On the surface, paying off $100,000 in student loan debt looks insurmountable.
Yet that is exactly what Germaine Foley a financial coach and mom from GermaineMartina.com was able to achieve a little under two years ago.
In fact, on top off paying off $100,000 in combined student loan debt, Germaine and her husband paid off an impressive total of $200,000 in debt over six years.
Here’s her story of that journey to financial freedom.
“I graduated college in the early 2000s with $40,000 in student loan debt. I met my husband-to-be and he also had $40,000 in student loan debt.
Back then, nobody was really talking about getting rid of your student loan debt as a way to build a secure financial future so we just ignored the loans. Before we realized, our combined debt had risen to $100,000.”
Additionally, because they were first generation college graduates, as Germaine put it, they wanted to just “live the life”.
“And so while were were high income earners - $150,000 per year in combined salary - we became so strapped for cash because of our lifestyle expenses”.
Things got so challenging that In 2005, Germaine and her husband filed for Chapter 13 bankruptcy.
Filing bankruptcy provided the family with some relief but unfortunately did not do anything at all for their six figures in student loan debt.
They were still responsible for paying off the student loan debt.
“To be honest, even filing bankruptcy did not change us. We still had bad money habits. We still lived paycheck to paycheck.”
Germaine’s father gave her and her sisters Dave Ramsey’s Total Money Makeover.
“I read and finished the book in two days. It was the turning point for me.”
After reading Total Money Makeover and becoming convinced that there was a chance that their family could have a better lifestyle that emphasized financial freedom, it was time to get her husband on board.
Germaine said she began to “dream” with her husband about what life could be like for them when they had money saved, could send their two sons to off to college debt-free and not have to worry about money.
Once she got her husband on board, it took six years for Germaine and her husband to pay off $100,000 in student loan debt and $200,000 in total from other consumer debt.
What were the exact strategies that got them there?
Mindset Change Is Important
Germaine says to “change your mindset” first. It sounds corny and does not seem very actionable but according to Germaine, unless you get this right, it is easy to fail on the journey to becoming debt-free.
Believing that becoming debt-free is not only for an elite few of the population, is the first key to wiping away any type of debt.
Total Money Makeover triggered the mindset shift that first keyed Germaine in to the fact that it was in fact possible to live debt-free.
Stop Trying To Look The Part
“The culture tells us that success looks a certain way and so most of us follow suit.”
Germaine mentioned that the quest to “keep up with the Joneses” is what keeps a lot of people in debt.
She also cited The Millionaire Next Door is a good book for learning about how the real rich people live. It is also helpful if you want to learn how to stop ‘looking the part’ and actually get on the path to becoming financially free.
Budgets Are Everything!
“Giving every dollar that came into our home a job was like giving myself a raise.”
Germaine mentioned that whatever money was left over after the budget had been taken care of, went to paying off part of their debt.
There are several budgeting systems out there and I have reviewed several of them including tools like:
What if you don’t like apps and technology? Is there a way for you to budget?
By far, one of the simplest budgeting systems to use is the Zero-based budgeting system. This is a budgeting system that assigns an expenditure to every dollar of your income - even for the money that is supposed to be “left over”.
All you need here is a pen and a piece of paper and a lot of determination and you are on your way to planning a financially free life.
Because there are several ways to budget and because we are varied people, a particular style of budgeting may not work for you.
Don’t get frustrated!
Find a budgeting method that resonates with your personality and work with that.
Another strategy Germaine and her family used was to apply the debt snowball method to attack their debt.
The “snowball” method is where you pick your smallest debt and tackle that first. Once that is paid off, you pick the next piece of debt and pay that off.
As the old proverb goes “Little drops of water, make a mighty ocean”. And this is exactly how Germaine and her family were able to pay off $100,000 in debt within six years.
How does it feel now that you are debt free?
“It truly does feel great!” says Germaine.
“Now, we are in a position to give more to causes and people we care about, save more money and can in fact send our boys to college debt-free”.
Paying off huge sums of student loan debt looks challenging at first.
I hope this post helped you to see what is possible when you decide to change your mind about money and practice the strategies Germaine Foley and her husband used to pay off debt that would accrued even more interest over time.
Have you paid off any student loan debt? How did it feel? We would love to here your story in the comments below.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.