These two are on track to pay off $89,000 in student loans in 15 months – and they didn’t win the lottery

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…Noah Syndergaard (Pitcher for the New York Mets) is standing on the mound and staring intently at his catcher’s movements. He seems satisfied as he stands tall and mean mugs the runner on second. It’s the bottom of the 9th and that guy represents the tying run. He cannot advance. Syndergaard winds and delivers…


“Was it a strike?” Jon’s mind searches for the answer as he is roused from the dream by something gently poking his cheek. He realizes the dream is gone as consciousness overcomes him.


Now it feels like there are a few tiny sticks prodding his cheek so he swings and grabs. Nothing bothering his face but now it’s in his hand. Jon opens his eyes to find… a Boxelder bug (a stink bug). Not cool man. He sits up and sees them all over his room. He’s living with 6 other guys and initially chalks it up to just another college apartment experience. Then he remembers he didn’t have to live in this apartment. He’s been financially disciplined his whole young life and could definitely afford to stay in a nicer place – at least one free of stink bugs. He reminds himself, “No, that’s not me. This is the price you need to pay to win.”


The gist… Jon and Heather are a young 20-something couple who, like many of our generation, started their married life with the anchor of student loans around their necks. They both completed 4 years of education at an out-of-state private school, and if not for the generosity of Jon’s parents that number would surely be higher than $89,000. Jon works in the sciences for a state organization while Heather works as a nurse. They’re not poor (even though you’ll come to see they may act like it), but they’re definitely not millionaires either. Well, at least not yet anyway.


Jon told me this would be a boring story when I approached him to write it. He said I could, “take the facts and spice them up however I like.” I thanked him for the creative freedom and then insisted this is an incredibly informative and inspirational story. Here’s my attempt to make it so:


The foundation. “Character,” was Jon’s 1-word answer to my question of, “what is the most important thing your father taught you growing up?”His parents taught him the value and importance of saving over spending, and that it did not represent good character to ‘buy’ things you can’t afford via credit. Meaning – if you don’t have the money for it in the bank then it’s not wise to take out a loan. He’s a firm believer that the borrower is slave to the lender.


This passion for living below his means and saving over spending carried over into his college career (refer to the boxelder story above – that wasn’t an isolated incident). As may typically happen in college, another monumental moment found Jon – her name was (and still is) Heather.


The couple. They meet in college during Jon’s Junior year (her sophomore), fell in love, and decide to marry not long after. Not sure if it was the first date, but eliminating debt was a topic discussed early and mutually agreed upon.


Freedom was the central motivator. Freedom of debt, time, money… Basically freedom to live the life they desire. They agreed that to best do this – they would need to work hard now so they could reap the benefits later. For this a plan was concocted… We’ll cover this plan in detail in a bit, but let’s not get too far ahead of ourselves.


The 2 were married in the summer following Jon’s graduation (before Heather’s senior year) and it’s here we find ourselves at a crossroads. One in school with tuition and bills to pay and the other recently graduated with no job. I imagine he searched high and low, far and wide, to find a decent paying job. I believe that because I know what he settled on…


It was $14/hour and he had the title of microbiologist! Yeah! He’s a statistic, but a positive one. He’s using his degree to provide for his family. Cheers, sir. What was this glorious job, you ask? Quality control…


He tasted milk to note whether or not it was spoiled at different intervals in relation to the expiration date… He did this for one month and now no longer touches milk if it’s within 7 days until the expiration date. Perhaps best for all of us if I don’t tell this story.


After she heard the milk story...
After she heard the milk story…
He used his fancy title as a springboard to a more reasonable and respectable job with a pharmaceutical company. It was entry level but paid more and didn’t require him to put rancid milk anywhere near is mouth. Win.


For about 7 months he worked in pharmaceuticals, but he wanted to work in forensics. It was his passion and like many things in this story – when he went after it he typically worked hard enough to get it. This is where Jon and I met. He started as a Laboratory Technician (even more money) and did a great job.


I met Jon. He was unassuming at first but after a while we talked sports, politics, religion, and money (on break time of course). We both enjoyed talking finances and listened to podcasts. Naturally then we had both read Dave Ramsey’s book and listened to his podcast. Dave (we’re on a first name basis) has a nationally syndicated radio show about eliminating debt and improving your personal finances, and during some segments he answers listener questions.


I’m listening to the podcast one day and I hear a listener named Jon ask a question. This voice sounded familiar… Could it be? Yes. It was. Jon called into the show and I had to ask him about it. At this moment we recognized our likemindedness.


