It has been about 2 years since graduating from Pharmacy School. I became licensed as a Pharmacist in May of 2012. This was a huge milestone in my life. This meant all my hard work was going to finally pay off. I was finally going to get that six figure salary that many of us strive for. It was a feeling of great accomplishment that I have been waiting for during all the years in college. That feeling however, did not last long as I started receiving e-mails about the student loans I had borrowed throughout college.
At this point I had accrued approximately $85,000 dollars in student loan debt with a 6.8% interest rate. Left over from the student loans was about $20,000 dollars for emergency funds in case I could not find work immediately. This could have been used to pay back some of the loans immediately, however I had not cemented a full time job as a pharmacist. After graduation I worked 2 per diem (on call) jobs until September 2012 when my status was changed to full time at one of the jobs.
Most of my classmates started buying new cars, houses, and took extravagant vacations once they started working. There was a part of me that wanted to join the fun but realized this would hurt me financially in the future. I hated the fact that this was the poorest I have ever been in my life. My net worth was -$65,000 starting out of school. This could have been much more if I had not started working at the age of 14 with part time jobs, internships, and summer jobs. Interestingly, at the age of 25 graduating with a bachelors and doctorate degree my net worth was less than new born babies!
My next goal was to eliminate my student loans as soon as possible. The 6.8% interest rate was not something I wanted hanging over my shoulders. To make things worse, student loan interest is not tax deductible if you hit a certain income level. Thus, it really makes no sense to keep these loans around in my scenario. There was a temptation to join my classmates and increase my standard of living. It takes discipline to avoid these temptations and find a way to enjoy life without being engulfed by consumerism.
How I Paid off Pharmacy School Loans in 2 years
In the last 2 years I have created a budget for how my money is spent. This allowed me to keep track of exactly where my money was going. The budget revealed where money could be saved. Ultimately, the plan to budget and continue a frugal standard of living helped pay off my $85,000 student loan debt in less than 2 years. Here are the secrets to paying off your student loans in a short amount of time:
- Create a Budget: Creating a monthly budget can help guide spending. Initially, the first few months should be evaluated closely to get an idea of where money is being spent.
- Keep track of your monthly cash flow: this can be included in your budget. For those who have multiple income streams it could be beneficial to keep it separate from budget. You can track if you are making more or less throughout the year. A great tool for keeping track of budget and cash flow is www.mint.com or www.personalcapital.com
- Keeping up with the Joneses: Many people try to keep up with the Joneses by buying new cars, new gadgets, designer clothes, eating at fancy restaurants, buying super sized homes, or going on expensive vacations. Sure these things are nice but not when you are living paycheck to paycheck and have debt that is accruing interest.
- Living with the the same Budget as a College Student: You have already got experience living as a poor college student. Continuing doing the same and you will save a huge portion of your paycheck. This will allow you to make larger payments towards those student loans.
- Make weekly to biweekly loan repayments: Try to make payments on a weekly or biweekly basis to decrease the amount of interest that builds on the student loans. Example Student Loan: $10,000. You make $1,000 dollar payments each week. For 7 days you will accrue interest on $10,000, 7 days on $9,000, 7 days on $8,000, and 7 days on $7,000. Total interest for the month would be higher if you made monthly payments and had 28 days of interest on $10,000 dollars.
- Find a 2nd Per Diem or Part Time Job: That 2nd job income will accelerate your payments. Just suffer for 1-2 years and that loan will be paid for just that much faster!
- Also read my other post about Student Loan Refinancing to save money.
I hope the recommendations above will help guide, motivate, and inspire you to achieve your goals. Follow my blog for more tips and advice on finances and being a pharmacist. What are your experiences? Please comment below and share your thoughts.