How We Paid Off $20,000 of Student Loan Debt in 12 Months at 23 Years Old

As you all know, I love a good debt payoff story. Melanie reached out to me recently and asked if she could share how she paid off her debt. Below is her story, enjoy! Hi, I’m Melanie! I’m a CPA by day, and personal finance blogger at Melanie De Jong Blog by night! I’m 24…

Michelle Schroeder-Gardner

Last Updated: March 31, 2021

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How We Paid Off $20,000 of Student Loan Debt in 12 Months at 23 Years Old #debtpayoff #studentloans #payoffdebtAs you all know, I love a good debt payoff story. Melanie reached out to me recently and asked if she could share how she paid off her debt. Below is her story, enjoy!

Hi, I’m Melanie! I’m a CPA by day, and personal finance blogger at Melanie De Jong Blog by night! I’m 24 years old, and I reside with my husband and beautiful baby boy in Northwest Iowa. My husband and I paid off $20,000 of student loan debt fresh out of college while living on just one income for 5 of those months AND paying for part of a wedding and a honeymoon (and no, we don’t make a fortune). Our debt payoff story has inspired me to help and encourage others to become financially free! Here’s our story.

When the confetti stopped, the champagne was done being popped, and I settled into my new job and new home post-college graduation, the last thing I wanted to think about was how in the world I was going to pay off my student loans.

For three and a half years, I signed my name on the dotted lines without even knowing what I was getting myself into. For three and a half years, I rarely glanced at my student loan statements and honestly had no idea what the balance was and what I would owe after school.

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That all changed one evening over Christmas break my senior year, when I decided I should probably sit down and figure out a plan. At this point, I had been dating my now husband for two months, and there was a possibility I would be moving from my hometown in Washington State to Northwest Iowa, where my school was located as well as where my husband was from.

I sat down with a warm cup of coffee, in my pajamas, and pulled out all the papers I had stuffed in an envelope and kept in my desk for three and a half years.


There it was. The $25,000 debt sentence.

Suddenly my coffee wasn’t so warm, the holiday feelings were so fuzzy,  and I was hoping I had too much Kahlua and coffee earlier and my vision was blurry.

Unfortunately, that wasn’t the case. I graduated that May with a big hole to dig myself out of.

At 22 years old I was $25,000 in the hole, about to get married, and to top things off my husband would still be in school for 5 months after our wedding.

With a little encouragement and a lot of hard work, we were able to pay of $20,000 in one year and the rest soon after!

Here is how we did it!

Related content: How Do Student Loans Work?


I Made Payments While in School & During the Grace Period

I started making small payments my student loans both before and during the grace period. For six months after graduation, your student loans are in what is called the “grace period”, meaning you don’t have to make any payments on them because essentially the lender is giving you “grace” to find a job before you start making your monthly payments.

After I returned from Christmas break, I started using the income I was earning from my internship and other part time job to make payments on my student loans. I did this for the last 5 months of school, throwing whatever money I could at my loans.

After graduation, the grace period started and I made payments then as well. I was able to make larger payments because I began working full time with the firm that I had interned at.

Since I was making payments when I was not required to, every dollar I was paying was going towards the principal balance of my loans instead of interest. As a result, when I would start making the required payments, I would start with a lower loan balance than the amortization schedule showed, thus decreasing the amount of interest I would pay on my loans in total.

I knew that if I started the discipline before it was required, it would make it that much easier after I graduated to consistently make extra payments.

I was motivated because I hated the fact that I would be the one bringing all the debt into our marriage. So I tried to get my balances as low as possible before we got married and combined our finances.


We Used The Debt Snowball Method

Following the debt snowball plan, we paid off my student loans from smallest to largest balance. This way, we got some easy wins right off the bat and that helped us stay motivated!

How the debt snowball plan works is you start making the minimum payments on all your outstanding debts except for the one you are working on (the smallest), and you throw all extra money you can at that debt. After you tackle one balance, you take the minimum payment you were making on the debt that is now gone (plus any extra money you have that month) and throw it at the next smallest balance, and so on so forth.

I’m glad that we saved the largest loan balances for last, because when you see light at the end of the tunnel, it makes it easier to stay motivated. If we would’ve started with the largest balance, it would’ve been a lot easier to give up (especially when setbacks came our way)!


We Created a Zero-Based Budget & Stripped it Down to the Essentials

We ran on a very tight, zero based budget during this time. It was vital that we created a budget, because it allowed us to cut out everything but the essentials like rent, utilities, food, etc. Having a zero based budget also made sure there was no wiggle room. Every single dollar was assigned before the month even began. We still live on a zero-based budget, it’s just not quite as tight.