Enough about me. Let’s get to the meat and potatoes. How in the world did these two pay off this huge sum of cash in such a short time? Well, let me tell you.
Getting crazy about eliminating debt (this section is a bit heavy on numbers – you’ve been warned). I’m a big believer that life is all about perspective – so let me provide you some about these two. First off, they hate debt and they hate paying interest. I mean HATE. With that in mind – in the 8 months since Heather’s graduation they have both been able to land well paying jobs in the fields they are passionate about. Together they earn an income close to $110,000 annually. That’s pretty phenomenal for a married couple under 25. Nice work. This is rough math but that breaks down to about $6,500 a month after taxes/benefits are taken out of the checks.


For a typical budget enthusiast this would be sufficient… Not for Jon. “I do a weekly balancing of our account,” he tells me. What?? I had neither heard of this approach nor quite understood what he was talking about.


Jon broke it down. “We keep a $2,000 dollar emergency fund in our checking account and we get paid weekly (they alternate weeks for getting paychecks). (Our income) averages out to about $1,500 each week. 10% off the top goes to the church…” They are adamant about giving back to their church and their community. For the record, that’s about $7,800 dollars each year. I hope you’re doing the math with me, but in order to pay off the debt in the time frame I’ve outlined above we’re running out of money to live on.


Jon presses on. “…Dave Ramsey’s plan says you shouldn’t exceed more than 25% of your income for housing expenses. 25% is what we use for all of our expenses.” That’s $375/week or about $1,575/month… “The remaining 65% goes to loans.”


How in the blazes does this work? How do you live on 25% of your income? – My response to Jon (paraphrased for the younger audience). He replied, “I treat it like a game. I feel like you have to otherwise it would be (soul crushing)… I’ve always wanted a Lotus (expensive car) and to think that I could have had at least a used one by now is kind’a tough. But I think, what’s more important? Driving an awesome car, or sacrificing now to get out of debt?”


They want to have financial freedom in their lifestyle so that they can start a family some day and so Heather can work or stay home as much as she’d like.


I get it but still I press for the nuts and bolts of how they do it:


“It’s easy. I pay the bills that come in during each week and take what’s left over and put it toward the loans. It just works out to about 65% of our income.”


After I pick my jaw up off the table I ask about a million questions. How does this work? Do you ever run out of money? Have you been able to pay your bills on time? What if everything comes due at once?… He told me their worst week is always the first of the month. Rent is due ($800), which comprises the majority of their expenses, and when you add in tithing (what they give to the church – $150), groceries ($80/week) and any other bills that may come up – there isn’t much leftover to put toward loans.


“The first week always seems like we falling behind,” he says. “But then week 2 might only have $200 in expenses and we can put $1,300 on the loans. We feel better about these weeks.”


At this point I’m thinking there must not be much they do. How else could they live on $375/week? Jon reassures me they do get out from time-to-time. They don’t have a strict limit to spending. If they’re hungry they eat, when they need gas they buy it… Jon terms this as budgeting loosely, meaning that expenses just work out to about the 25% of their income, it’s not a fixed amount. With this loose budgeting, they go out to eat once or twice a week (mainly to Chipotle), and don’t automatically restrict themselves from spending any extra money. In fact, they’ve become recent subscribers to our local newspaper – the Columbus dispatch. There’s always an angle though. Jon tells me if they save a buck a week in coupons then they break even… “plus we got some free shirts in the deal.”


Don’t let me mislead you though, they do live frugally. They live in a modest apartment (to my knowledge not infested with stink bugs), don’t have cable, and don’t buy things they don’t need. Yes, this comes with many sacrifices, but they have the necessities.


In order to stay so focused and to keep paying down the debt they keep track of where every dollar went at the end of each week. They evaluate what money was spent on and if adjustments need to be made for next week then no worries. It’s a very chill method for having such impactful results – I’m sufficiently impressed.


“My brother-in-law likes to dumpster dive,” Jon tells me… I’m thinking this frugal behavior must run in the family. Then I find out his sister’s husband (same guy) is a well paid engineer and they have 3 kids. He ‘dives’ as a sport apparently. To the perhaps obvious question, ‘Why?’ I find out he has fun doing it and has gotten some pretty neat stuff. One of their kids actually has a noise maker that was ‘recovered’ from a dumpster behind their local Babies-R-Us. “The thing works great, just has a huge pink line of spray paint across the side.” – This is completely irrelevant but I felt compelled to share.


Back to the relevant and again keeping with the desire for perspective: Jon’s parents are swinging through and visiting the kids on a road trip. After leaving the brother-in-law’s, the parents head Jon and Heather’s way and tell them – “we’ve got some stuff for you.” Nice! free stuff is always great, right? I’m going with a maybe on this one.


They had about 300 K-cups that were ‘recovered’ from somewhere west of Indianapolis in (you guessed it) a dumpster. Yes, from the brother-in-law.


