our student loan payoff plan
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Our Student Loan Payoff Plan

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Hey there, Picky people!

As many of you know, Mr. Picky Pincher and I are still in the getting-out-of-debt phase of our early retirement journey. This is arguably the most difficult part of retiring early, but we’re excited to finally see progress!

In 2016 we got rid of $25,000 of debt. This includes our $14,000 credit card debt (read about it here) and a $10,000 car payment debt (read about it here).

Riding on the coattails of a great 2016, I am officially announcing our 2017 debt payoff plan! It’s quite ambitious, but we’re excited to get down to business.




Down with student loans!

Mr. Picky Pincher and I collectively have $65,000 of student loan debt. Ouch! Curse you, private school!

While we both wish we could go back in time to prevent our 18-year-old selves from taking out loans, we’re tackling our responsibilities head-on.

Even though it totally sucks.

Over the next 18 months (so really this is a 2017 – 2018 plan), we plan to have these student loans completely paid off.

Here’s the strategy we’re using to pay off our student loans so quickly.

Cut expenses drastically

We’ve been doing this since our frugal overhaul in 2015.

To cut expenses:

  • We ditched our phone contracts and got Google FI. We pay a quarter of what we paid with Verizon and AT&T.
  • We moved to a cheaper area. This was not an easy decision, but it saved us $400/mo.
  • We cooked a lot more at home. This was a big challenge since Mr. Picky Pincher and I are both Picky eaters and have opposite tastes in food. It took a lot of trial and error, but we found great meals to cook together. We also started making our own staples like bread and yogurt at home.
  • We stopped buying movies and DVDs and rented them from the library.
  • We got rid of one car payment that cost us $450/mo
  • We switched to LED lights and used energy-efficient appliances
  • We stopped going out for drinks and chilled at home with friends.

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Paid off higher interest debt first

Once we freed up more funds by living below our means, we tackled our debts.

There are many ways to pay off debt, but we prioritized our credit card debt first since it had higher interest rates than student loans. The amounts were lower, too, which meant we could get them out of the way faster.

That does mean we deferred our student loans, which sucked (P.S. They accrue interest while they’re deferred, so you’re shooting yourself in the foot with deferment, y’all).

It took us a while to pay the credit cards off since we were still figuring out our money-saving strategies during this payoff. If I could go back in time, I wish we had learned to save more money before this payoff, but oh well!

The credit cards are finally out of the way, and that feels AWESOME.

After the credit cards, we had a car payment, mortgage, and student loans to tackle. Funnily enough, the car payment has a crazy-low interest rate, so it doesn’t make much sense to pay that off with cash. The mortgage also has a low rate and a high balance of $145,000, so that didn’t make sense to tackle yet, either.

Our student loans, however, with interest rates from 3% – 7%, were on our radar. $65,000 is a crapton of money. But we crunched the numbers and figured it was the next logical step in our payoff plan, since it was a large-but-manageable sum with a bigger interest rate than our other debts.




Have an emergency fund

After we paid off our credit cards in 2016, we started pumping excess funds into savings to pay for our home renovation—in cash.

Now that the renovation is done, it doesn’t make much sense to keep cash locked up in savings. We decided to have enough funds in savings to cover a month of expenses. If we have to dip into our emergency savings during our payoff, we’ll simply apply less money to the student loans that month, replenish savings, and move forward. That will increase the time of our student loan payoff, so I really don’t want to do that.

The reason we need an emergency fund before our student loan payoff is because we won’t be contributing to savings during this time.

Every. Single. Penny. will go on the student loans. We wanted to have a financial cushion in case one of us becomes ill, loses our job, or we have a catastrophe with our home or cars.

I believe having an emergency fund is the key to avoiding debt after an unexpected life event.




We overpay on our student loans. Like, by a lot.

The minimum payment on each of our student loans is about $300 each.

But guess what?

