How One Pharmacist Paid Off $100,000 in Student Loans and Other Debt in Just a Few Years
Editor’s Note: Holden Graves is a pharmacist with a great personal story about paying off his student loans. Please read the story with an unbiased mind. You may think his story is unrealistic, but I think it’s an incredibly inspiring story of perseverance, tough choices, and intelligent planning. If you’re considering the freedom that is associated with debt-free, I hope this story inspires you!
When I started pharmacy school, student loans were on my mind. I knew that I would have a large bill, but I also had the idea that I would be able to pay them back with a pharmacist’s salary. Little did I know that the student loans would still invoke a feeling of stress and fear within us. Luckily for me, my wife HATES the idea of having loans so we set out together to get paid them off as quickly as possible.
As a little background, pharmacists that graduated in 2020 have an average student loan burden of $179,519 at graduation! I was fortunate enough to start my career with less than half of that. Some of this was intentional, but the majority was family support that I was lucky to receive.
Keeping Student Loans as Low as Possible
I came out with an undergraduate degree that was from our local state school. Because I wanted to go to pharmacy school, I knew that my undergraduate degree was not nearly as important of a factor. I received scholarships to other schools, but the cost of the state school was still much lower than those of other schools.
Fortunately, I was able to graduate in 4 years with no student debt, thanks to a combination of scholarships, working part-time, and a trust fund that was set up by my grandfather. I want to clarify the trust fund since many may write off my experience as unrealistic.
The trust fund was set up by my grandfather from the life insurance that was paid out when his wife passed away. It was only intended for his grandchildren and paid out the equivalent of a state school tuition for every semester for 5 years of post-high school education. I understand I was fortunate to be in this position and understand that many are not as fortunate as I was.
When choosing a pharmacy school, I chose our in-state option again because it was the most cost-efficient option. I also did it because it kept me close to my fiancée at the time (this was the real reason, but the other reason was no less true).
I was fortunate to continue working during pharmacy school and only took out student loans for my tuition. My living expenses were covered with a small amount of savings and working part-time as a pharmacy intern. I got married between my second and third years of pharmacy school and my wife was able to support me during the next few years as she had just started working.
One of my first mistakes with student loans was that I took an extra $3,000 to go on an all-inclusive honeymoon. It was not my smartest financial decision, but 5 years later we still think about that honeymoon and my loans are nowhere in the
Another financial mistake I made was to buy a new car. My current car needed it’s transmission replaced and I felt that it would be better to get a new car. After all, I would be able to “afford” the payments eventually, right? I financed around $15,000 for an $18,000 car. We were able to pay it off before I graduated from pharmacy school, but I didn’t learn my lesson as you will see later.
Our family’s approach to student loans
During my third and fourth years of pharmacy school, my wife and I lived together. The best thing we did was to talk about our finances before we were married. We spoke of how I was focused on saving for retirement and making sure that my family would be ok if anything were to happen to me.
I found out my wife hated any kind of debt. We found out that I am very risk-tolerant when it comes to finances and my wife is very risk-averse. I was more willing to spend money on things I thought would bring me joy, but I understood the importance of having money saved and invested. I still have to convince my wife to buy the $10 makeup brush vs the $1 (the more expensive way is definitely worth the extra cost).
So, we came together to lay out a plan. Our plan during pharmacy school was to only live off of her salary and for my part-time work to go to the interest that was accruing on my student loans. My goal was to pay off all the accrued interest before it was applied to the student loan principal (usually happens about 6 months after graduation).
That is exactly what we did and I ended pharmacy school with “only” $84,169 in student loans.
Of course, after graduation, my wife’s car also had a transmission issue. Not learning from my previous lesson (and realizing I was about to start a “big boy” job), I decided to buy a new car again. This time the total cost of the car was around $25,000. We financed around $20,000 of it at 4%.
In total, our debt was at $99,126 at our lowest point.
The goal after graduation was to get a job and pay off the loans. My wife wanted everything I was making to go to the loans and have them paid off in a year. My goal was to refinance the loans and pay them off in 5 years.
We were at odds, but we had the same goal in mind: pay off the loans as soon as possible while still prioritizing other goals. I wanted to contribute more towards savings and investments, and she just wanted the student loans gone. Having spoken about our finances before, and living together for 2 years, we were able to see each other’s side and come to an agreement that satisfied both of our desires. Ultimately, we decided to build an emergency fund and contribute to our retirement while being as aggressive as we could with the loans.
