The countdown is on!

Barring any accidents, medical emergencies, or calls from my "lenders" (aka mom & dad), I will be debt free in 2.5 months!

So from the day of graduation and start of repayment, it will be 2 years and 1 month or 1 year and 7 months, respectively.

Let's do a recap for any high school graduates, new students, or new to the working world:

1. Freshmen year: Scholarship scholarship scholarships! Apply! I know applications and writing about yourself are annoying, but free money is ALWAYS worth it. Here's a motivator - take your potential scholarship amount, divide it by the current minimum wage (likely what you're being paid at this stage in life) and that will give you the number of hours you'd have to work for the same amount of money. Compare that to the amount of hours it will take you to write an essay (2-4?). Win.

Only take out as much money as you need - for me, this meant saving all summer before freshmen year for the "fixed expenses" (i.e. dorm, meal plan) and taking only enough to cover the rest of those expenses and books. During the year I worked, so thats where my "fun" money came in.

Get an internship that summer if you can - it will build your resume & start to pay for that study abroad you'll do next year.

Any money left over from your first year "budget"? Lock it into an online savings account that has a 3-5 day transaction time. This will give you time to think hard before you spend any extra.

2. Sophomore year: I was allowed to look at apartments! I never went lavish - it was college after all. By living on a little less then, it wasn't be so scary when I got to the big city in 4 years and rents have doubled. Shop around, compared the total of the full lease to the total of student living, and make your decision from there. At UGA, apartments were cheaper than dorms.

Go back to last year's internship or try for a new one! If all else fails, get a part time job.

Thanks to your summer job, scholarships, and a good budget - you get to go to Spain! Yes - you can take out loans for a summer semester, but remember you still have 2-3 more years to pay for and a 6 week study abroad will cost almost a full-semester's worth of expenses.

3. Junior year: I was now in my major and classes were harder. I needed to up the amount of student loans I took out, because I would be working less in order to study more.

The internship to end all internships - this is what you are looking for! Now that you have skills from your major classes, the pay will likely go up (and they'll be looking to bring you on full-time when you graduate next year!). Save save save, spend a little, and save some more. Trust me, your 1st car will last one more year - no need to blow every paycheck or get into a car loan just yet.

4. Senior year: This is (potentially) your last year - enjoy it! Your most recent internship will hopefully take you a long way through the year, but again focus on taking out the minimum you need to get to graduation and maybe build in a little cushion for 1st month's rent in "the big city" you plan to start at.

Your first paycheck at your first job won't come for at least 2 weeks, so you need to bake that into your plan for the year.

Now you have 2 routes - full-time job or graduate school. Full-time job will mean you have 6 months from the day you graduate before you have to start paying loans. This is time for you to get "settled in", or if that was easy, start paying early! Interest is always accruing, and the sooner you make a dent in the principal the lest you will waste on this cost of time.

5. Grad School: If grad school is for your - congratulations - you are about to be overwhelmed with expenses. Back to the freshmen year idea - apply, apply, apply to be a TA. You often get reduced tuition and monthly paycheck for the work you'll be doing. This will greatly reduce the amount of money graduate school will cost you.

But remember, graduate school is a lifetime investment and well worth it. When I looked, I wanted to be sure the amount I paid out of pocket or in loans is reasonable considering my expected salary.

Hopefully leaving grad school will land you a killer job. Even if it doesn't, start your "real world" budget early. I geared mine towards paying of student loans as aggressively as possible (~half my monthly take home pay goes into student loans), so that I could have an expected pay off date before a first promotion.

Be Aggressive! Be-be agressive!

Taking a route this aggressive is tough. I had to say no to certain things my friends jumped right into. People love to think "new job? new everything!"i.e. wardrobe, furniture, or car.

First of all, status is earned, not bought, so hold onto that hand-me down furniture or car and keep the clothes you have looking as nice as possible or shop consignment. Second of all, you are a newbie and not a big deal - people will notice if you don't show up on time because your car broke down, but they are not going to give a hoot what you drive to get there.

 I hunt for bargains like I am a coupon queen. I plan to do nice dinners for birthdays or special occasions, but PLAN for it, and try to bring lunch and eat all my groceries rather than going out to eat all the time.

For me, this plan above made sense. I also grew up through student loans at a time when interest rates started out at a fixed, low rate of 6.8%. If you are reading that in 2013, you know how incredibly high that is compared to market. Now, 6 years from when I first signed onto these damn things, new students are getting a lovely 3.4% (and complaining about it), and I am stuck with a fixed rate.

This high rate also meant there were not as viable options on the market - savings accounts earn less than 1%, sometimes less than .5%. Bonds might pay 2-3%. Stocks - well, the stock market is ridiculously volatile and not a risk I am willing to take. With as many companies going under, I have passed for the time being.

For me, it made sense to pay of this debt stuck at a high rate as quickly as possible - because I COULD DO NO BETTER ON THE MARKET! If, instead, I felt comfortable that I could earn more interest with the money I would otherwise overpay to my student loans, I would have gone the standard plan or longer. But to me, this was a no brainer: I pay it off now, I save myself $7500 in interest, and I am quickly debt free.

Because I was stuck with the debt and the fixed rate, I feel like the interest I saved by paying early was an instant "return" on my money. And assuming the market will get better going forward - I will be that much more free to start investing in the future.

Disclaimer: I am not a financial advisor and everything stated above is purely opinion based on my own experiences and observations.  

Getting closer to a Peace of Mind

The other night, TurboTax and I were having our long overdue discussion about how much money I would owe the government this year.

Turns out, I have already given them PLENTY for 2012, and I will be receiving a hefty refund. Man do I love exclusions from income (exlusion = never shows up in your wages on your tax return; deduction = potentially taken out from the wages you report on your tax return).

So, the age old question popped up of: what am I going to do with all this money??

For those of you who've been reading my posts for awhile, you know exactly what I am going to do: pay down my student loans!

I love putting a big fat amount towards student loans - I instantly see a reduction in the amount of interest charged every month, and I instantly see that big balance go from a certain number past the first comma go down.

Once I saw the impact of that student loan, I started schemeing. How can I get these paid down even faster? Let me tell you..

A few months ago I got nervous about my emergency fund being too small. Since I only have one income, if for some reason I had to stop working all cash flows in would stop. So I made a plan to aggressively build it up to about 4 months of expenses. Phew - so glad that was over!

At the same time, I got nervous about not putting enough into my 401(k) now while I am still working - what if some day down the future I have a family, comprised of myself, hungry mouths, and a husband with a small 401(k)? What would we do once we get to retirement - share what little he has? Certainly not. So I started adding to my 401(k) again.

Well, now between the refund check, the "additional" emergency fund (over $1,000 per Dave Ramsey), and a reduction to my 401(k), I have a plan to pay off these student loans by MAY!!!!!

Total payoff time: November 2011 to May 2013, or 1.5 years.

Last year I took a few liberties with my budget, so honestly I could have been paid off by now if not for those; however, I made memories with those liberties and I am still on track, so I will not regret them.

For the next 5 months, I am going to be very nervous - with just a little E-fund as back up, I have to pray that Ole Betsy doesn't break down, the economy doesn't kick me out of my job, and my health stays sharp.

However, I know the reward of sacrifcing a little now will pay off with a HUGE peace of mind come May. I am being this aggressive with my debt not just for me, but for my future family, whom I hope to teach these same values of maintaining a debt-free financial peace of mind.