It’s nearly impossible to pay off those loans with just the minimums. It takes people 10 -15 years to pay these things off because they stick to the minimums or defer the loans. To pay off loans quickly, you need to overpay on them.

By a lot.

I estimate that we’ll put at least $3,000 on our loans each month–which is ten times the minimum payment. Hopefully we can apply more than that so we can meet our 18 month goal, but I know that’s doable.

Again, this is only possible because we cut our expenses and live beneath our means. It took a lot of hard work, planning, and lifestyle changes to do this.

I know people complain about cutting things out to save money, but when you consider the more powerful things your money can do, like smashing huge chunks of debt, it’s all worth it.

The Bottom Line

It’s been a hard but rewarding couple of years for us. We’ve learned how to work together to save money and build a positive financial future.

The next step is to tackle our silly student loans, which will then free us up to eliminate our mortgage. We need to really be on our frugal game in the coming years, but I am so thrilled at the prospect of becoming debt-free!

We want to know: Are you eliminating any debt this year?

43 comments on “Our Student Loan Payoff Plan

  1. This is awesome! I’m sure seeing those dwindling balances will be great motivation to stay the course. 1 month of expenses in an emergency fund isn’t really a very big cushion though. You said you’d just not pay the extra towards your loans and replenish funds if needed, but you need to also think about what would happen if one of both of you couldn’t work for a few months. Sometimes you get handed the unexpected beyond just a car repair or leaky roof.

    1. It feel soooo good to see the balances decreasing, that’s for sure. 🙂 That’s true, many people argue that you should have 3 – 6 six months of expenses in an emergency fund. We actually have more than that in the fund, but it’s savings for working on the house. So in actuality we have probably 3 months’ worth of expenses in there, but much of it is allocated for working on the house down the line (building the garden, insulating the attic, etc.). After doing the math it’s more prudent for us to put cash towards the student loans, but you have a good point! It’s definitely risky.

  2. Hey Mrs. PP,

    Great plan for eliminating your pesky student debt. $3k a month will be challenging, but once you are done, it will be like getting a $36k salary raise!

    Personally, I have no plans to eliminate debt in 2017. In 2015, I paid off my student loans, and in 2016, I paid off my car loan. I have a mortgage loan at 2.625% and I don’t plan on paying extra anytime soon…

    I actually might go into debt more; perhaps another house or property? We will see!

    1. Ooooh you lucky duck! Hahaha, well I hope you can land that sweet, sweet rental property for more passive income. 😉

  3. I love it! Go, Picky Pinchers! I love that you’re taking responsibility for student loans instead of complaining. I can tell you it felt awesome when I paid off “my” student loans (when married, all the loans become “ours”, but you know what I mean). We’re holding off on paying Mr. COD’s loans for now in order to have a nice fat “relocation” fund in case of big expenses when we move. Once we get all those added expenses taken care of, it’ll be good to finally finish the debt. You guys will do great! Imagine, spending less than you earn in order to pay off debt! If only more people would try it😋.

    1. Doesn’t it feel amazing? I couldn’t believe how awesome it felt to slam down $3,000 on those loans. It would have taken me a year to put $3,000 on the loans if I had continued my old spending habits–yikes! Thanks! Hopefully we can all get those loans paid off and move forward. 🙂

  4. My 2017 goal is to save more. I increased by 401k contribution by 1%. I usually give it a month or so to see how my expenses are without it. I set up an auto withdrawl from savings to my Roth, so I can’t be a slacker. I’ll also see how that is going with the possibility to increase that. I reconfigured my direct deposit to my checking accounts to see if it looking like less money around will influence me to spend less. However my spending _is_ relatively pared down. I know going out to eat is one of my weaknesses, so I try to limit it, and use gift cards when I can’t resist any longer. (I watch some coworkers go out for lunch every day. *cringe*).
    I did pretty good last year on not buying new clothes except relating to the family trip. Sun protective shirts saved me! I got 3 new pair of socks for Christmas, so I’m going to do my best to hold off on clothing purchases this year until items get holes, and I don’t have another of the item to take it’s place. I do need new shoes, and have since Oct/Nov. I’ve been trying to eek out a bit more mileage, and hit a sale &/ or free shipping. Maybe my spring bonus ‘splurge’ can be the shoes. I always let myself get a treat (sometimes dinner out or a yoga workshop ~$100-200 max) with my bonus and the rest goes to savings or Roth.
    Sounds like you have an excellent plan to conquer your student loan debt! Wishing you all the best!

