Today, February 27, 2018, one week after my 37th birthday, I have officially paid off my student loan debt. Zero has never looked so good. I graduated from law school in 2006 with $155,343.87 in student loans, and I have paid well over $200,000 including interest. I have never earned six figures per year. I paid my debt in less than 12 years instead of 20 or 30, and I saved nearly $100,000 in interest by doing so.
I’ve run three marathons and half a dozen half marathons. I have an Ivy League degree and a JD from a well-respected school. I passed two state bar exams on the first try. I’ve won jury trials and appeals in state and federal court. I know how to set and exceed goals. I just never got the BigLaw salary. (I never wanted to do that work, but I won’t lie — the income would have been nice.) I still accomplished this goal. Paying off this debt has been very difficult but equally important. My debt didn’t negate my successes over the years, but it did diminish them. Financial stress permeates every aspect of life, and my wins have always felt a bit dimmed. But I accepted responsibility, devised a plan, and executed it.
My family never had enough money when I was a child. My parents went through divorce, bankruptcy, and foreclosure when I was in high school. It shook me to my core, and instilled a deep feeling of insecurity. In college, the landlords for off-campus apartments demanded large lump sums in exchange for dealing with undergraduates, and my friends easily handed over four-figure rent checks every semester. I cried, pleaded, and negotiated monthly payments instead. America’s class system is complex, and my financial class has never matched my social, cultural, and academic one. I’ve carried financial shame for my entire life. I’m so over it.
When I was about six I decided to be a lawyer for animals. That idea morphed over time, but law school was always part of my plan. Nothing in life goes according to plan, however, and my career has been rocky. After law school, I went through job changes and unemployment. During my 15 months of unemployment in 2011–2012, my federal loans went into forbearance where the interest capitalized, and I scrambled to pay the large minimum amounts due on my private loans. I was severely anxious and depressed. I eventually took the first position I was offered, and about a year later I transitioned into my own practice.
Aside from that period of time, I always kept my head above water. But even with interest rates of “only” 3–5%, the amount owed barely decreased despite the fact that I was paying a standard minimum payment of $1100 per month for years. Because my balance was large, close to half of my standard payment went toward interest despite relatively low rates.
I’ve never been “bad” with money, or paid a penny in credit card interest. But this debt was my choice, and despite my education, in no way has it ever felt like “good debt.” Unlike a house with a mortgage, I couldn’t sell my brain to get rid of it. In 2014, just as my life and income were stabilizing, I started to have panic attacks. I was angry at myself and the world. I went to doctors about my anxiety, and when I told them it stemmed from student loan debt, they scoffed at me. No one in mainstream society helped me do anything proactive. They told me I simply needed better coping skills. “You’re stressed out? Here, take a pill. Do some yoga.” For the record, I love yoga, but it wasn’t getting me out of debt. Normal in America is broke, in debt, and living paycheck-to-paycheck, even for many high-income professionals. The day my doctor (who was in her 50s) told me she was still paying off her medical school debt was the day I knew I had to do something drastic.
I dove headfirst into the world of personal finance/financial independence blogs and podcasts, and I cut my (in no way extravagant) expenses to the bone. I’ve never had an employer-sponsored retirement program, let alone a coveted match. Saving and investing serious money while in such deep debt made zero sense to me, bull market be damned. As an extremely risk-averse person, I had to plug the massive leak to keep from drowning. I decided to throw $100 per month into an S&P 500 index fund in a Roth IRA in order to put something toward retirement, and I directed the rest of my money toward debt. It was the only decision that let me sleep at night.
It may sound odd to call this journey one of self-care, but to me, self-care does not mean fleeting treats that produce no lasting value. Instead, self-care is mundane, un-sexy, behind-the-scenes work that creates a life I desire and deserve. It is slow and methodical, but cumulative. Over the last 3 ½ years, I’ve lived on a shoestring. I bought almost nothing. I had always felt guilty when I bought something for myself, so I identified exactly what I valued: running shoes; healthy vegan groceries; quality food and care for my dog and two cats; cable TV (yup!); and a facial every six weeks. I cut out absolutely everything else. I hate traveling, so not going anywhere was easy. I lived on an average of $25,000 per year, including housing, and shoveled 60–70% of my income (after taxes and business expenses) toward debt. Some payments were higher than others, but on average I paid slightly more than $3,000 per month.
I didn’t blog about it or start a YouTube channel, but I did find a lot of support in those communities. I did this as a single woman living alone until I moved in with my boyfriend at the start of 2017. My housing expenses decreased with cohabitation, but did not disappear, and my business expenses remained fixed. I had a very small emergency fund, but finally, a very stable income. I gave every dollar an assignment at the start of each month, and sometimes I had to choose between conditioner and cat litter until payday. Extreme? Yes. But I needed to see massive progress every month. What you focus on is what happens. I’ve always thrived on intensity, and I knew I needed to do this my way. Watching that balance drop substantially month after month became addictive. (That said, I’m glad it’s over.)
