How talking about money helped me pay off $137K in loans
When friends and family asked what I wanted for birthdays and holidays, I was honest.
For most of us, debt is a necessary evil. Paying it off can be one of the most freeing, empowering accomplishments in the world, worthy of celebration. Mic's series Paid in Full tells the stories of these triumphs, and just might help you figure out how to get to balance zero, too.
Name: Aracelis
Age: 37
City/state: Seattle, WA
Amount of debt paid off: $137,000
Type of debt paid off: Student loans
How long it took to pay off: 12 years, 4 months. I paid $57,000 in 10 years on a loan of $137,000. After refinancing, I paid the rest of it: $80,000 in 2 years and 4 months.
Jobs held while paying the debt: Business Program Manager at a software company, plus weekend bartending, retail, and seasonal work as side hustles.
I immigrated to the United States from Venezuela at 19 because I was passionate about learning and wanted to attend college and further my education. It’s hard for anyone in Venezuela to save money due to hyperinflation, so I had to take out student loans for school in the U.S. This was very different from my parents, who didn’t have to pay for their college educations in Venezuela, as they went to college on scholarship. I pursued a Bachelor’s, Master’s, and an Executive MBA.
Growing up in Venezuela, I never learned about financial wellness, but it makes me happy to see that states like Florida are requiring high school students to take at least one financial literacy course before graduating. I’m fortunate to have an excellent job and live in an incredible city, but it’s an expensive city. I am surrounded by wealth: people with high salaries who drive expensive cars and live in beautiful homes. I realized that I needed to make a change in my life and get a jump on paying off my student loans. After paying down my original loan for 10 years and not making a big dent in the principal, I knew I needed to make a change.
As well as making lifestyle changes, I refinanced with personal finance company SoFi, and the interest rate on my student loans dropped to 3.5% from 6%. My employer had an arrangement with SoFi where I was able to save another 0.5%, bringing my interest down to a total of 3%. This helped me better budget for how much I paid each month. I went from a 30 year loan down to a 7 year and I paid it off in 2 years and 4 months. I was laser focused on my goal and wanted to pay it off ASAP.
The problem is, we don’t talk about money. I was very, very vocal.
Refinancing my loans helped me better manage my finances. But the problem is, we don’t talk about money. I was very, very vocal. I wanted my friends and family to know about my student loan debt. So for any holiday or birthday, when they asked what they could get me, I let them know that I wanted money to help me pay my student loans. When they gave me cash, I put it toward the loan payment and I sent them a screenshot of the receipt, showing them how they helped me get closer to my goal. When it came to gift giving, I told my family and friends that I can’t give you a gift, but I can give you an experience — that was in my budget.
A lot of my friends complained that I was able to pay my loans because I had a good salary, but there are two ways to pay your loans: Increase your salary, and reduce your costs. I worked multiple jobs to reduce my loan payments. I bartended, worked retail on weekends, took on seasonal work, and applied all the funds toward paying down the loan. I decided to live in a small studio in Seattle that was more affordable for me, and I used public transportation and carpool apps to get around town rather than buying a car. At the time that I was paying off these loans, SoFi offered a great Lyft discount program that helped me mobilize when it was raining or when I was working late shifts on weekends.
When I paid off my loans, we had an amazing celebration, and everyone who supported me emotionally or financially came. I told my friends and family that they helped me achieve my goal of being paid in full; we all paid down my student loans. It was our celebration.
I feel so relieved now. I’m now able to focus on my next financial goal of buying a house. I’m thinking of buying a home in Portugal since the housing market is so overheated in the United States. I think people should have open and honest conversations with their friends and family about debt. The more money is talked about, the less of a taboo subject it will be.
