I had to make some big lifestyle changes, but refinancing really saved me.
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.
City/state: Decatur, GA
Amount of debt paid off: $12,000
Type of debt paid off: One private student loan
How long it took to pay off: 1 year
I knew that with a college education, I'd be in a better position to secure a great job, create generational wealth, and have a better life overall. So, the decision to go into debt was an easy one. However, student loan debt is a significant financial burden for most people, including myself, and tackling it requires many sacrifices. Among other things, I refinanced my private student loan, lived with roommates, took public transportation instead of buying a car, and limited my eating out. Now, I am just hoping my federal loans — about $70,000 — are forgiven!
I am currently in the Public Service Loan Forgiveness (PSLF) program. Under the PSLF Program, people that work in public service and make 120 qualifying monthly payments can potentially get their loans forgiven. However, the program has been in the news lately for being riddled with problems and recently required an overhaul, so as long as the program functions as intended, I should get most of it forgiven.
I didn’t know my biological parents growing up, but I knew that they did not have much money. I also was adopted by a family that was not financially wealthy. I knew how it felt not to have money, and I never wanted that experience as an adult. Knowing how it felt to not have much money made me want to build generational wealth in adulthood. My goal is to make sure that my future children never have to feel the way I did growing up, that my family and those who raised me can live a comfortable life, and that I give money back to my community.
My original private student loan provider was Sallie Mae. It was for about $14,000, and it was manageable in the beginning. However, it was a variable rate and increased significantly until I was paying hundreds of dollars a month without touching the principal amount. When I refinanced my private student loan with SoFi for $12,000, I was determined to pay it off as quickly as possible; I ended up paying it off within about a year! SoFi made it easy because the interest rate was so low, and I was able to apply funds to the principal amount.
The event that made me rethink my financial situation was when my private loan from Sallie Mae’s variable interest rate grew to around 9%, and I knew I had to do something. The extra money I was paying toward the loans didn’t make a difference. I began receiving letters in the mail about refinancing from a few places; I decided to look into it and found SoFi.
I decided to pay off my loan because I wanted to start a business, buy a house, and build a legacy. The only way I could do that was getting my money right first, so I refinanced my student loans. The next step was learning the business side of things. It took a lot of time, and I was working another job — I still am — but by 2020, I had that feeling of, "It's now or never." Either you're going to start your business now, or you're never going to. When I launched my business, LipRevolt, that year, I was scared because of everything going on: Many people were out of jobs, and my fiancé was furloughed. It wasn't just the pandemic, either. There was so much racial conflict; we had protests and racial demonstrations. At some point, you get tired of the oppression, the racism, the injustice, and you realize you have to do something. I can't solve everything with lipstick, but I can try to do my part. Sometimes, I’d get that feeling in my head of, "Is this going to work?” Self doubt was real. But then I’d remind myself why I started in the first place.
To pay off my loans, I moved in with my now-fiancé's parents. I was on a strict budget, taking public transit, not eating out, meal prepping. Since paying off my loans, I have been able to launch my business, buy a home, and feel better emotionally about my financial situation. I have also paid for part of a wedding!