How I Paid Off $30,000 of Student Loans in 2 Years by Paying the Minimum Balance

Hello! Today, I have a debt payoff story from Alyssa Hunt. Alyssa is the creator of TheLifeHunt.com a blog that helps busy hustlers work towards business success and financial freedom all while managing full-time jobs. She is currently working towards a Master’s degree in English Literature and she teaches writing composition to university freshmen. 

When I graduated college in 2014 with my undergraduate degree, I had racked up $30,000 in student loan debt. During my four years of college, I didn’t think much of taking out a loan here and there.

After all, I needed a way to pay for tuition.

Once the excitement and celebrations of graduation ended, I felt a mound of debt on my shoulders.

It was then that I decided to focus all my attention on paying off my debt as fast as I could. And by fast, I meant that I wanted to have all $30,000 paid off in exactly 2 years after receiving my first bill.

Setting my goal of 2 years felt entirely achievable to me, but to everyone else, it was crazy and impossible. I don’t believe a single person thought it could be done. So many people tried to convince me that student loan debt is “good debt” and that it’s “normal” to have debt.

While this might be true, I hated the thought of owing that much money to anyone and I wanted to get rid of that burden immediately. So, I developed “Operation Debt Payoff” and gave myself a 2-year time frame. 

Many people questioned me as to why I decided on only 2 years. The truth is, I wanted the financial freedom to travel, plan my dream wedding, get a master’s degree, start a business, and live comfortably without the burden of debt. Since I was able to pay my debt off at such a young age, I’ve been able to succeed at all the things on my list.

Within 2 years after receiving my student loan bill, I made my final payment and became debt free by the age of 23.

Related content on paying off your debt:

• How I Paid Off $40,000 in Student Loans in 7 Months
• Is Paying Off Your Debt Worth It?
• 37 Crazy and Creative Strategies To Pay Off Debt From Real People

Here are the exact steps I took to achieve my goals!

Loan Audit and Professional Help

The truth is I set my goal of 2 years before I even knew much about my loans. All I knew was that they totaled $30,000. That meant the first thing I needed to do was conduct a loan audit to figure out all the nitty, gritty, logistics.

I learned that there are two types of student loans: federal and private. During my four years, I took out 8 federal loans. That meant that my monthly payment was over $500 and my interest rates varied from 3.4% to over 6% per loan.

This is from my FedLoan Servicing account, which shows the date that I took out the loan, the type of loan, and the status (which they are all paid in full by now).

This was extremely overwhelming.

To help me out, my parents took me to our families’ financial advisor. I came prepared with a print out of each loan so that I could be transparent with the advisor. After I told him that I would have all my debt paid off in only 2 years, he chuckled and told me that it was impossible and unrealistic.

He then told me that everyone needs a little debt in their lives because the payments help with your credit score. Maybe this is true, but I still had no interest in paying $500 a month for the next 10 years, even if that meant a tiny bump on my credit score. And besides, debt is debt and I hate owing anyone anything.

Once he saw that I was determined to stick to my plan, he told me to come back in 2 years if I succeeded. And, guess what? In 2 years, I popped into his office and announced that I was debt free.

The look on his face: Priceless!

The Method Behind my Success

This method specifically works for federal loans that are unconsolidated.

I owe my success to two major decisions:

1. The decision not to consolidate my loans.
2. The decision to pay only the monthly minimum.

The reason I chose not to consolidate my loans into 1 giant loan was because I chose to focus on paying off one loan at a time. 

My entire game plan was to pay off one individual loan in full at a time, starting at the loan with the highest interest rate, while still making my monthly minimum payments.

These are some screenshots of the payments I made on three of my loans with the starting principal and the interest the loan accrued.

Let me break this down for you.

I put my loans in order from the loan with the highest interest rate, which was over 6% all the way down to the lowest, which was 3.4%. Then, I focused on saving enough money to pay off an entire loan in the order of highest to the lowest interest rate.

While it was a simple and straightforward plan, it took some willpower to not jump ahead. What I mean by this is that it was tempting to pay off the loans out of order. 

For example, one loan was only $2,000 at a 3.61% interest rate while another loan was $4,500 at 4.5%. Since the $4,500 loan had a higher interest rate, I needed to pay that one off first to save me money in the long run.

The temptation came once I had $2,000 saved and sitting in the bank because I wanted to just pay off that loan. However, I stuck to paying off the loans in the order of interest rate and it absolutely worked.  I can’t stress enough how wildly successful this plan was.

Why Paying the Minimum Balance Worked So Well

While paying more than the minimum monthly balance might seem like a faster way to pay down debt, it’s important to know that your money doesn’t always go to your overall principal balance.

Part of your monthly payments goes straight toward your accumulated interest and then the money that is left over goes to the principal balance. That is why it takes approximately 10 years to pay off student loans because they are calculating in all the interest you will accumulate over the years.

By using the method of focusing on saving for one loan at a time while paying the minimum balance, you ultimately cut down on thousands of dollars of interest. Also, when you pay in full for an individual loan, you don’t have to worry about whether or not that money goes to the principal or your interest because you are completely wiping out a loan from your bill. 

