Light from the Black Hole of Student Debt

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This week I did something incredible.

I was so excited. I skyped Kirk at work. I called my parents. I did a little dance in my kitchen.

I made an extra payment of $500 on the principle of my student loans.

Not that exciting, you think? Well, let me tell you: on the contrary, this is momentous . This is my first step towards getting out of debt.

Four years at Michigan State University cost me over $100,000. Even after several scholarships, working an on-campus job, Mom’s & Dad’s contribution of a few dozen grand, and planning my classes so I’d have exactly the 120 credit minimum required for my BA, I was still left with $55,000 in student loans.

Almost everyone has some kind of debt: a mortgage, car payment, credit cards. Student loans, however, are a strange breed of financial obligation. The monthly payments don’t go towards something you can touch. There isn’t a house you can walk into or a car parked in the driveway. There isn’t a home gym or a new wardrobe or a timeshare in Jamaica. The only thing to show for thousands of dollars of student debt is a single sheet of paper. The paper that’s supposed to get you the job to pay off the debt. (It’s funny: we don’t even bring that piece of paper to the interview. My diploma is in my old dresser at my parents’ house.)

Paying back my student loans feels like pouring money into a black hole. Sure, technically, I’m getting myself out of debt. But the debt is so enormous it doesn’t seem to make a difference. Let’s put paying off my student debt into more tangible terms.

I drive to the Apple Store and buy an iPad. Exciting, a new toy. But then, on my way home, I roll down the window. Out goes the iPad.

That’s ridiculous. I know.

I “throw away” an iPad every month.

What a downer. What’s worse, though, is thinking about the total amount that I still owe. On several occasions I’ve thought myself into mini depression-attacks over my student debt. I don’t like to log into my accounts and see the balances. My payments are auto-debited, so I’ve tried to avoid thinking about it altogether.

Early last fall, my payment suddenly dropped from $620 to $540. At first I was excited: my payments were smaller! After mulling it over, however, I decided to find out why. I called up Citibank, the administrator of my private loans.

I found out that my payments had been automatically adjusted because of a recent drop in interest rates. Adjusted how, I asked? To fit the duration of the loan. And remind me, what exactly is the duration of the loan?

18 years.

I choked on my coffee and fell off my chair. Eighteen years? That’s ungodly long.

Eternity long.

I knew it would take some time to pay off my loans. And I’ve always thought, as soon as I have the money, I’d pay them off as fast as possible. As soon as I have the money . Unfortunately for money, I don’t like it. I don’t want a 9-5 job to earn it nor do I care to work myself into the ground for it. Unfortunately for me, Citibank doesn’t accept payment in the form of homemade cookies, heart-to-heart talks or free skateboard tows with my bike.

What to do? It’s a simple equation. More money in + less money out = savings. The last few years I’ve traveled and moved around so much that I’ve made it impossible to save any money. I’ve changed jobs and income streams more than many people do in a lifetime. To make paying off my loans a priority, I needed to stay put and put in the hours.

In January, I decided against traveling to Chicago with Kirk. I really wanted to go, but the plane ticket plus the amount of time I’d have had to take off work just didn’t make it worth it. (And, having just spent two weeks in Europe in October and a week in Wisconsin in January, I need to cool it with the jet-setting.)

For me, travel has always taken precedence over everything else. At some point, however, I need to start sacrificing traveling now for traveling (and everything else) I want to do in the future.

Already I’m seeing positive results. In the last two months, I’ve been able to create a small rainy day fund. I’m no longer scrambling each month to make sure my checking account balance is high enough before my loan payments auto-debit. And, I have extra money left to pay down the principal of my loans. I’m on track to pay off my smallest loan in April. When I do, my total monthly loan payment will drop by $50, which will allow me to pay down the principal on the rest of my loans even faster.

I’m starting to see the light. And light coming from a black hole is pretty amazing. ☼

MonsteRawr March 6, 2012 I feel both your excitement and your pain. We worked very hard to pay off first our credit card debt, and now some of our smaller debts, like the $3,000 we borrowed from his parents when my car died. But as soon as those are paid off, the money we were paying towards those are going straight towards our student loans. We don’t want to take on a mortgage until we are free of student loans, so those terrible numbers are what is standing between me and getting our of our piece of shit apartment. I know it hurts to throw away that money, but it’s for the better. You could be like my former co-worker who deferred his until he was 34; he won’t have his payed off until he’s in his 50’s!

I feel both your excitement and your pain. We worked very hard to pay off first our credit card debt, and now some of our smaller debts, like the $3,000 we borrowed from his parents when my car died. But as soon as those are paid off, the money we were paying towards those are going straight towards our student loans. We don’t want to take on a mortgage until we are free of student loans, so those terrible numbers are what is standing between me and getting our of our piece of shit apartment. I know it hurts to throw away that money, but it’s for the better. You could be like my former co-worker who deferred his until he was 34; he won’t have his payed off until he’s in his 50’s!

SteveKeller March 6, 2012 I also know how you feel, Lauren. And by the way I still love reading anything that you write. No matter the topic, the way that you tell stories through your writing is a joy to read. The thing I find most interesting is that our education system doesn’t teach us about money. They don’t teach us how money works. All we have is the media brainwashing us to spend into oblivion like the government. And well we all know how that’s working out for them (and us consequently). I’ve become hooked on educating myself financially since I left college and it has really helped me in multiple ways. If you’re looking for a good book or two to read I have plenty that I would suggest. Especially someone with the entrepreneurial spirit that you have, furthering your financial knowledge will pay off now and forever. Congrats on the strides that you have made to pay off your loans early. It’s no easy feat. Hope all else is well!! Go green!!

I also know how you feel, Lauren. And by the way I still love reading anything that you write. No matter the topic, the way that you tell stories through your writing is a joy to read. The thing I find most interesting is that our education system doesn’t teach us about money. They don’t teach us how money works. All we have is the media brainwashing us to spend into oblivion like the government. And well we all know how that’s working out for them (and us consequently). I’ve become hooked on educating myself financially since I left college and it has really helped me in multiple ways. If you’re looking for a good book or two to read I have plenty that I would suggest. Especially someone with the entrepreneurial spirit that you have, furthering your financial knowledge will pay off now and forever. Congrats on the strides that you have made to pay off your loans early. It’s no easy feat. Hope all else is well!! Go green!!

Lauren March 14, 2012 Thanks so much Steve! Go White!!

Thanks so much Steve! Go White!!

Lauren March 14, 2012 Ahh! Defer a little longer and he might be using his Social Security checks to pay off his student loans.

Ahh! Defer a little longer and he might be using his Social Security checks to pay off his student loans.

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