The main setback so far?
I didn’t have a job right after graduation.
I applied for a residency and did not match. This left me scrambling for a job right out of the gate. It took me 5 months before I started a full-time position as a pharmacist. I was fortunate to work part-time before that and was able to keep my goal of paying off all the accrued interest by October (the loan capitalized in November).
Once I started my full-time position, it was off to the races.
Student Loans Payoff Strategy
If you want the true secret to having a solid payoff strategy, it is being on the same page with your partner. If you aren’t married or in a serious relationship, then learning your own money stories and habits will have a similar effect.
Why is this important?
Because if you aren’t on the same page, you might be working against each other. If I didn’t worry about the loans and increased savings or just spent the money, my wife would feel a constant level of stress over the loans not going away. Make sure you are communicating together, even if one side doesn’t seem very interested in money.
We had multiple competing priorities while paying off our loans that included:
- Save 4-6 months of expenses in an emergency fund.
- Invest for retirement.
- Pay off our car loan.
- Pay off student loans.
- Save for a down payment on a house.
Accounting for these priorities, we set out to make a plan!
1. Tracking expenses.
This is one area that I feel gets overlooked and can make it easier when deciding on a budget later. We used mint.com to track all of our expenses since it was an easy way to track automatically that we could go back and look at.
1. Create a budget
- We started by making a budget for all of our necessary expenses.
- We put $1,000 per month into our emergency fund which then switched to our down payment for our house after the emergency fund was at 3 months of expenses.
- 8-10% of our income went to our 401(k)’s to get the match and have extra saved.
- We paid an extra $500 per month towards our car loan.
- We decided we would pay off the student loans in 3 years by paying $3,000 per month to student loans.
2. Monthly check-in dates
- We started to have monthly check-in dates that allowed us to talk about what we had spent money on, what we could do next month, and where we wanted to put extra money that we earned during the month.
- I was able to work extra for the first few years which earned us an extra $15-20k per year before taxes.
3. Set a goal
- We needed to set a concrete goal of when we would accomplish our goals to make sure we were on track.
- Our main focus was to accomplish all of our goals before having kids.
- We focused on all of our priorities listed above.
4. Refinance student loans
- I was not looking to go for student loan forgiveness so we looked to refinance our loans.
- Since I had federal unsubsidized loans, our interest rate was around 6%.
- After comparing a few options, we found a reputable company and lowered our interest rate to 3.5% and even got $200 from them that was put straight to the loans.
- We didn’t change the amount of money we put towards the loans, so we were putting an extra $300 towards our principal each month.
5. Make it automatic
- With this plan solidly in place, we started to take ourselves out of the equation.
- Based on the suggestion in Automatic Millionaire by David Bach, we decided to make this plan automatic with no input from us each month.
- Auto-Payments included:
- Bi-weekly payments to our student loan servicer in the same weeks I was paid to make sure there was money in the account.
- Transfers to our emergency savings on a bi-weekly basis, which was in a high-yield saving account at a different institution than our checking account.
- Bi-weekly payments to our car loans.
- Automatic investments to our 401(k)/403(b) through work.
- The only thing that wasn’t automated was the money we ended up with at the end of the month.
Achieving Victory, Securing Financial Peace
In March of 2019, we found out we were pregnant with our son. At the time we had accomplished all of our goals, except for paying off our student loans. Luckily in October of 2019, we paid off the last of our student loan, and our son was born on Thanksgiving Day a month later.
We had accomplished all of our goals (although we cut it a little close)!
While COVID-19 has set us back a little bit, it is good to know that the only debt over our head is our mortgage and we can enjoy our life with our little one now.
We set our big goals and accomplished what we set out to do by building a plan and knowing exactly where our extra money would go.
As Dave Ramsey says, “A budget is telling your money where to go, instead of wondering where it went.”
Meet the author!
Holden Graves is a pharmacist in Dallas, TX. He and his family are a true inspiration to the hundreds of thousands of healthcare workers across the country who are struggling to pay back their student loans.
- Listen to the latest podcast episode.
- Budgeting Part 2: Five Easy Steps to Make a Budget that Helps You Win with Your Money
- The Emergency Fund: The Account You Need That Won’t Make You Money
- The Beginner’s Guide to Student Loan Management
Please leave a comment below! What was/is your strategy for becoming debt-free?
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