4 months ago I had 60,000 in debt and right now I have 0 sooo today we’re gonna explain
how that happened.
Alright, let’s jump right into it.
What is going on everyone I hope you are all having a fantastic day.
So, in previous videos, you may have heard me talk about my fiancé and I've never actually
had her in a video but we just finished paying off nearly $60,000 of student loan debt in
just three months and after bribing her with some free Chick-fil-A, I felt like she should
at least come on camera for a second to say hello considering she's a huge part of the
story.
ERIN COMES IN.
So today we're going to break down the whole process of paying off $62,000 of debt in three
months including breaking down all of the numbers, explaining how we paid this off so
quickly, why I decided to help her with her debt journey considering we're not married
yet because I'm sure that will be a controversial topic in the comments and ultimately just
give you some hope if you are watching this and currently have what feels like an insurmountable
amount of student loan debt.
So I've talked about my college finances in previous videos but long story short, I went
to an in State College, I was a resident assistant, I had a number of scholarships, and I'm not
gonna lie to you, I was incredibly blessed that my parents helped me pay for a large
chunk as well.
Make of that way you want but I assure you I am not some trust fund baby and I did everything
I could while I was in school to graduate early and minimize the cost in any way I could.
But that's enough about me Erin how much did debt did you have?
ERIN: $58,635.01.
Have Aaron explain how she also went to an in-state school worked as an RA had multiple
on campus jobs.
BRENDAN: And you are totally cool with me talking about this and breaking down all of
the numbers and you were not bribed with Chick-fil-A?
ERIN: Sure.
ERIN EXITS Alright so the first point that I'm going to talk about is in reference to
what Erin just said and is honestly a terrible part of the education system and that is that
she went to one in-state school worked as an RA had multiple on-campus jobs graduated
on time and did all of the things that you were told to do as a young adult yet she still
had no choice but to take on over $60,000 in debt to pay for her schooling and I know
that there's a lot of people that probably have a lot more debt a lot of people that
have less debt but I think we can all agree that based on the information that I just
laid out, it's kind of horrifying that that still costs $60,000 because short of going
to a local community college and living at home which by the way there is absolutely
nothing wrong with that, there really isn't any way to do this much cheaper depending
on the state that you live in.
I do also want to be open and honest from the start that if looking at the raw numbers,
I did help pay off a lot of that debt and I am fully aware that that is going to be
a hot topic for a number of reasons.
So I'll talk more about my justification behind that decision in a second but I first want
to make a crystal clear that while I may have made a direct financial contribution that
absolutely does not mean that I paid for my soon-to-be wife's college.
That would be an incredibly inaccurate and false statement and completely discredit the
hard work and effort that she put in in order to lower the cost of her schooling as much
as possible.
By deciding to go to an in-state school rather than a private institution that could have
cost $60,000 per year she easily saved $100,000 or more.
By working as a resident assistant she got free room and board and saved over $10,000,
she had a million different jobs that entirely paid for her housing and food, and long story
short she put in way more effort to fund her education than I ever did.
I do want to talk about why I made the decision to help pay off her student loans prior to
us getting married I promise I will get to that but I'm sure all of you really wanna
see the breakdown of all the numbers and understand how and why we decided to pay off that dead
in such a short period of time.
So the grand total of student debt that we're talking about here is $58,635.01.
That came in the form of $30,008.75 in private loans and $23,420.69 in federal loans.
Now as many of you may know federal student loans have been paused in terms of payments
and interest rates for both subsidized and unsubsidized loans however those unsubsidized
loans did accrue interest prior to that student loan pause taking place and of course, the
private loan interest rates half continued so there is a few $1000 of interest baked
into that but a majority of the total is made up of principle.
In terms of paying off that grand total, it's really broken down into three major payment
categories.
First we made a payment in August of 2021 for $30,008.75 which was entirely focused
on private loans and the rationale there was federal loan interest rates were paused plus
the rate on federal loans are typically lower than private loans so if we had to choose
between the two we decided to pay off the private loans first.
The second payment came three months later in the amount of $23,420.69 and was entirely
federal loans and we actually decided to rip the band aid thinking that the federal student
loan pause would be ending at the end of January and literally the day after we made the payment
it was announced that pausing of the student loan payments and interest would be extended
and while we were definitely a little aggravated about that for a few minutes, in the end,
we were going to have to pay it off anyways and being a huge fan of Dave Ramsey and much
of what he teaches, it still feels like the right decision.
and the last category is simply the $5205.57in remaining expenses for her final semester
that we would just pay out of pocket which brings the grand total to $58,635.01.
Now I can't talk about the government and student loans without addressing the very
hot topic issue of whether or not the current administration can or will forgive any amount
of student loan debt.
Well, I will say right now that number one this channel is not political in any way and
I'm going to keep it that way and number two no one can predict the future of whether or
not this truly will happen.
I know there has been a ton of chatter about $10,000 of loans being forgiven or some other
random numbers that have been thrown around and while that possibly could happen, we just
felt that if we had the ability to make it go away then that is probably best instead
of hoping for someone else to pay it off.
Could the administration forgive $10,000 of student loans or more…probably.
If that happens will we be kicking ourself that we paid it off early, yeah I'm not going
to lie I probably will.
But again, in my opinion, it felt like the right decision for us but that doesn't necessarily
mean that that is the right strategy for you so that's just the decision that everyone
is going to have to weigh and decide on their own.
Alright so with all of the story and the numbers broken down let's circle back to the big hot
topic issue and that is why in the world did I pay off $60,000 of debt for someone whom
I am not married or legally binded to in any way shape or form.
Now if you're scratching your head thinking why is that such a big deal well good for
you but here's what Dave Ramsey had to say about that exact topic.
So
obviously I went with an option that is in direct opposition to what many financial and
legal experts would recommend and I fully understand that a lot of you may rip me apart
in the comments saying that that is an absolutely ridiculous and stupid thing to do.
And while the moral and relational factors that
went into that decision are between my fiance and I, from a financial perspective here is
my argument.
I've known for years that when I married Erin, that was going to come with some student loan
debt and I accepted that a long time ago and was okay with it and when we started having
conversations about it then and I started setting money aside in a catered investment
account that I would eventually use to pay off that debt.
Now as the date of when I actually would need that money has gotten closer, I have adjusted
that portfolio significantly in order to reduce the risk just as an older individual typically
takes on less risk as they get closer to retirement because they have less time to recover should
something go wrong.
So because I had adjusted that portfolio to be higher in bonds and lower in stocks and
equity, that meant that it eventually got to a point where the interest rate on the
loans was higher than the return I was earning in that very conservative portfolio.
And for that reason and that reason alone at least from a financial perspective is why
we decided to get rid of those loans prior to getting married in a few months.
So make of that what you want but I'd love to hear your thoughts on it in the comments
section because again I fully recognize that not everyone would support that not everyone
would make that same decision but in my mind, that was the right thing to do and the fact
that I was also able to justify it on paper definitely helped a number focused mind like
mine.
So I get that this wasn't your typical Dave Ramsey debt payoff story where we both worked
12 jobs and ate beans and rice for three years and somehow emerged debt-free and stronger
than ever and I'm sorry if that's what you were expecting when you clicked on the video
but what I will say is that despite the fact that I do have a full-time job it is really
thanks to you my YouTube audience that allowed me to even think about paying off this student
debt early so it's worth from Aaron I both thank you so much for watching these videos
and continuing to support my content.
this was definitely a different style video than what we usually talk about here in the
channel but as always if you did get value out of this content and you want to help support
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in the future and of course, thank you so much for your time I really do appreciate
it so much take it easy and I'll see you in the next one.