Jon throws them in the trunk and after the parents leave he and Heather head to Aldi (a discount grocery store) – there’s a sale on lemonade and oranges (random – i know – but true). They load up $2.50 worth of these on the conveyer belt and wait for the ‘old man’ in front of them to complete his transaction. This man looks back, eyes the goods, then glances at our couple here and says, “I remember when I was first married. My wife and I would live on love. We need more than that now… would you two like me to help you get any potatoes or spaghetti?”


An adorable gesture, no doubt, but Jon graciously denies and thanks the man. On the way out to the car Jon and Heather remark about how nice the man was and that they could not take the help of this old man shopping at Aldi who probably doesn’t have more than a few bucks to his name…


Jon opens the trunk, sees 300 K-cups, and thinks, “I have dumpster food in my car and we just bought $2.50 worth of lemonade and oranges… maybe we’re worse off than I thought.”


Dry those tears, things are looking up now... -Photo by SMW
Dry those tears, things are looking up now…
-Photo by SMW
What has this weekly payment plan done to their overall amount paid? They expected paying off the $89,000 to take 3 years… They’re on track for 15 months. At the time of our interview it had been 8 months and they had paid off $52,000. During Heather’s 4 years of school the loans accumulated about $10,000 in interest alone… In the 8 months since they started paying weekly payments the loans have accrued less than $2,000 in interest.


Jon told me, “I made about $110/day and found out that during her last year of school we were paying $11/day in interest on the loans. I hated it. With our current plan it’s about $2/day in interest.” Not perfect but significantly better.


If these two paid the minimum payments over the course of 30 years (the term of the loans) they would have paid close to $185,000 total – $82,000 in principle and ~$103,000 in interest. Now they’ll pay under $90,000.


It is such a simple but effective approach to pay weekly payments on the loans. In doing this you do not give the loan 1 month of time to accrue interest, add it to the principle, and ultimately increase the amount you pay. By paying weekly, you basically cut interest off at the knees. It doesn’t have time to accumulate – thus you pay a small fraction of what you would’ve paid otherwise.


Jon’s key to living the financial life of their dreams. Jon had earned a promotion with our agency, from a laboratory technician to a forensic scientist. The day he was to start his new position his car broke down on the way to work . He was ~15 minutes into a 30 minute drive. An off-duty state trooper helped him push his car off the side of the road and gave him a ride to a nearby gas station. He made a few calls with no luck, then a, “skinny, sketchy looking man with an air of ‘I won’t kill you today’ offered me a ride.”


The trip was uneventful and after he was dropped off Jon thanked the man and said he didn’t have any money to pay him with. The man said, “No problem, just do something nice for somebody next time you can.”


All-in-all Jon was about 45 minutes late to work. Our boss completely understood the dilemma and as Jon’s commitment and work ethic aren’t in question he was let off the hook.


All was well with the job, but it was at this moment that he was faced with a choice with seemingly 2 clear options: 1) take out a loan and buy a new car so this doesn’t happen again, or 2) find a way to get a reliable used car for much less cost to keep on track and away from increasing the debt owed.


By this point I would think you know the option he and Heather chose. He put it to me this way – “There are 2 ways to live. Spend future paychecks and not get anything else and eventually run out of money for the payments, or save up and pay cash. You can’t get ahead if you always owe people. That way you’re always working for the man.” Amen, anyone, to sticking it to the man?


Where we are now. 8 months after she started working they paid off $52,000 – $42,000 was cash-flowed and $10,000 came from the savings they earned during Heather’s last school year.


“What do you plan to do once the loans are all paid off?” “Nothing,” he answered. “Well, maybe go out to eat.”


What lies ahead. They have about $34,000 left to go but are on track to be completely debt free by October 21, 2016 – Heather’s 25th birthday. They planned to celebrate with a cruise after becoming debt free, which they thought would be 3 years from the beginning. They are so far ahead of schedule they decided to celebrate early. It’s important to celebrate milestones. They’ll be taking a cruise in May with some close friends and although I’m sure they’ll have a great time and amazing trip, I’m also sure they’ll get back to business when they return.


It’s amazing to think about the fact that you can actually win. These two don’t come from anywhere different than most of us but they’ve worked incredibly hard in their early lives so that their time won’t be spent in someone else’s debt. Take a second to imagine that feeling… Completely debt free and all of the money you earn each month (or week in their case) is just that – it’s yours. That thought definitely motivates me, I hope it can do the same for you too.


I’ll let Jon close: “…Goals are a huge part of it. It’s the most important part of (paying off debt). It’s people who have no plan and spend all of tomorrow’s dollars on today’s stuff that can’t win.”

Interested in how these two ended up (financially that is…)? See the follow-up article here.

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– Mike
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