Was my debt “worth it?” I waffle on this question daily, but it doesn’t matter. I can’t go back. I loved law school, and I learned skills I will have for the rest of my life. But as every lawyer knows, the practice of law is not law school. I know my work has changed people’s lives for the better, and when I lose a case, I know I fought the good fight. I still love the law. But the legal system is broken. I am burned out, and I don’t know what the future holds for my career. But I will figure it out, knowing that the freedom and flexibility that come from being debt free will give me options. I do know this: no matter whether I have a job or not, I will never again have to pay off this debt. No matter what the stock market does, I will never again have to pay off this debt. No matter who is in office, and what the rules are about income-based repayment, pay-as-you-earn, etc., I will never again have to pay off this debt.
Sidenote: I have never qualified for any student loan forgiveness program. But even if I had, I still would have paid the debt off. My debt was a shackle — to jobs and locations I grew to hate, and to every decision I ever made. Moreover, 12 years of practicing law have shown me that the government lies and weasels out of promises every day. The Public Service Loan Forgiveness (PSLF) Program is a logistical nightmare with no guarantees. At the beginning of this month, no one had received forgiveness despite apparent eligibility. As of February 12th, at least one person has received PSLF, but he or she still ended up paying the $90,000 original balance — the amount forgiven was compounded interest. I loathe our current president as much as any other reasonably intelligent American, but scrapping PSLF is the right proposal. Complete forgiveness creates perverse incentives for schools to inflate tuition across the board. It is poor economic policy. If you are on income-based repayment and banking on federal student loan forgiveness in 20–25 years, be prepared not only for the tax bomb on a balance that may have doubled, but also for the possibility that the government will change the rules or simply say no to the millions of people demanding forgiveness of trillions of dollars of debt, every dollar of which is guaranteed by taxpayers. Finally, a complete government bailout is a pipe dream that is never going to happen. The only absolute way to get rid of student loan debt is to pay it off, and frankly, after paying off my own, I don’t want to pay anyone else’s.
The skyrocketing cost of higher education is a huge problem, and there is plenty of blame to go around. But the heart of the student loan crisis isn’t macroeconomics, politics, corporate greed, or the salaries of university presidents. It’s, well, this:
Nearly everything in life presents a choice, and no one gets to have it all. The average car loan is a whopping $500/month. Big houses, fancy vacations, tons of clothing, nightly take-out, the latest iPhone, pets, kids (and everything they “need”), etc. — these are the choices millions of people make. Then they choose to not pay their student loans.
“Privilege” is a very loaded word, and I do not characterize my life in such a way. (Cue the social justice warrior flame-throwers.) I recognize the good fortune I have had. I was able to live with family during my unemployment and thus avoided getting into deeper debt. Not everyone can do that. I am thankful for my loving support network, and for the close family members who chose to help me with some of the interest payments. But no one saved me. No one is going to save you from your demon either. Getting out of debt isn’t easy, but it is simple. It requires some knowledge, but mostly discipline and willpower over a given period of time. Your income matters, but not as much as you think. Your choices (both daily and impulsive) matter more. Sarah paid off $33,000 of student loan debt in three years on an income of less than $30,000 per year. It will take some people longer than others. It may require second and third jobs, but it is always possible.
If you don’t believe you can do something, you’re right. The cult of victimhood is strong, and it is dangerous. It took Dave Ramsey, a self-proclaimed “southern hillbilly evangelical,” to convince me, a staunch northeastern atheist, that I was the one with the power. I was not a victim. I’ve witnessed people of all backgrounds use their hardships to justify poor financial decisions, and it is completely self-defeating. I come from a mixed-race family of civil rights activists, but every time I mention the concept of personal financial responsibility, I am deemed a conservative troll. It’s completely nuts.
One of my future goals is to bring financial literacy programs into middle and high schools. Algebra and geometry build critical thinking skills, but those skills never seem to make it to the real world. Most parents don’t teach kids about budgeting, debt, mortgages, IRAs, or compound interest (it can crush you as much as help you). I was a smart kid, but I knew nothing about my family’s finances except that we were very often broke. Money is the last taboo in America. The median household income is $59,000, and yet the personal savings rate is 2.4%. Nearly half of Americans are unable to cover a $400 emergency. We know various intimate details of our friends’ and families’ lives, but we don’t know how much they earn or how they prioritize decisions around money. I’m not asking everyone to be as transparent as I am, but I am asking people to think about their own tendencies. Discussions about income inequality, the wage gap, and tax reform are useless unless they are combined with discussions about personal finance, self-control, and individual life choices.
I get to live my life now. I have flexibility and options. I have a small but positive net worth, and depending on my career path and income, I will have thousands of dollars per month to save and invest. I will catch up quickly, spend money on items and experiences that bring me true joy, and still reach financial independence well before traditional retirement age. I will maintain a minimalist lifestyle and a high savings rate (50% feels easy after 60–70%), but I am finally in pursuit of some balance. I know life can and will slap me in the face again. But being in a strong financial position will allow me to face emergencies and hard times from a position of fortitude, not fear. I still have responsibilities and deadlines and goals, but today I am truly at peace.