How I paid off a student loan in 5 months using YNAB


For those of you who don’t know, I am on a crusade to pay off my student loans ASAP. The end of last year was amazingly fun and exciting because I paid off 1 of my 3 remaining student loans in just 5 months after I discovered YNAB. I want to share how I did this, so lets get straight to the goods:

The big picture

Once I discovered YNAB I wanted to challenge myself to see what I could do before the end of the year. I follow Dave Ramsey and his debt snowball method for paying off loans, so I decided to try to payoff my smallest balance loan before the end of 2014. So, here is what we had to work with:

  • Balance as of August 1st (first month using YNAB) – $13,862.31
  • Average payment on target loan per month – $2,808.27
  • Final payment on Dec 1st (pay off date) –  $2,362.06

Here is a chart mapping out my 3 student loans, the red line is the one I paid off. NOTE – each dot represents the balance on the last day of each month (I included July, since it was the opening balance to August).

newchart

As you can see I paused payments on the loan A (because I was already ahead on payments) and was paying minimums on the loan C (I was not ahead on this). I paused A payments to help payoff B faster, and boy did that work well!

Finally, here is what I actually paid each month towards the loan I paid off (B). Note this doesn’t include payments made on the other student loans.

Month Paid
August $4,100.00
September $1,589.46
October $3,423.08
November $2,566.72
December $2,362.06
Total Paid $14,041.32
in 5 months

Cool story bro… So where did all that money come from and whats the secret?

Full disclosure – my salary during 2014 was $65k a year. I also do some freelance work on the side. That being said my secret is simple – you need a budget! I mean this in the literal sense that you need a budget and in the sense that you need a budget (YNAB) as an actual piece of budgeting software that you can buy. I jumped ship from Mint.com back in August (when I went full derp on this loan), and you can read about the top 5 reasons I switched to YNAB.

Using YNAB I setup my budget each month to be the bare minimum I needed to survive and threw every single last dollar at this one loan. Those months were super intense, but TOTALLY worth it because I am 1 loan closer to being debt free!

At the end of the day paying off debt is NOT easy. You have to stop believing that you will be in debt for years and COMMIT to getting debt out of your life. Decide in your mind that you have HAD it, be on a plan, give every dollar a job, and most importantly live below your means. That being said, here are the two things I recommend for you to get started on a budget and get out of debt:

  • Read a copy of Dave Ramsey’s Total Money Makeover. This is the very first budget/financial book I ever read and I follow his plan closely. I recommend buying it from his site or Amazon.
  • Buy and start using YNAB. It normally costs $60 but you can get a discount using the link below. I live by this thing and LOVE it for doing budgets. The YNAB discount code is already applied when you click the link.

Full steam ahead cap’n!

This year is going to be the year! I made it my new years resolution to become debt free in 2015. The only debt I have is student loans, and as of this writing I have a little over $33k remaining. At my current pace it’s going to be close, with my target currently set for December. The lifestyle and budgeting have been intense, but I have learned A TON about how to budget and how to account for things that most people don’t think of. Speaking of – my next post will be on my top tips and tricks that most budgeters don’t know. If you have any comments or questions please comment below!

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  • Awesome post! Congrats

  • jagg2637

    Thank you! I am excited to write up my next one of tips and tricks for you!

  • Looking forward to it. I feel sorry for Americans when it comes to student loans, it’s a terrible system.

  • You were able to pay over $2k in student loans per month on a $65K salary??? I am having such a hard time believe this. lol I am in a similar financial situation and I am only able to put away maybe $400/month. How were you able to put away so much? Did you hold off on paying and saved up the money and paid at the end of the month?

  • jagg2637

    Great question Shamira! Here is a better breakdown:

    INCOME
    Net Paycheck (after taxes, benefits, etc.) = $1,840 (x2/month)
    Monthly avg from sidework (building website, fixing computers) = $200
    Misc income (sold dirtbike) = $600

    MONTHLY EXPENSES:
    Rent: I live in a 1 bedroom in Chicago ~$1300/month I have a roommate and split so my share is about $650/month
    Utilities: $90/month
    Electric: $50/month
    Internet (no cable): $50/month
    Entertainment: ~$50/month
    Transportation: Normally $100/month but is deducted from my paycheck automatically
    Food: $250-300/month
    Rainy day funds (christmas, b-days, anniversary): ~$100/month
    Clothing: $0 – Yes I have holes in my socks 🙂
    Laundry: $20/month

    TOTAL
    Each paycheck is 1840 x 2 = $3680/month from paychecks.
    Sidework = ~$200/month
    Misc other income = $600
    Minus my stated expenses = $2740/month towards loans.