How I Paid Off My Student Debt: Eric Pratum
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.
Eric Pratum, 30, shares his story.
Pratum earned a bachelor’s degree in German from Western Washington University, a master’s degree in German from Portland State University, and then returned to Western Washington University to earn his MBA.
Armed with three college degrees, Pratum was ready to take on the Seattle workforce. He was offered a marketing job the same week of his graduation.
“My plan after graduation was to at least keep up with my payments,” Pratum said. “But because of what I was getting paid at my job, it looked like I would just barely be able to make my student loan payments as well as pay for my living expenses.”
He only stayed at that job for seven months, citing one reason for leaving as higher-than-anticipated living expenses. After switching jobs, Pratum’s salary increased enough to where he was able to live and pay all of his expenses, barely.
Pratum said he graduated with about $90,000 in debt, split roughly between student loans and borrowing from his parents. It was clear to him that a strict budget was necessary.
“I had $50 to $150 a month of disposable income,” he said. “My budget was really tight.”
Pratum said he began looking to save money any way he could – this included bringing lunches to work instead of going out for lunch with co-workers, avoiding the smartphone craze, sacrificing cable, and taking the bus to work.
“At that point, I drove a 1990 Subaru Legacy. It was a car my parents had given me, and I had no need to buy a new car because I didn’t want a car payment,” Pratum said. “My job didn’t pay for parking or gas, but it did pay for a bus pass. So I would ride the bus for 30 minutes to work.”
Pratum also implemented a few extreme budgeting methods.
“For Christmas and my birthday, in lieu of gifts, I asked everybody for food – anything that would keep for a long time,” he said. “My parents got me a 50-pound bag of rice and my mother-in-law got me canned vegetables. Truthfully, asking for food as a gift saved me from buying three or four months of groceries. My diet was really boring for a while, but all I had to do was buy the items to spice up the food.”
Additionally, by buying fresh items in small portions and foods that didn’t need to be refrigerated, Pratum never had to plug in his refrigerator, shaving money off his energy bill.
After 11 months at his new job, Pratum received an offer for a job in Atlanta that he said would put him in a financial position where he would comfortably be able to handle all his debt. However, before he could accept it, the engine in his car blew up and he had to purchase a new car.
“I ended up getting a car loan I couldn’t afford, and I had to borrow more money from my parents, which increased my debt,” he said. “I had no emergency fund at the time. I was basically living hand-to-mouth.”
That was February of 2010, and despite the unexpected car situation, he took the job in Atlanta. His new job paid for relocation. Soon after, Pratum got married to his wife, who had accumulated $20,000 in school debt herself.
“We were paying for her debt and my debt. Fortunately, my job could cover all of our debt, take care of our living expenses, and allow us a little extra for miscellaneous,” he said. “We were living in Atlanta for a year before my wife was able to find a job. Once she found a job, we were able to transition from saving a little a month to putting her entire paycheck into our savings – our rainy day fund.”
Pratum said they followed experts’ advice – that your savings should be able to cover three to six months of expenses – but realized they were still $40,000 in debt.
“Our debt was decreasing, but not at the rate we wanted,” he said. “Knowing that if something bad happened and we would still have this debt to pay, we decided to take our rainy day fund and pay off as much of the debt that we could. We spent a year without an emergency fund, hoping that nothing bad would happen.”
Pratum became 100% debt-free in May 2012, after nearly four years of budgeting. He and his wife have since moved back to Seattle.
His advice to recent grads with debt: weigh the benefits and drawbacks of holding that debt or taking on more.
“Put together a plan on what you are and should be spending every month. If you don’t track your budget, you’re never going to know if you’re controlling your expenses,” he said. “If you don’t know how much you’re spending on everything, how will you know if you’re budgeting better?”
Pratum said after the debt was paid off, he and his wife ‘relaxed’ a little, went out to eat a little more, splurged a bit. But don’t plan on him making any drastic changes.
“I still take my lunch to work, we still don’t have cable, and we have a family plan for our cell phones,” he said. “I live two and a half miles from my office. I do drive, but I can also walk or ride my bike.”
Follow Valerie Jones on Twitter @ValerieJonesCMN