Personal Finance

How I Paid Off $85,000 in 16 Months

Expertise: Personal Finance, Personal Development, Real Estate Investing Basics, Landlording & Rental Properties
47 Articles Written
low stress landlord, rental property, real estate

On New Year's Day 2018, I made a goal: I would pay off $85,000 of student loan debt by the end of 2019.

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Obviously, that’s a rather ambitious goal and quite frankly, I had no plan on how I was going to get this done. I just knew that I would.

Sure enough, it is now mid-April 2019, and I am officially free of my student loans! I beat my goal by eight and a half months.

I'm far from the only one who has (or had!) massive student loans. According to StudentLoanHero.com, as of 2019, Americans have $1.56 trillion of student loan debt spread out across 45 million borrowers for an average outstanding balance of $35,000 each.

So how did I get rid of my student loan debt? I'm going to tell you in this article.

And if you find yourself or a loved one drowning in a seemingly insurmountable amount of debt, I hope you can use some of the strategies that I describe here to pay those suckers off.

How to Pay Off Student Loans Quickly

The Strategy

Before we get into tactics on how to pay down your student loans, let’s first talk about the strategy. There are two types of strategies: the brawn method or the brain method.

The brawn method entails paying down your student loans with brute force. In other words, penny pinching and applying any savings to your student loan debt before you start investing. While the brawn requires less thought, it also requires much more work and time.

The brain method is what I advocate for. Before you start mindlessly throwing money at your student loans, the brain method involves thinking of a strategy that might allow you to pay off your student loans much faster.

As Abraham Lincoln once said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”

Take the time to sharpen your axe!

What assets could you invest in that would give you a much greater return than the 4 to 6 percent interest savings of paying off your student loans? There is no one right answer.

Maybe it’s real estate? Stocks? Bonds? Businesses?

Whatever you think it is, start purchasing those assets. Once you’ve accumulated enough assets that provide you with a substantial amount of passive income, you can then start making enormous paydowns on your student loans, allowing you to expedite the process.

In the words that follow, I will explain to you my exact thought process, the tactics I used, and how it all played out. My first and most impactful tactic: house hacking!

Group of young people learning in a classroom one girl looks toward camera the rest are hovered over computer

Creating Passive Income Through House Hacking

Let’s take a ride back into Craig’s brain just 16 months ago. I was in the middle of my first house hack, and I knew that I wanted to pay off my student loans AND purchase two more house hacks in the next two years.

But something did not feel right about me paying off a 6 percent interest loan when I had experienced firsthand the 100 percent-plus returns I could see from house hacking. Doing it again and again would allow me to save exponentially more.

Not only would I be making passive income, but I would also be eliminating my largest expense (rent) while building equity in a Denver market that has been exploding year over year.

Naturally, after the first house hack, it would make sense for me to pay off the student loans with my rent savings, right? Nope.

I would not let my student loans get in the way of house hacking. The returns from house hacking are literally 10 to 20 times better than that of paying down my student loans. Therefore, I continued to make the minimum payments through the first half of 2018 until I closed on my second house hack in June 2018.

Then I had two properties—both of which were making me $1,000 over the mortgage every month while I was also living for free. All of the money made from my properties, I funneled into my savings account to purchase the third house hack.

House hacking is a proven strategy where people consistently achieve returns well into the 100 percent-plus range. It’s pretty much a must-do, especially if you are young, single, and motivated.

Related: Financial Freedom: 14 Steps to Stop Relying on Your 9-5 Job’s Income

Increasing Your Salary

The second most important tactic I used was optimizing the amount that I make at my W-2 job. The best-case scenario when working a W-2 is having two components to your salary: a base and commission.

To increase your base, it is as simple as asking your boss for a raise—although going into their office and just asking will likely not yield the result you are looking for. Instead present your boss with a strong case as to why he or she should give you a raise.

Base 

There could be another article written on how to ask your boss for a raise. The abridged version is to look at what the average pay is for someone in your role at other companies within your geographic location. My favorite resource for this is Glassdoor, but there are many others out there.

If you are below the average, you can likely present your boss with these statistics and make a strong case as to why you deserve a raise. If you are at the average, do not be afraid to point out all of your accomplishments you have made over your tenure to make the case as to why you should be paid above the average.

Commissions

Now that you know how to increase your base, let’s talk about commissions. Commissions are a variable part of your W-2 income that directly correlate with your performance.

The most obvious examples are real estate agents. They get a percentage of every deal they transact. The more deals they close, the higher they get paid. The downside to being an agent is that there is no "base" component.

If you already have a commission part of your pay, great! Work your butt off to increase the amount you make.

If you don’t, this will involve another trip into your boss’ office. Ask him or her if there is anything outside the scope of your current position that you can do to help increase the company’s profits. Then explain to them if you do successfully complete the project, you would like to be compensated in the form of either profit share of the new project or be awarded a one-time spot bonus.

