This is the third post in the new series called “How I Got Out of Debt” where I interview real people who have paid off real debt and been through some real struggles. All of this to show you that it is possible to pay off your debts sooner than 25 years after you graduate. The first interview in this series was with Michelle Schroeder and you can find it here, and the second with Sam Lustgarten can be found here.
I hope you find this story as inspirational as I did!
Name: Bobby Hoyt
City: Houston, TX
Debt Paid Off: $40,000
Time it Took: 1.5 years
Bobby is a personal finance blogger at MillennialMoneyMan.com. He started blogging earlier this year to tell his story and prove to other millennials that if he did it, they can too.
Bobby, tell us about the moment you realized you needed to pay off your debt.
Pretty shortly after graduating from college I went wake boarding with a couple of guys that knew a LOT more about money than I did. They started to invite me to go boating pretty regularly (which was awesome), and every time we went out on the water we would talk about my financial picture, what my financial goals were, etc. Both of them were entrepreneurs and had done well for themselves, and I guess they saw some financial potential in me too and basically took me under their wing. They flat out told me that I HAD to get rid of the student loan debt, or it would drag me down financially forever.
I’d love to say that I came up with the idea on my own, but I just didn’t know enough about personal finance at the time to make a decision like that. The fortunate thing for me is that I actually listened (which I’m not always great at) and did what they were advising me to do with my loans. The decision to aggressively pay off my debt turned out to be the best thing I could have possibly done for my future.
How much debt did you pay off? Was it all student loans?
A little under $40,000 – all of it was student loan debt.
How long did it take to pay off?
A year and a half, on a teacher’s salary.
Did you have a specific plan?
I actually didn’t have a plan at first. I really just started seeing how much extra money I had every paycheck and started throwing all of it towards my student loans. I started cutting out any extra spending and was able to make larger payments.
Did you stumble along the way? Make any mistakes, relapse into your old ways?
After I got started I didn’t really make any huge mistakes along the way. Most of my mistakes came right at the beginning when I had no idea what I was doing. I tried to make individual payments on each loan, which was a waste of time. I thought for some reason that making several smaller payments would cost me less in interest than if I made a lump sum payment. It’s amazing how little financial knowledge I had at the time.
I also didn’t have an emergency fund when I started making huge payments, which could have really screwed me up if my car had broken down or I needed some kind of medical procedure. I basically had nothing in my savings account and was throwing all of my extra money at the loans, which left me without a cushion for 2 weeks until I was paid again. ALWAYS have an emergency fund before you start paying down debt.
Did you know what you were getting yourself into when you originally took out the loans?
Nope, not a clue. I would have paid the minimum payment for the next 20 years if I hadn’t met my friends that knew more about money and finances than me.
While you were getting your loans paid off, what was the craziest thing you did to save money?
I didn’t buy new clothes, except for stuff that I needed for work after I got my first job. Even then, I bought the bare minimum and put the clothes on a rotation so I didn’t wear the same thing twice in a week. I also didn’t buy new shoes for 3 years after I graduated college, because I would rather put that money towards my loans. I put the shoes that I had in the washing machine when they started to look bad. It got to the point where I had students that were telling me I REALLY needed to buy new shoes – the struggle was real.
Were you saving while you were paying off debt? (retirement, regular savings, etc.)
After a few months I was way ahead on my loan payments, so I took a break from throwing payments towards my loans and put them into my savings instead to create an emergency fund. I started making big payments again as soon as I had a few thousand dollars set aside.
Did you reward yourself at mini-milestones? What about when you were debt-free, did you buy anything?
I actually didn’t reward myself at all, which was why I was able to pay my debt off so quickly. The first big thing that I bought a few months after I was debt free was an engagement ring for my fiancé, and I paid cash for it. (It’s nice too, I didn’t want to skimp on that). I tend to believe that I don’t deserve any kind of reward for financial accomplishments, and I don’t need to celebrate…at least not yet. I’ll celebrate later on when I’m wealthy.
What do you think was the key to succeeding at paying it all off?
Learning how to sacrifice for my future and believe in delayed gratification. Too many people my age want everything right now – houses, cars, clothes, etc. It’s the stigma that is attached to Millennials, and it’s basically true. I realized that the majority of the people that I grew up with were going to end up poor or stuck in the middle class when they are older, and would also be saddled with debt. (They call it the 1% for a reason right? 99% of the people around you aren’t wealthy.) I tried to live differently than all of them, and it has worked out pretty well so far.
How does it feel to no longer owe money on student loans?
It’s awesome!! I’ve been fortunate to achieve a lot of cool things early on in my life (Eagle Scout, Degree, Job), but paying off my student loan debt is the accomplishment that I’m most proud of. Thats why I started MillennialMoneyMan.com – I want more people to do what I was able to do.
What did you start spending money on again once you paid off your student loans?
I haven’t really started spending money on anything to speak of yet. I streamlined my finances even more after I got rid of my debt and started paying myself. My new focus is building my net worth through investing and creating businesses, which includes my blog/website and some other projects. Watching your bank account balances grow is just as much fun as watching your student loan debt go down. 😉
Will you ever put yourself into debt again?
Yes, but it will be a different kind of debt – the kind that makes me money! I am buying a house in the coming months with my fiancé, and we plan to make it an investment property after a year. I also plan on buying other investment properties this year through the real estate investment company that I started after I became debt free. I don’t plan on financing cars or a boat (which I REALLY want) any time soon…just too much of a waste of investment capital for me. I’d rather pay cash for those kind of things in a few years.
What is the one piece of advice you would give to those who are still feeling like they are stuck in debt with no way out?
It’s really two things..but I’ll put it into one sentence to make it work:
Stop trying to keep up with the people around you, and find people that know more than you do about money and pick their brain.
I would still be in debt if I hadn’t done the two things listed above. It is totally possible to get rid of debt if you put your head down and make some changes to your finances. However…I won’t lie, it sucks sometimes to watch your friends and peers get a bunch of stuff that you don’t have. I always make myself feel better about it by remembering that they probably financed their shiny new items and are in debt up to their eyeballs. Also, I had absolutely no financial education and managed to pay off my debt on a teacher’s salary by reaching out and asking questions. If I can do that, other people can too.
Thanks again to Bobby for sharing his story with the Bright Cents Community! It’s really inspiring to hear how he started with almost zero financial knowledge and blossomed into an awesome blogger who wants to share everything he knows!
If you would like to share your story about paying off your student loans, please contact me and we can get your story out there to help others! How awesome would that be?!