, over the past 10 months I have quietly sold 214 random items for over $34,100 of untaxed income.

Your parents will be happy to let you sell their junk as they are most likely the co-signers on your student loans. 99% of the time Craigslist people are friendly and pleasant.

They reciprocate the same worries as you, wondering if you are going to try to take their cash. Yes, there are some extreme cases, but I have created a framework to help mitigate risk. This will help you sell safely, maximize profits, and make the best use of your time.

Framework: How to sell on craigslist safely.

I would highly recommend batching all Craigslist tasks so they don’t interfere with everyday life. I usually create all my postings on Sundays, reply to emails from 12 to 12:30 on weekdays, and sell after work around 6pm. This framework has allowed me to pay back all of my loans with minimal extra effort on my part.

Airbnb

Now that we’ve sold everything in sight and are more comfortable doing business with strangers, let’s double down on the cash flow positive mentality.

Airbnb is much safer than Craigslist from a hosts’ viewpoint. Guests are verified by email, phone number, and drivers license. Setting up your listing is self-explanatory and took less than 15 minutes.

After that, people will inquire to your listing. Airbnb will send you an email and you can reply right from your phone. It’s important to keep in mind perceived value for your guests when pricing your listing.

In the beginning you want to price lower than listings in the area to generate demand. After you receive a few positive reviews, it’s ok to bump up the price a little.

But remember, as you increase the price, you’re guests expectations will follow the same demand curve. I am not one for leaving money on the table but I don’t want to spend my time catering to guests as they stay with me.

So far I’ve been hosting on Airbnb for 6 months. I only let my room get booked for 10 nights per month, at $60 per night (with a $5 cleaning fee), I’ve netted an extra $650 per month.

I sleep on the couch 3nights per month and stay with friends or my parents the other 7. It’s a good deal compared to the extra $7,800 I’m bringing in while I sleep (literally).

Repeat the Principles.

Selling on Craigslist alone would have paid off my entire student loan. I had no reason to start renting my room on Airbnb after. It was a result of the having a cash flow positive mindset.

Repeating these principles has lead to bigger opportunities that would not have presented themselves had I stopped after step 1.

[Update] This post helped me land a job at Trove Market.

Trove makes it easy to buy and sell stuff locally. A few features I really like are the ability to message and pay in the app. You can do me a solid by downloading Trove here.