Having a budget also allowed us to plan ahead for expenses that we knew were coming- like our wedding, honeymoon, and trips to Washington to visit my family. These were things that were important to us, so while we did them as cheap as possible, we still did them.

Creating a budget gave us a gauge of where we were, and where we needed to be in order to reach our goals. Having a budget meant having a plan for our money, and having a plan is what fast-tracked our debt payoff.

Click here to learn how we set up our budget in 7 easy steps.


We Cut Out the Small Leaks in Our Ship

Once we created a budget, we pinpointed the expenses that were creating leaks in our budget. What we thought were small expenses that were actually in total adding up to quite a good chunk of money over the course of a month.

One of these expenses we cut out was eating out. After tracking our expenses for a month, we realized that we were spending close to $500 a month on restaurants and bar tabs! Suddenly those $10 margaritas I was having every weekend didn’t taste so sweet. We drastically reduced this spending category and only ate out and went out every once in a great while, instead of every single weekend.

By tracking even small expenses, we were able to trim down the areas we knew we could do better and throw all extra at our debt. Some other things that I cut out included my daily latte’s, money I spent on clothes, and buying a lunch at work instead of packing one. While these seem like really insignificant expenses, they add up over time.

For instance, my daily latte is $5. I would get one every day during the work week. If you do the math, that adds up to $25/week. This ends up costing around $100 per month! I drank drip coffee instead and threw the extra towards my student loans!


We Lived On 25-50% of Our Income During This Time

After we got married, I got a job as a full-time CPA. My husband still had 5 months left until he would graduate and be in the workforce. He worked after school here and there, but nothing that consistently brought in income.

During this time, we lived on about 50% of my income and after my husband started working full-time, we lived on 25% of our income.

Once my husband started working full-time, we were really able to accelerate our debt payoff. We only lived on about 25% of our income during this period of time. By living well below our means (which we still do today), we were able to attack our debt. After all, your income is your biggest wealth building and debt dumping tool.


We Rented for Really Cheap

Renting allowed us to free up our income. After we were married, we lived in a really small triplex unit. It was not the most glamorous, but our rent was cheap! This allowed us to throw thousands of dollars at my student loan debt every month (once my husband was also working full time).

I’m glad we waited to buy a house, because with home ownership comes a lot more financial responsibility. Because we rented, we didn’t have a lot of the expenses that we now have to budget for, like home repairs, real estate taxes, homeowners insurance, etc.


We Learned the Power of the Word “No”

In a culture where we are constantly told that there is nothing we can’t have, telling yourself no is a learned habit. We mastered this habit.

We learned that there is no shame in telling others “that’s just not in our budget right now.” We weren’t afraid to let others know that we were working on paying off debt and thus we wouldn’t be able to do everything that we did before.

If friends wanted to go out to eat and then to bars after, we would suggest that they come over to our house instead and we make our own cocktails and play cards! This saved us tons of money and allowed us to throw that $500 a month that we were frivolously spending at my student loans.


We Were Intense

We didn’t half-ass it. For me, it was easy to be intense. The thought of making payments every single month for 10 more years petrified me. What was even scarier was the amount of interest I would be paying if I waited 10 years to pay it off! My husband had never been indebted in his life, so he was motivated to pay it off as fast as possible as well.

We got mad at our debt. When you get mad, you become very intense. We were relentless with paying off our debt. We knew the freedom we would have once we were debt-free, so we became laser-focused.

We found ways to throw more money at our debt that most people would consider crazy. We put the cash we got from our wedding towards my student loans. We put any bonuses I got at work towards my student loans. We worked extra hours any time we could. Any cash gifts we got (including birthday money) went towards my student loans.


We Didn’t Give Up After Setbacks

We never gave up. We definitely had times where we were discouraged, tired, unmotivated, and sick of it. Sometimes it felt like we were working so hard and getting nowhere.

There will always be setbacks, it’s inevitable! We weren’t able to pay off as much one month because we got married and had costs associated with the wedding. A couple months later, my husbands truck needed a new engine, costing us $5,000. I’m grateful we had the $5,000 (since we had cut out everything but the essentials and had an emergency fund in place), but it was still frustrating.

On the flip side, whenever we had extra money coming in that we hadn’t planned, we threw that towards our debt!


We Worked Together as a Team

Even though I was the one who brought all the debt into our relationship, my husband never held my debt over my head. He was well aware of how much debt I had BEFORE we got married, and he was ready to tackle it as a team. Love is blind, right? 😉

If you are married, it is vital that you are on the same page and you work together. You both have to be 100% committed or it won’t work. Either your finances will suffer, your marriage will suffer, or both.