    1. That’s a great idea with the Roth! See how contributing a little more will affect you before going full-force on it. 🙂 Dude, Mr. Picky Pincher’s coworkers eat out *every day* and it’s insane. It’s funny because they always comment on how great his home-cooked meals smell. If only they knew!

      I think it sounds like you had a fantastic 2016. I’m sure 2017 will be amazing. Wishing you the best as well!!

  5. Our only debt is our mortgage, so we have no debt payoff plans for the year. Our big goal is to save, save, save. We have a car that will need replacing in a few years, and we are planning on building a house and need to bust our behinds saving for a down payment and completing some home repairs so we can sell.

    1. Yay, congratulations on paying off all that debt! Do you also invest? I’m trying to come up with a wealth growth plan for once we dig ourselves out of debt.

  6. Thanks for sharing your plan! It’s always great to see how other peopl ebudgent to pay off their debt. We paid off my student loans in 2016 (as well as paying cash for my grad school !) This year we are hoping to payoff the last $3,000 of our car, and hopefully payoff the last of my husband’s student loans too! Guess it’s time for us to sit down and make another plan.

    1. All riiiight! Sounds like you’re well on your way to crushing that debt. 🙂 And bravo for paying cash for school; that’s not an easy feat!

    1. Congrats again on the early retirement! It just shows that retirement doesn’t mean you stop monitoring your moolah. 🙂

  7. Great job on using the Debt Avalanche method to pay off your high interest debt first! It’ll save you more money and time in the long run as the interest won’t get to compound.

    The only debt I have currently would be my car loan, but I’m slowly paying it off as it’s a 0% interest loan. Once I finish paying it off, the money that would usually go to it would head straight towards my investment accounts!

    1. Oh wow, how’d you swing a 0% interest loan on a car? That’s badass! Yeah, I wouldn’t be in a particular hurry to pay it off in that case, but hey, more money for investing never hurts. 😉

      1. My credit score was really high when I applied for the loan through the dealership, I think it was 750+ and it placed me in the A+ credit ranking with them. I guess that’s how I qualified, or at least that was what the salesman told me.

          1. Oh, I was just kidding! We have a Toyota that we adore and a paid-for Ford truck that … well, it runs, so that’s all I can really ask for.

  8. Wow, paying off that much debt is really commendable. I also appreciate your reference to the emergency fund; I don’t think nearly enough people have one!

    My wife is working on a loan forgiveness application after working as a Speech Therapist in a low-income school district for 5 years. We’re crossing our fingers that she gets it as she’s not actually a “teacher,” and may not qualify unfortunately.

    Loving your blog!

    1. Thank you! I know some people like to have 3 – 6 months of an emergency fund saved up, but we decided 1 was enough for us while paying down huge student loan balances. Oh my gosh I hope your wife gets those loans forgiven! That would be sooooo sweet. I had half of mine forgiven (long story) and it’s made life so much easier.

  9. Nice work on the 2017 debt-smashing plan. As nice as it would be to run away and hide from all that debt, it’ll still end up hunting you down in the end. Once it’s gone for good you’ll look back at it and laugh. I’m assuming that you’re actually getting value for all that debt in better job prospects and higher wages?

