How I Paid Off My Student Debt
Each year, millions of Americans make the decision to further their education by pursuing college degrees. Many are left with a sense of accomplishment after they graduate…and many are left with something else. An unfortunate, but all-too-familiar trend has surfaced – Americans graduating from college with substantial debt. According to the Federal Reserve Bank of New York, the average amount of student loan debt is $24,301. Though it can seem overwhelming to do, there are people who have successfully paid off their student loan debt.
Adam Ringenberg, 32, shares his story.
Just two weeks after graduating from Mississippi State University with a bachelor’s in business administration and a master’s in information systems, Adam Ringenberg landed a job in his field. The problem arose when Ringenberg, who also graduated with $42,000 worth of debt – $35,000 from student loans and $7,000 from credit cards – realized his new job would pay him $28,000 a year.
“I got my first paycheck and I knew how much my loan payments needed to be,” he said. “That was when the panic set in.”
Like many college students, Ringenberg didn’t necessarily manage his finances in the best manner while in school, admitting he would consider the available balance on his credit card as income.
But the reality of his repayment obligations forced him into a real-life lesson in debt management.
It all began when Ringenberg’s sister gifted him with tapes by financial expert Dave Ramsey for Christmas.
“He has a 7-step plan for getting out of debt and I followed that to the letter,” Ringenberg said.
First, Ringenberg canceled all of his credit cards except for one, which he said he froze in a six-inch block of ice in his freezer so he would not be tempted to use it. He then deposited $1,000 into a savings account, which served as his emergency fund. Then came some serious budgeting.
“I remember looking back through my grocery receipts and realized I would spend about $80 on groceries and about $200 on other stuff,” he said. “I immediately switched to a cash-only system.”
When Ringenberg received his monthly paycheck, he would take out $200 cash for groceries, $200 for gas, and another $300 for anything miscellaneous. The remainder of his check went toward bills and paying off student loan and credit card debts.
“Dave Ramsey’s system tells you to start paying off your smallest debt firsts, because psychologically, it makes your goal seem more attainable,” he said. “It feels better decreasing the number of people you owe, even if you’ve only paid off a smaller portion of your debt.”
Ringenberg followed his strict budget for six months before deciding he wasn’t making enough progress. So he used another bit of Ramsey’s advice and began rummaging through his apartment to find things to sell.
“I used sites like ebay and craigslist to sell items and ended up with $1,500 from stuff that I sold,” he said.
It seems as though the stars began to align for Ringenberg because he also changed jobs. His new job offered him $40,000 a year, overtime, and holiday pay. However, Ringenberg said he continued to live as though he was still making $28,000.
At his new job, Ringenberg posted the amount he owed on the wall by his desk as a reminder and motivator.
“I was getting paid every two weeks and making $800 payments on my debt every two weeks,” he said. “My co-workers would ask me what the number was for and once I began telling people, they provided a lot of encouragement.”
An important factor to consider in keeping living expenses down, Ringenberg stressed, is driving a practical car.
“I tell people all the time to sell their car. If you’re driving around in a $20,000 car, you’re probably paying hundreds of dollars a month for car payments,” he said. “You can buy a good car for a few thousand dollars. That’s what I did and it gives you a lot of traction. Take the money and use it to pay down debt.”
Ringenberg continued to stick to Dave Ramsey’s tips, stuck to his budget, and stuck to his guns. Then the day arrived – two-and-a-half years after graduating – when Ringenberg paid off all the debt he incurred while in college. Though it wasn’t easy – he recalled the time the transmission went out on his car and he bummed rides while selling items on craigslist for extra cash – he reached the light at the end of the tunnel.
Ringenberg’s experience with debt management proved helpful when he married his wife, who had just graduated with $42,000 in loan and credit card debt.
Deja-vu, anyone? But Ringenberg had it under control.
“When we got married I had $10,000 in the bank. Once we got married, there was no more his and hers, it was our money,” he said. “The first thing we did was pay off one of her credit cards. After that, we just worked the plan.”
By that time, Ringenberg had moved to a job making $70,000 a year, but still continued to live like he was making $28,000.
“My wife and I used allowances and though I make more than her we have the same allowance,” he explained. “We always use our income to pay bills first.”
Ringenberg’s methods proved successful again, and the couple paid off their debt in just two years. They were also able to put $30,000 down a house. The happy homeowners are now the parents of a six-month-old son.
“Six months into my debt management, I realized it didn’t matter what happened, but I was never going to go into debt again,” he said. “It’s kind of like asking me if I want to become a prostitute. Basically, it’s not even in the realm of possibility for me.”
Follow Valerie Jones on Twitter @ValerieJonesCMN