We made sure that we had the same vision, goals, and we were working towards together. This meant we picked each other up when we were down, gave each other grace, and developed a team mentality.


We Didn’t Let Others Dictate Our Spending

We had to learn to let go of comparisons. At this time in our life, we were not going to be able to buy a house, have a new car, or go on expensive vacations. We weren’t going to base our spending off of what other people in the the same stage of life as us had.

This was especially hard for me, because I’ve always struggled with comparisons. I never understood how people fresh out of college just like I was could afford a brand new car, a house, and a trip to Europe. I now know that most of them finance it and live a life paycheck to paycheck. I knew that was not how we wanted to live, so I learned to let go of comparisons.

I am so glad that we went through this, because now we don’t feel the pressure to “keep up with the Joneses.”  We have learned to be content with where we are, with what we have, right now.


We Made Sacrifices  

We consistently made sacrifices. No lavish honeymoon. No large graduation gifts to myself such as a new car, computer, or vacation. No eating out multiple times a week.

It is HARD to pay off $20k in one year when you are young, married, and living off of one income (a starting wage nonetheless)  during part of your journey. We knew going in that it was going to be a tough year. We just had to keep reminding ourselves that if we make the necessary sacrifices now, we can reap the benefits later.

We now know that life is full of trade-offs. Yes, it was a tough year and even though we did some fun things, we had to really limit our spending. Now that we are debt-free, we know that the trade-off was worth it. We made a few sacrifices that allows us to now live a life of financial freedom.

Our financial journey is one that I hope will encourage and inspire others to get out of debt. There is nothing special about us or our situation. If we can do it, so can anyone! The freedom of being debt-free is not a far fetched dream, it can be a reality! If this is you, I hope I’ve inspired you to start your own journey. Read more about our journey on my blog!

Do you have debt? What are you doing to pay it off?

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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. So so stinky proud of you, Melanie. You’re a “side hustle millionaire” minded entrepreneur. Now you know you can earn all the money you want online and make money on the Internet 24 hours a day just with “blogging and affiliate marketing” alone. Thank you for being another inspiring example of a [side hustle millionaire] and sharing your amazing story through Michelle’s blog here. 🙂

    1. Thank you! I love sharing our story and I’m glad you enjoyed it!

      1. Keep up the good work! 🙂

  2. Christina

    For once, I would love to hear an out of debt story that was more creative than “I quit buying coffee and lunch everyday.” I know it hard to fathom, but there are people out there who have NEVER bought their coffee and lunch everyday (they already brewed at home and packed) so therefore that is not an expense they can cut out. Guess what? Those same people, already don’t eat out every weekend, so again, they can’t cut out that expense. This same group of people already meal prep, use coupons, and shop at Aldi’s to stretch their budget. Get a higher paying job? We LOVE the one we’re currently at and don’t want to leave. Side hustle? Done. Negotiate bills? Check. Sold car, borrowing parents’ car to avoid car payment? Done. Still slowly digging out of debt with an extremely small emergency savings? Yep. Please try to find some new, creative ways or resources. Reading the same stories over and over is getting frustrating.

    1. How about one of these articles?


      Also, my own debt free story doesn’t involve coffee because I don’t like coffee, so I haven’t spent more than $100 on coffee in my entire life. My debt free story mainly revolves around 100 hour work weeks.

  3. Anil

    Hi Michelle,

    I really loved your story about paid off $20,000 of student loan in just 12 months.
    It’s really inspiring..Thank you so much for sharing…

    1. I’m glad it was inspiring- it took a lot of inspiration for us to pay off that much debt, especially right out of college. It’s worth it!

  4. Wow, this is a wonderfully inspiring story. I love that you worked together as a team and didn’t give up because of setbacks. I pray this will be my story soon.

  5. Wendi

    Thanks for your story, Melanie. Every story like this is inspiring. To echo a bit above about hearing very similar stories (because she’s right) I would love to make a suggestion. I have irregular income because I work for my self. I’ve been trying to pay off debt for over a decade! So clearly I’m not doing things right. I take two steps forward and then something happens. Right now I’m doing my taxes and I’m terrified of the IRS bill that’s probably in my future (and yes I paid quarterlies.) It would be great to hear a story about someone with irregular income/self-employment income paying off debt. Or how to create a budget with irregular income. If I got the same paycheck every two weeks then it would be easier to make a budget but I don’t. If they are single and not a couple that would be a bonus. I’m sure I’m not the only person out there dealing with similar situation. If you have any resources I would be grateful. Thanks again for these stories.