Additionally, by focusing on one individual loan, it helps to break down the overwhelming idea of paying $30,000. For me, I was able to focus on a $5,500 loan, or a $3,500 loan, which felt way more doable than trying to pay off $30,000. It’s easier to see progress when money is going towards individual loans rather than putting money towards a giant principal balance and feeling like nothing is happening.

This method also allowed me to set tangible short-term savings goals. Based on the money I was making with my full-time job, I knew exactly when I would have enough to pay off an entire loan so I was able to plan accordingly.

My ultimate suggestion is to stick to the monthly minimum and save up to pay off an entire loan. Doing that is the only reason I was able to pay off my bill in 2 years.

Other debt payoff stories:

• How Amanda Paid Off $133,763 In Debt in 43 Months
• 2 Strategies and 3 Habits That Helped Me Pay Off $93,000 of Debt in 3.5 Years
• How Our Family of 5 Went from House Poor to Debt Free in 3 Years

Saving Aggressively

Believe it or not, I came up with “Operation Debt Payoff” within one week of graduating college. I knew that if I was going to be successful, I only needed to do one thing: save money.

That’s exactly what I did. I started to save, and I mean aggressively.

In fact, by the time my first bill came in the mail, I had enough money set aside to pay off my 3 highest loans immediately. That meant that my $500 monthly payment dropped to $300 within the first month.

By the time I had only one loan left to pay, my minimum payment was around $30 a month. That’s a huge drop from the $500 I started out paying. Talk about success!

However, to save that much money came with a list of sacrifices.

After doing some calculations, I learned that I needed to save approximately 70% – 80% of each paycheck to meet my goal of 2 years. To save that much, it meant that I had to make some serious cuts and adjustments to how I lived.

The first big adjustment was that I moved back home after college so I could save on rent. This was such a great decision (and I loved living with my parents!). Next came all the things I needed to cut: Starbucks, eating out, manicures, getting my hair done, shopping, trips, etc. Basically, I became the most frugal 21-year-old ever.

And let me tell you, people were quick to call me prude, stingy, uptight, no-fun, and so much more. Did I care? Well, honestly, a little bit. But, did I see the bigger picture? Absolutely. And by the way, those same people who called me prude back then are now asking me how to save money so they can be debt free.

Making such a huge adjustment to how I saved money, and ultimately becoming a frugal person, ended up being something that stuck with me. While I do take trips now and spend money on the occasional luxury, I learned that giving up Starbucks and manicures for 2 years didn’t harm me at all. Those two years of aggressive saving taught me discipline, focus, and the difference between the things I wanted and the things I needed.

If you think aggressive saving sounds difficult, I assure you that it’s not. After you make the necessary adjustments, it becomes second nature. For me, once I saved up enough money to pay off a loan, I was so excited to start my saving process all over again.

By the time I paid off all $30,000, I decided to continue with my aggressive saving methods (with a little more flexibility), in order to build up a solid savings account. 

The Reality of it All

This method of paying off student loan debt takes a lot of discipline. Just because I was paying off a large amount of debt didn’t mean that the world around me stopped.

I still had bills such as car insurance, phone bill, health insurance, gas, groceries, retirement, tithing, etc. I also had emergencies come up that required me to spend money I was planning on saving. On top of all of that, I had to travel across the country to a family reunion for a week that resulted in me spending even more money.

Despite all of this, I still found as many ways possible to make my plan work given my circumstances. Here are some things I did:

1. Started saving before my bill came. This helped make a huge dent right away.
2. Set a budget. I listed all my bills and then worked in my 70% – 80% savings from my paycheck.
3. I found ways to make extra money through freelance writing gigs.
4. I didn’t upgrade any technology, like my phone, in those two years.
5. I got hand me down clothes from friends instead of shopping.
6. I learned how to meal prep.
7. I worked extra hours at my job when I could.

Reactions Then vs. Now

When I first announced my goal to everyone, many people didn’t take me seriously. I was told that it couldn’t be done, that I was being foolish, that I didn’t understand how debt worked, and that I would lose my friends. But, I stuck to my plan. And guess what happened?

Everyone quickly learned that I was very determined and they eventually adapted to my new lifestyle.

Since I knew I couldn’t spend much money on socializing, I learned how to enjoy hanging out with friends without spending. I took advantage of window-shopping, I didn’t order food at restaurants, I made DIY gifts for birthdays, my friends and I had many fun nights in, and we did plenty of free outings such as the beach, farmer’s markets, and museums.

During this time I didn’t lose a single friend.

Yes, they joked and called me stingy, but the truth is, I was being stingy, and it was completely worth it.

Nowadays, the same people who told me I couldn’t do it ask me how I managed to pay off that much debt in such a short amount of time. I have even received random emails from a friend of a friend because they need help crafting their repayment plan.

Most of the time when I tell people how I succeeded, they think it’s some miracle that only I could have pulled off. That’s not true at all!

Everyone’s debt situation is unique, which means everyone needs to craft their own “Operation Debt Payoff” plan. Maybe you want to pay your debt off faster than I did, or maybe you need to take a little more time.

Whatever you decide to do, just know that regardless of what everyone says, you can absolutely do it. I believe in you! You totally got this!

What are your tips about paying off student loan debt?