Got student loans on a non-profit salary or other low income? You’re not alone. But in Joyce Chou’s case, her loans entered repayment with an unexpected twist.
It was summer of 2015, and Joyce had just returned to the US after spending nearly a year teaching English in Taiwan. She’d been there on a Fulbright grant following her college graduation.
It was time to start her new job working as a grant-writer at an education non-profit in Houston. She was looking forward to starting work back in the US and getting settled in an apartment.
There was just one problem.
Like many recent college grads, Joyce had overlooked one crucial detail about her direct unsubsidized student loan: interest had been piling up on it the whole time.
She’d put it into deferment while teaching in Taiwan, so that only made matters worse.
(Interest accrues while you’re in school on unsubsidized loans too, which many people don’t realize. That interest gets added to the amount you owe. Essentially, it increases the cost of borrowing & the amount you end up paying.)
The long and the short of it? Between that and her Perkins loan, she was staring in $15,380.72 student loans in the face, which eventually ballooned to $16,218.53 with interest.
She panicked a little, and then made a plan.
One year later, she made her final student loan payment! That’s $16,218.53 paid off in 1 year — on a low non-profit salary, no less.
How did she pay them off so quickly on a non-profit salary?
It started with a commitment and that plan.
(Being committed to getting out of debt is SO important, because you’ve got to be in it for the long haul.)
Then, she followed up by taking action on eliminating those loans.
Joyce made several choices that ended up having a big impact on being able to get her student loans paid off quickly. In short, she:
- Tracked her finances
- Reduced her expenses
- And increased her income
It’s a powerful trifecta that works wonders for debt reduction.
More importantly though, she keep those actions and her commitment going strong throughout the process by creating a student loan progress chart using Google Sheets. It was a simple chart with one line going up to show the amount repaid increasing, and one line going down to show the balance decreasing.
It’s much easier to stay motivated when you literally focus on your progress, so visual aids like that can be super helpful. (Here are some more ways to visualize your progress.)
Next, let’s talk in more detail about the things she did to pay off her loans so fast.
Tracking her finances and making adjustments
Joyce tracked her expenses using Monefy, and also pulled that data into a spreadsheet.
“Tracking finances alone did not speed up paying off my student loans,” she adds. “However, what it did do was make me incredibly cognizant of where my money was going and what I could afford to cut back on.”
And when she noticed her spending was a little high in some areas, she did NOT just shrug and move on. Instead, she made adjustments. For example, if she spent more than she wanted to eating out one month, she would make it a point to eat in more the next month.
In other words, she paid attention to what was going on with her money and then did something about it if she didn’t like what she saw.
She was proactive too, making sure to cut expenses in larger areas ahead of time. She didn’t just wait to see what happened.
Keeping major expenses low helped pay off her loans on a non-profit salary
To really keep expenses low, Joyce lived with a roommate in a two-bedroom apartment and cultivated a variety of frugal habits.
Frugal habit #1: Keeping housing costs low
Splitting the rent based on room size meant she paid only $570 a month in rent. That’s a significant savings over the $1,000+ average monthly rent in the area. She also made it a point to live near where she worked and shopped, saving both time and transportation expenses.
Frugal habit #2: Keeping transportation costs low
Speaking of keeping transportation costs low, she avoided some hefty costs by deciding not to get a car. (Yes, even in spread-out Houston.)
Deliberately living close to work helped, but she could have easily done the “normal” thing and gotten a car anyway. Instead, she got a 150cc motor scooter and used that to get around.
“The scooter itself was $1,020,” she says. “Although full disclosure: my mom bought it for me and refused my attempts to repay her later on, a privilege that I am endlessly grateful for.”
Between living close to work, not having a car payment, having lower insurance costs, and an economical way to get around, her total transportation expenses were typically less than $80 a month.
Frugal habit #3: Keeping food & entertainment costs low
She saved on food too, which is often a pretty large part of people’s budgets. She kept her grocery budget to about $200 a month, and limited how much she spent on eating out.
Rather than struggle with telling people “no” to social activities, she took matters into her own hands. She invited friends over to eat and suggested going out for dessert instead of full meals. Sometimes she even got paid to eat out as a mystery shopper.
Speeding things up with side hustles
Increasing her income helped too. When you don’t make a ton in comparison to your debt, doing side work can make a huge difference.
Joyce added several part-time jobs while paying off her loans. She didn’t sit around thinking, “I don’t have a high salary at the non-profit, so it’s going to take me forever.”
Instead, she turned her previous experience and things she was good at into extra income. For example, she did copy editing, and she taught English at a language school on Saturdays during the school year. (In addition to the occasional mystery shop.)
This brought in an additional $100-$700 a month, which sped things up considerably and allowed her more fun money. It’s important to have fun too while paying off debt!
(Here’s a whole list of side hustle ideas if you need suggestions.)
Life after debt
It’s a SUCH great feeling when you get rid of student loans for good.
“I felt incredibly relieved!” Joyce exclaimed. “It almost felt like the road ahead cleared for me, as I could now focus on other financial goals.”
She worked at the non-profit for about 2 years before moving on to other things.
She’s a personal finance writer at Financial Impulse, and she now works in SEO and content marketing, which she loves. (For anyone unfamiliar with what that is, it’s a lot of looking at site analytics plus brainstorming, writing, and editing online content.) Stop by and say hi to her on her site!
Currently she’s focused on reaching certain net worth benchmarks, and saving for major upcoming expenses, like a car, wedding, and maybe property, in the next few years.
I hope this story has inspired you to take action on your own loans, or to keep going if you’re already doing so!