    1. I’ll be soooo happy once the debt is gone. We just got the $20,000 note down to $16,000 and it feels amazing.

  10. Best of luck on your debt payoff! This year I’m focusing on getting toward my “mortgage payoff before 40” goal. I have about 11 years left on a 15 year mortgage, which would put payoff when I’m 47. I want to have it gone by 40, despite the low interest rate of 2.75%, for a few reasons:

    -Security: Not having that big monthly payment to cover will help in case of emergency/job loss/medical event/other

    -College: My oldest son will be starting college in just about 5 years when I’m 42. I want to free up enough cash flow to make my goal

    -Freedom: I’ve had a mortgage my entire adult life-starting with a condo at 20, and now this house for 11 years. I’m sick and tired of paying it

    -Hate: I hate my mortgage company. They totally messed up my taxes/escrow back when I first got the mortgage and were a nightmare to deal with. I hate that they’re making money off me every month, and there’s not much I can do (can’t switch to a better rate)

    1. I COMPLETELY agree with paying off the mortgage. A lot of people keep mortgages into early retirement, but it’s just not for us (for the reasons you’ve listed). I can’t imagine having an extra $1,000 every month. 🙂

  11. That’s an awesome plan, power to you guys! I paid mine off last summer and the feeling was amazing! I know y’all are super gung-ho and ready to go, but if you’re ever feeling glum about the situation and looking for inspiration, there is this great podcast where people who have made lifestyle changes to live below their means and pay off their student loans as fast as possible share their stories. You can find it here: http://www.payback.fm/

    Hope you enjoy!

  12. That is so awesome that you are paying down your student loan debt. When you pay that all of I bet you all will be thrilled. I have to admit that my wife and I were lucky to not carry student loan debt and having paid off our mortgage in 2012 no longer have any debt. So we’ll be cheering you on while we try to save 70% of our take home pay 🙂

    1. Woohooooo! How did you avoid student debt? Man, our savings rate would be outta this world without debt payments. We’re speaking by pretty well in the 50% range, so that’s not too shabby. 🙂 Congrats on being debt-free! That’s quite an accomplishment in this day and age. 🙂

  13. I didn’t realize how similar our financial situations were until I started binge-reading your posts today! It is SO SO freakin’ encouraging to know that you and Mr PP were in mine and my husband’s shoes at one point. We have been married for 1.5 yrs, have about 7k in credit card debt, and I have ~$70000 in student loans (we collectively bring in 115k per year). We are hoping to purchase a house by this time next year, but it’s so daunting to try and cut through this debt! I am looking forward to learning more from you!!

    1. Oh my gosh, that’s awesome! Thanks for reading. 🙂

      I don’t know if it’s doable for you, but we paid off our credit cards before we shopped for houses (we had $14,000 of debt). It gave us a better interest rate on our home after improving our credit score. It did mean postponing the search for a year, but it worked out great for us.

      Good luck on your debt destruction!

  14. Our home mortgage is about the same amount and we took many of the steps to “live like college students” again to have it repaid within the next 7 years. Congrats on the progress in 2016 and here’s to 2017!

      1. I think you have a lot of the same bases covered as my wife & I. Saving money while shopping is the easiest way for us to cut corners. With the internet, it’s easier than ever (of courses there’s also more things to buy than ever too).

        We use cashback portals & scour Craigslist & Ebay.

        1. A lot of people swear by the cashback portals but I guess the issue for me is that I don’t buy a lot of stuff online, so it’s often not super worth it. Can you do portals through Amazon?

          1. Not really. It’s for a very few select categories and the payout often isn’t worth it. Using the Amazon credit card is really the only way I’ve seen opportunities to save money.

  15. Wow, you two have made some crazy cool sacrifices. Congrats. I know its not easy by any means (that interest that is accruing for me while the SLs are in deferment is so painful). Cheers to paying that off in 2017. Right there cheering you both on!

    1. Thank you!! It’s been such a long time coming and I can’t believe we can even afford to do this. Some days I have to pinch my Picky little self. 🙂

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