Why I’ve decided to pay off my $55k balance as soon as possible. No 10-20 years of payments. No more hoping “the government” will come through for me.
I graduated from grad school with $105K in student loans. Say what you will about Dave Ramsey. He is right about paying off debt fast. I was only in the workforce for a couple years before the pandemic hit. During that time, I was binging Dave Ramsey videos and realized he’s right about debt. Decided to pay as much as possible toward my student loans. I managed to get them down to $55k in about 2 years. My income was about $65k fresh out of school.
I stopped making payments when interest was paused during the pandemic so I could invest in stocks and enjoy life. I bought a lot of consumer things (cars, vacations, clothes etc) during the stimmy-fueled, low interest, juiced up pandemic economy. My income during covid climbed to the low 6 figures.
Fake Government Rescue
I should have known better but I actually thought I might get $20k forgiven when the idea was floated around. Of course it got “approved” when I applied. But the second the forgiveness was challenged in federal court, I knew I wouldn’t be getting a dime. I was right! Turns out it’s not a presidential power to just snap your fingers and forgive trillions in government held debt. Now we have the “SAVE” plan, which isn’t even remotely close to what I was “going to get” under the forgiveness plan. It does nothing for people who make over $100k. It probably wouldn’t even do anything for me if I was back to making 65.
I have weighed the idea of making small payments and continuing to invest and letting the loans drag on. For all I know that might end up being mathematically more profitable over my lifetime. But at the end of the day I am putting a premium on wiping this thing out. The interest is like an acid attack on my money. The only way to make it stop is to pay down that balance aggressively.
Stocks will probably go down due to low Q4 earnings
The other factor is that the stock market is probably going to have a bit of a rough patch after Q4 (with rates the way they are and student loans coming back, it is going to be an austere Christmas). I figure that if I can pay this off fast, by late winter/early spring of 2024, I can probably buy the dip on the burst-bubble fake inflation economy free and clear of any student debt and just throw paychecks at the market downturn.
This past week, I took $15k from stocks and savings and threw it at my Nelnet, leaving me with a $39K loan balance as of today and a lower bank/brokerage account balance than I have had in a longgg time. Feels nice to be honest with myself and just get this pain over with.