A couple paid off $88,000 of student loans in 5 years using a combination of 2 popular strategies

  • A couple paid off $88,000 of student loans in five years by combining the debt snowball and avalanche strategies. 
  • To start, they paid down the smallest loans, also called the debt snowball method. 
  • Next, they put all their payments towards the highest-interest loans to pay it all off. 
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Jane and Daniel Joseph started out their life as a married couple the way many Americans do: with student debt.

After five years in college for Daniel and four years for Jane, the couple had accumulated a total of $88,000 in student loan debt. 

“Once we graduated, we wanted to get rid of those loans as quickly as we could,” Daniel told Insider. “We did not want to have that for any period of time, because it just loomed over our head.” The couple made a plan to start paying it off as soon as they got their first jobs.

“We put all of our extra money into it. For the first couple of years, it wasn’t much extra,” he said. The couple accelerated their payoff at the start by rounding up their monthly payment to the nearest hundred.

After a few promotions and raises, they were able to put even more cash towards their student loans and turned to two common debt payoff strategies, the debt snowball and the debt avalanche, to make the process faster.

They paid off the smallest loans first to gain momentum

Their student loans weren’t in one lump $88,000 loan — rather, it was broken up based on the year each loan was taken, and the types of loans used. They decided to start with the debt snowball strategy, which focuses on paying down smaller debts first. 

“We had a couple loans that were only a couple of thousand dollars each,” he said. They put any extra money towards those small-dollar loans to clear them and build momentum.

This was a good start to their payoff journey for two reasons. “One, it just felt good to get rid of them. Then, two, that money that we were contributing to those loans could be rolled over and snowballed into the larger ones,” Daniel said. 

One of the upsides of the snowball approach for paying off debt is simply the motivation. Achieving some progress early on in the process can make it feel much more rewarding, Daniel said.

They then started to prioritize higher-interest loans

For federal student loans, the interest rates vary based on the type of loans used and the year they’re borrowed — some years and loan types have higher interest rates than others. So, this couple turned to the debt avalanche method to reduce the potential interest they’d owe. 

The debt avalanche focuses extra cash on the loans with the highest interest rates. After paying off the small loans, Daniel and Jane turned to this method. “There were a couple that I believe were around 9%,” Daniel said. “Those were the ones that we wanted to get off the table as quickly as possible just to avoid paying interest.”

Interest on student loans can add up quickly over time, like with any loan. The higher the interest rate is, the more it costs to borrow. By paying off the higher-interest debt first, the couple could lower the total amount their loans cost.

While these bigger and higher-interest debts took longer to pay off, they saved the extra money on interest. Then, they were able to take that money and put it towards the other lower-interest loans. Their strategy combined the best parts of both strategies, and ultimately helped them meet their goal quickly.

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