How I Got Out of $200,000 of Student Loan Debt

Have you had the experience of not wanting to even look at your student loan balance because it never gets smaller, sometimes just keeps getting bigger, or is altogether too huge of a number that it scares you? I checked all of the above at one time or another. I’d love to say that there was some magic bullet to getting out of a mountain of debt like the $200k I accumulated from dental school. I’ve even heard of stories of dentists graduating with a half million dollars in debt when you throw in undergrad studies and specialist training afterwards. Many dentists and other professionals with this amount of debt end up resigning themselves to the idea that they will just always have a student loan payment, just like they’ll always have a car payment or a house payment. I’m here to tell you why it is of an even greater importance that you rid yourself of student loan debt in particular compared to any other type of debt.

I began my journey as one who was just sick of paying my level payments and never seeing the balance decrease. I’d even throw a little extra some months or make an extra payment other months and still get frustrated at it not even being able to see the needle move at all. How is it that I send the equivalent of a house payment to these student loans every month and it never seems to change? When I delved into the mechanics of the loan, though, it made sense. What makes a student loan as I had it different than other types of loans is that the interest compounds daily AND any interest that has accumulated is always paid FIRST. For example, the terms of my federal student loan was 6.8% interest with a 0.25% reduction if paid with automatic payments. There was a time I had gone on Income Based Repayment as well, but that is a different story. So if I sent $1200 to my $200k student loan, the interest that has accumulated would need to be paid first. So $200,000 x 0.068 = $13,600 yearly. Divide $13,600 by 12 months and you get $1,133.33 per month in interest alone. So my $1,200 a month payment was decreasing the principal by $66.67 per month on a typical month. No wonder I never saw the needle move! To get an idea of this insane daily interest, if you divide $13,600 by 365 days, you get $37.26 a day that must be paid first every single day. I remember at one point I just wanted to get the balance down below $190,000 and sent a payment that did just that only to find the next day it was back up to $190,035. Clearly, I needed to do something to change this incredible momentum of interest accumulation against me.

To be fair, after discovering this, I was physically sick at the thought of owing that much money. I never wanted to look at it and I’d prefer to fill my time with thinking of something else. Eventually my wife and I decided that this was no way to live for years and years. We decided to take massive action, we would live completely on her income alone and all of my income would go toward the loans. This required a lean budget and an outright rejection of the typical dentist lifestyle of accumulating frivolous things because “I waited so long to finally make some money and enjoy life.” I also resolved to look at the account balances every single day as a type of exposure therapy- if I saw it every day maybe I wouldn’t be so scared of it, and maybe I’d also be more motivated to take daily action to reduce it. Also, implemented these 4 things.

4 Actionable Tips to Getting Out of Debt

1. Find that source of burning desire to be free of the chains of debt. I realized that I would never have the freedom to be anything else but a dentist while I had this debt burden. There is an income needed to support this amount of debt and that means I have no freedom to choose any path but being a practicing dentist. What if I got injured or disabled and couldn’t practice. Any number of little things happening to me could make it impossible to practice. The risk of financial ruin if I couldn’t practice to me was greater than the fear of the account balance.
2. Earn extra income whenever possible and send anything extra you make immediately to the debt. Do not have any extra sitting in your hands, the longer you have it in your possession, the harder it is to let it go. I took extra temp jobs that paid hourly rather than on commission (separate discussion entirely). I worked my normal job Monday through Thursday and then I would be a temporary dentist on Fridays and Saturdays. Sometimes I’d even have a job that would be Thursday night 6 pm - 10 pm. 
3. Create a visual and tactile daily reminder to mark your progress. This could be a fundraising thermometer style poster, graph, etc. We used post-it notes stuck to the refrigerator marking each $1000 increment we had yet to pay when we reached $40k remaining balance and then took one off each time we paid off $1k. Very gratifying.
4. Stay motivated with personal development. Do everything you can to expand and improve your mind, body, and mental health. Paying off significant debt is a trying mental slog and staying motivated is extremely difficult when it’s over a long period of time. Realize, though, that while you are being intentional in paying off debt you have already adopted a mindset of intentional life-improvement. Channel that intentionality into yourself as well: read books, listen to podcasts, attend lectures and talks, and join (or start) a mastermind group to share in your successes and hardships. You’re the magic bullet, the secret sauce, the warrior in the epic. 

I must confess there are many times during this process that I found myself demoralized, irritable, impatient, and unpleasant to be around. The problem was I didn’t realize it until I had come very far down this unhealthy mental path, and it was only because my wife was able to tell me lovingly but firmly that I wasn’t being the best version of myself and that I’d have nothing to show for paying off the student loans other than a $0 balance. I’d also have 0 meaningful relationships in my life if I didn’t become someone worth having a relationship with. The words of Les Brown say it best, “In order to do something you’ve never done before, you have to become someone you’ve never been before.” The value lies not just in the $0 balance, the saved thousands of dollars in interest, or the feeling of being free from bondage. The value lies in becoming someone altogether rare and precious in this world, refined by fire, and utterly resilient in the face of adversity. Go, and become the stuff that dreams are made of. 

-DOF