If you are thinking that there is no way this will work in your company, I suggest you at least give it a shot. Let’s put it this way. If you can add $100,000 to your company’s bottom line, do you think they will have a problem paying you $2,000 of that? Or awarding you a $25,000 to $50,000 spot bonus?

In the first case scenario, they are paying $2 for every $100 they receive. If someone offered me $100 in exchange for $2, I would do that every single time! I am sure your boss will, too.

If a perpetual profit share does not seem attractive, the same idea goes for a spot bonus. By giving you $25,000 to $50,000 to create $100,000 of value is a return of 200 percent in the first year and infinite thereafter. Again, who wouldn’t do that?

male ride share driving in front seat of car female passenger in back with cell phone in hand

How I Boosted My Salary

In my workplace, I have done both of these strategies. I increased my base salary by 30 percent over the course of one year and also successfully executed two large projects outside the scope of my job description. This was instrumental in being able to pay off such a large amount of student loans in a short period of time.

If you still think that there is no way your current boss or job will allow you to do this, I would strongly suggest thinking about changing positions. That’s what I did. I left my cushy job in Silicon Valley and took a lower initial base pay. In year one, I made less money than I would have had I stayed with my former company. In year two, after implementing the aforementioned tactics, I made over 50 percent more than I would have at my previous job.

How to Generate Even More Income

Taking on Side Hustles

The third and final way I paid off my student loans so quickly was through side hustles. House hacking is relatively passive once you get it all set up, and increasing your salary and earning commissions increase your dollar per hour during your 40-hour work week.

But this still leaves you with time to earn money outside of your full-time job. By now you’ve probably heard the commonly used term “side hustle.”

In the days of the sharing economy, there are tons of side hustles that you could do. Whether it is Uber-ing people around, walking dogs, or freelancing on your own, you can earn some extra cash one way or the other.

Related: 16 Side Hustles to Help Save Money for Your First Deal

My Side Hustles

What did I do? My side hustles were primarily Turo and Airbnb. My favorite mode of transportation has, is, and always will be my bicycle. I ride my bicycle to work almost every morning, which leaves my car sitting in the driveway idly most of the time.

However, I still do enjoy having a car for weekend trips into the mountains. Rather than selling it, I thought it would be a good idea to rent it out on a site called Turo. This allowed me to make an additional $400 to $700 per month. I did this for about 13 months.

My second side hustle was what is known as Airbnb arbitrage. My friend had a condo in downtown Denver that he could not get rented out at the price he wanted. As a result, he rented the property to me.

I paid him the exact rent amount he wanted and then turned around and rented it on Airbnb. I would make over $10,000 in the course of the year through this strategy, and my friend had a great tenant who paid the rent on time, all the time. Win-win.

Conclusion

There you have it! Those are the strategies and tactics I used to pay off $85,000 of student loan debt in 16 months. Everything I have done to date is repeatable: house hacking, increasing your W-2 pay, and taking on side hustles is something that almost anyone can do.

It won’t be easy. It will require change, discipline, and responsibility. But if your average small-town, middle-class guy can do it, so can you. No excuses!

Will it be worth it? I’m living proof, here to tell you that it definitely is.

Remember, “Nothing in life worth having is easy to attain.”

Cheers!

Would you repeat my strategies and tactics? Are there any additional methods you’d employ? What have you tried in the past to get rid of debt quickly? Did it work? 

Let’s chat in the comments!

 

 

Craig Curelop, aka thefiguy is an aggressive pursuer of financial independence. Starting with a net worth of negative $30K in 2016, he has aggressively saved and invested to become financially independent in 2019. From sleeping on the couch and renting out his car, he was able to invest in two house hacks in Denver and a BRRRR in Jacksonville. He plans to continue to investing in both Denver and Jacksonville for the years to come. Craig's story has caught the attention of several media outlets, including the Denver Post, BBC, and many other real estate/personal finance podcasts. He hopes to inspire the masses to grab hold of their finances and achieve financial independence. Follow his story on Instagram @thefiguy!

