Conquering a Mountain of Student Loans: An Inspiring Financial Planning Success Story!Submitted by Dorval & Chorne on March 4th, 2019
By Daniel Dorval, CFP® | March 4, 2019
In our last blog, Keagan described a student loan forgiveness scam that sounded too good to be true and that turned out to be the case for the twenty-something new grad who came to see us for advice. We run into so many people who feel like their debt is overwhelming often because of their student loans. It is not surprising that too-good-to-be-true scams are so appealing. How do you possibly dig your way out of tens or even hundreds of thousands in student loans while also having some semblance of a life?
I wanted to share a real-world success story illustrating how planning and commitment can lead to incredible results! We hope this story helps inspire our readers to what might be possible in their own lives...
Four years ago, I met with a couple of recently graduated nurses who were 25 and 23. They were engaged to be married, but their future together was on hold in part because their combined student loans were about $180,000! They didn’t want their life together to begin with such an enormous burden hanging over their heads, but they also weren’t sure what to do about it. Their student loans were the equivalent of a mortgage which seemed completely overwhelming to them. They came to us looking for a plan to get their debt paid off as soon as possible. The problem is they also wanted to save for a wedding and plan ahead for an eventual new home purchase at the same time!
We talked a lot about strategies to help balance their resources across all their competing priorities. Since retirement is not an immediate priority for them, we decided they should only contribute enough to get the full match from their employer. By reducing their retirement plan contributions, we created some additional cash flow to help pursue their more immediate priorities. We agreed upon a plan to aggressively begin paying down their daunting student loans over the course of four years.
During that four-year time period, they got married and welcomed their first born…a baby girl! Despite these major life changes, they diligently stuck to their plan and continued applying a good portion of their income to paying off their student loans. Yet they never felt like they were missing out on life because they were both committed to their goals together. They were able to share the sacrifice in a way that didn’t feel so much like skimping on other aspects of life. Sure, they drove older vehicles for longer than they might have liked, and they rented a small apartment when they would have preferred a nicer place, but these were sacrifices they were willing to make together in order to accomplish their bigger life goals.
We had the pleasure of meeting with them recently to help celebrate the last of their student loan payments in December! It was an incredible accomplishment they were proud to share. Now our planning meeting shifted focus from paying down debt to reaping the rewards of their diligent efforts! By paying off their loans, they now had about $4,000 per month of free cash flow that could be redirected to other priorities. Their first priority is saving up to buy a new house. They also want to buy a new car…preferably a larger vehicle because they are now expecting their second baby girl later this year!
We laid out a plan to show them how they can now pursue these big family dreams. They have enough cash flow available to buy a beautiful new house with room for their growing family. They can easily afford that newer, more reliable vehicle. They can begin saving for their children’s education while also increasing their retirement plan contributions. They have built a strong emergency reserve so their financial foundation is still secure despite all of these big life changes. They now have the ability to balance out their available resources to put them on a path to pursuing all of their most important future goals. It was incredibly fulfilling for us to share in their celebration of accomplishment with them!
This couple never looked for the easy way out. They knew their college degrees were their pathway to higher earnings and future success, but also knew they had to pay off those loans before moving on to bigger and better things in their life. Through discipline and delayed gratification, they were able to accomplish what might have seemed impossible to most young couples.
This was an extreme success story that was inspiring for us to experience, but we have lots of examples of how planning can help improve quality of life for the people we are privileged to help. That is why we exist!
If you would like our help, the best way to schedule a meeting with us is by calling Keagan at (612) 347-8611 or by emailing her at firstname.lastname@example.org. We are here to help you with all aspects of your financial life!