I paid off $200,000 of student loans in 18 months with the help of this plan

Disha Spath, an internist and the founder of the blog The Frugal Physician, shares the 10-step plan that helped her pay off $200,000 in student debt.

Disha Spath
Dr. Disha Spath and her husband Josh.
Courtesy Disha Spath

In 2017, when I was a young mom of two boys under 2 years old, I decided I was done with my student debt.

I was on unpaid maternity leave from my job as an internal medicine physician at a hospital. My husband was studying for his master's degree and I had to go back after two short months, because we needed an income to pay the large bills for my student loans, our car loans, and our mortgage. Many might think doctors are financially secure from the start. Unfortunately that is not always the case early on, especially in lower paying fields like primary care.

Even before my maternity leave, my husband and I found ourselves living paycheck to paycheck, in part due to my large student loan bill. During maternity leave, I got some short-term disability, but the majority of it went to paying off the debt. 

We decided then that we were not comfortable carrying my student loan debt for 10 years. We wanted to pay off the loans as fast as possible so we could gain better balance in our lives. My husband and I sat down to devise a plan and put it to work, and I started a blog called The Frugal Physician to build a community, learn from and help others in my situation.

Thanks to our plan, we paid off our two cars in less than a year. And after that, we tackled my $208,000 of student loans and were able to pay them off in under 18 months. With our debts paid down and more breathing room in our monthly cash flow, my husband and I now had the flexibility to pursue careers that felt fulfilling to us, while still spending meaningful time with our family. 

I was able to go from feeling completely overworked and overwhelmed, doing night and weekend shifts, to a much more balanced schedule, working 3 to 4 day shifts a week. My husband was able to find work as a project manager in the tech industry like he wanted, instead of having to take whatever job was available.   

Everyone's debt payoff path is different, but these are the steps we took that helped us accomplish our biggest money goals.

We came up with a debt payoff plan that worked for us

We sat down and took a measure of all the debts we owed and their interest rates. We decided to take the debt snowball approach, putting all of our extra monthly savings towards the smallest loan until it was paid off. Then we rolled that extra amount, plus the monthly payment of the smallest loan, into the next biggest loan until that was paid off, and so on.

This method gave us small wins to celebrate along the way to and provided us with a lot of momentum to keep moving forward.

What's the difference between a debt avalanche and a debt snowball

Video by David Fang

We started keeping a written budget

Before we started tracking our money, we were spending without a plan, and then not feeling great about it. When we started our debt-free journey, we decided to meet at the end of every month and take an accounting of where we spent all our money.

As we became more cognizant of our spending habits, we were quickly able to identify what we could cut out and where we could cut back. And when we did spend, we knew what we had to work with, so that took any guilt out of the equation. 

We visually represented our debt

Knocking out our smaller car loans was a relatively quick process. When we got to my large student loans, we needed a little extra motivation. So we started a "macaroni jar" with each macaroni equaling a thousand dollars. Every time we made a payment, we celebrated by taking out a macaroni from the jar together as a family. It was so fun and motivating to see the balance going down.  

We increased our income

After separating from the U.S. Army as a captain, my husband took a couple of years to study for his master's and stay home with our boys. After finishing his master's, my husband was eager to get back to work. His income as a project manager helped to speed up our debt snowball.

We made saving automatic and painless

Instead of trying to cut out all discretionary spending, we first focused on lowering fixed monthly costs. For example, we dropped monthly subscriptions we weren't using and tried to lower the costs of other fixed monthly bills by finding frugal substitutions.

We switched to streaming services instead of cable and cut that entertainment bill in half. We also switched to an alternative phone carrier to lower our cellphone bill. And we automated all those payments. 

We downsized

In late 2017, we moved from Savannah, Georgia, to Albany, New York, in part so my husband's family could help us with our kids. We decided that renting for a bit while we got to know the area would make sense. So we sold our home in Savannah and moved to a smaller rental. That helped us create even more space within our budget for our debt snowball.

Our housing expenses went from around $2,400/month for mortgage/tax/insurance/HOA to $2,050/month for rent. So we found another $350 a month here for our snowball. Renting also cut out unexpected maintenance and home improvement costs for our primary residence.    

We became renters — and landlords

While we were renting our primary residence in Albany, we were also the landlords of a home we owned in a different city. My husband and I have always believed in the value of building passive income through real estate. When we moved to Savannah, we decided to keep our first house, a single family home in Nashville, as a rental.

Thankfully, we found good renters and a great management team so the house has created a reliable cash flow for us while providing tax benefits. This helped us optimize our living expenses even further and more than halved our housing costs.  

Is now a good time to refinance your mortgage?

Video by David Fang

We refinanced

Once we decided to pay the loans off more quickly, we found that it made sense for us to refinance. I refinanced my student loans to a private lender and lowering the interest rate from 6% to 8% down to 3.6% made it easier to pay off. At 6% to 8% interest, I was paying around $1,000 a month just in interest. This way I was saving about $500 a month on interest, which helped speed up the snowball process.  

We used credit card reward points to travel 

Even though we were on a budget, we wanted to make sure we were still doing activities we enjoyed. So instead of cutting out travel altogether, we planned trips with reward points. Still, we were careful to pay off the credit cards every month and never carry a balance. Using this method, we were able to take several vacations while still paying down our debts.

With this plan, my family and I were able to pay off debt quickly and build financial habits that we continue to use today.  

Disha Spath is an internal medicine physician, a mother to two awesome boys, and a wife to Josh. She writes about money-saving hacks and personal finance to help doctors and other high-income professionals get out of debt and design their ideal life at The Frugal Physician.

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