    John S Lewis from Jackson, NJ
    Replied 5 months ago
    Hi Craig – great story. But isn’t a house hack a place where you actually live? Am i misunderstanding how you did this?
    Bill Blass
    Replied 5 months ago
    “House hacking is a proven strategy where people consistently achieve returns well into the 100 percent-plus range.” To say 100% plus returns are “consistently achieved” just reeks of pre-bust real estate seminar lingo. Do you have any calculations to back this up for your deals? What portion of the formula depended upon speculating on appreciation?
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Bill, I know it sounds scammy. But it’s 100% true. I’ve done it and know multiple people that have done it multiple times. The reason why the returns are so high is because you are receiving an owner occupied loan. By putting down just $20,000 you can get a property worth $400,000 or more. If you house hack in the most optimal way. You can cash flow $500 to $1,000 per month WHILE living for free. If you tack on rent savings of say.. $700 per month you can be saving $1,700 more per month on your $20,000 investment. Over the course of 12 months, that’s $20,400 and all of your money back. That does not even include loan paydown, saving on taxes, and the opportunity for appreciation. That’s how you get in well into the 200% to 300% or more range.
    Ken Barrett Investor from Fishers, Indiana
    Replied 5 months ago
    Assuming they’re all duplexes (he doesn’t specifically mention, but it doesn’t actually matter)… House Hack 1: Lives in one unit, rents out the other. All rental income goes into savings until he can buy a second property. House Hack 2: He’s now saved enough money to buy a second duplex, which he moves into. He rents out the apartment he just moved out of, and now has 3 doors earning him rental income. All rental income goes into savings until he can buy a third property. House Hack 3: He’s now saved enough money from his first two properties that he can afford to buy a third duplex. He moves into the third property. He rents out the apartment he just moved out of, and now has 5 doors earning him rental income.
    Michael Frasier from New York City
    Replied 5 months ago
    When you use this house hack strategy are these now 3 more loans? Or do you save all the way up to buy the house 100%. Wondering because isn’t this a lot more debt then the student loan debt? ( Although it would be making you money too)
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Michael, Yes, I do have 3 more loans. But those loans aren’t being paid by me. They are being paid by my tenants while the property appreciates and I still cash flow some myself. So while yes, this is more debt than student loan debt, it is debt that is being serviced by my tenants and it is an asset that is appreciating overtime. Unfortunately, I am the only one that can pay down my student loan debt.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    John, Ken has it exactly right. You are only required to live in a house hack for year. So after the first year, I was able to save enough to purchase my second. I moved to my second purchase while keeping my first as a full time rental. Rinse and Repeat.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Hey Roy, The first one I bought was a 3.5% down FHA loan. There are other owner occupied mortgages that are 5% down conventional. These are the ones I have been using. I have yet to refinance any of my properties. If you want to use the FHA loan again, you will need to refinance. Other than that, you should be able to recycle them.
    Roy Harris Accountant
    Replied 5 months ago
    Congrats on achieving this success, Craig. You’re certainly inspiring many. When you say you’re only required to live in a house hack for a year, are you referring to something like a 3.5% down FHA loan? I assume the mortgages you’re getting on your second and third properties are also some sort of low down payment loans for owner occupied properties, as opposed to investor loans with around 20% down. Do you have to refinance the existing loans before moving to the second and third, or can you get additional ones as long as you fulfill the one year live-in requirement?
    David Lyons Rental Property Investor from Atlanta, GA
    Replied 5 months ago
    Fantastic post, Craig! Technology opens up so many more opportunities to create and reap value in addition to your W-2 job. Turo and AirBnB are great examples of that.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Thanks, David! I totally agree! The sharing economy really makes it easy for anyone to get a side hustle.
    John Martelotti Involved In Real Estate from Staten Island, New York
    Replied 5 months ago
    I like the side hustle ideas. Nothing wrong with earning extra cash.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Thanks, John! Nope. It’s super easy to have side hustles nowadays too.
    Jovan Hardwick Flipper from Saint Petersburg, Florida
    Replied 5 months ago
    Great post, Graig! This is what people should be taught in school! Money post!
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Thanks, Jovan! I totally agree.
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 5 months ago
    You the man, Craig! Congrats! I’m going to share the link to this article with my seniors. It talks about lots of strategies you and Scott have covered this year and applies to them even though they don’t have the loans….yet. Great work!
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Thanks, Dan! Very glad that you are going to share this with you class :).
    Vanesa Gonzalez Rental Property Investor from Miami Beach, FL
    Replied 5 months ago
    Great post Craig! And I saw your video on facebook. Very inspiring! I hope lot of young people read it.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Thanks, Vanesa!!
    Nitanga Jean De Dieu Rental Property Investor from Manchester, NH
    Replied 5 months ago
    Glad I took the time to read your story and I did not know anything about Turo. I live closer to Boston so I need to look into it. Congrats on paying off your student loans, I made my first payment last week hahah.
    Bill Blass
    Replied 5 months ago
    Careful – my buddy got his car trashed renting it out on Turo. Rental car companies put up with this nonsense as a way of life, but why would you? Not to mention your insurance company will probably hate it. Find another side hustle.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 5 months ago
    Thanks Nitanga! Bill makes a great point here. Turo can be dangerous. However, my car got totaled and I ended up getting back more than what I originally paid for it almost two years and 30,000 miles earlier. So… it’s a risk. One that might be worth taking for a year or two if you are looking to drum up some extra cash.
    Madelaine Au from Eugene, OR
    Replied 4 months ago
    Fantastic post! Now to start my own house hacking journey. Did you outsource on property management?
    Ander Murillo Merino
    Replied 4 months ago
    Ok so I am from Spain. Banks here ask for around 20% down… that slows down the whole process, plus it adds a lot more risk… any suggestions?