Logan Marston, an accountant based in Durham, North Carolina, likes numbers.
It’s no wonder then why he put his financial knowledge to work, and developed a strategy to repay $73,000 in student loans.
Only three-and-a-half years after earning his master’s degree in accounting from James Madison University – at age 27 – Marston was debt free.
Here’s his story.
Zack Friedman: How did you pay off all your student loans so quickly? What strategies did you use?
Logan Marston: My overall strategy was pretty straightforward: live humbly, minimize expenses and use extra cash to further pay down my debt.
I also took advantage of small interest rate reductions (0.25%) offered by my loan servicers for opting to make my monthly payments via direct-debit.
Lastly, I made sure to pay off my loans in the order of highest interest rate first, to maximize my interest savings. This one can really make a difference depending on your range of interest rates and how quickly you’re paying down your debt.
But, regardless of those variables, as a general rule: whenever you’re able to make an extra payment, the loan with the highest interest rate is the one you want to hit.
Zack Friedman: When did you commit to yourself to repay your student loans more quickly? What was the turning point?
Logan Marston: I definitely wanted to become debt-free as early as possible, but what motivated me most was saving as much money as I could on interest.
When I first began repayment, I was accruing over $300 in new interest every month. That fact alone was enough to throw me into panic mode.
I couldn’t just sit back and watch all that money fly out the window, so I decided that the standard repayment plan alone wasn’t going to cut it.
Over the next 3.5 years, around 90% of my discretionary income would be used to make extra payments toward my student loans.
Paying this aggressively was challenging to say the least, but it definitely paid off. I saved a total of $16,527 in interest by paying off my loans in 3.5 years verses the 10-year standard repayment plan. This was the reward I was after, and boy was it worth it.
Zack Friedman is Founder & CEO of Make Lemonade, a personal finance comparison site that helps you save money and live a better financial life. He is also an inspiring keynote speaker.
[“Source-CNBC”]
