How I paid off $95,000 of debt in one year

By | April 1, 2014

I will readily admit that luck played a significant role in bulking up my financial avatar. I attended a fairly decent law school and interviewed with firms in 2008 before the worst of the recession hit. My firm gave me a big check and a deferral year instead of a pink slip in 2009. Still, the post-graduate degree came with a hefty price tag, and by the time I started working in October 2010, I owed roughly $95,000.

As much as luck helped with securing a good job, I still made choices with an eye towards paying down the debt as fast as possible. I dubbed this project “Operation Get Rid of That Debt, Man.”My strategy was to embrace thrift and to give the bank as little of my hard-earned money as was possible. I boiled it down to this equation.

Income – Expenses = Capital

The more capital I could accumulate, the quicker I could pay down my loans.

Thrifty on the big details

I like cities. Big cities.

Most of my friends decided to start their legal career in New York or California, but I chose to settle down in Chicago. Chicago was a big enough city to get the big law starting salary ($160,000), but the numbers on life’s price tags — rent, food, transportation — were more reasonable. By choosing Chicago, I also avoided paying the New York City income tax on top of my state and federal taxes.

Most people’s biggest expense is their rent. In Chicago, I could afford a sunny 2 bedroom, 2.5 bathroom apartment for $1500 per month. By getting a roommate, I cut that down to $750 per month and we split all the utilities. Big cities on the coasts will force you to pay three times as much for less than half the space.

Chicago also let me get rid of my car and ride public transportation or my bike everywhere I wanted to go. The aforementioned apartment’s location was nothing short of ideal. 17 minutes via public transportation ($80/month) or 20 minutes on my bike (free) would get me downtown and sitting in my office.

Thrifty on the necessities

Lady luck also blessed me with two older sisters with professional jobs and a similar figure. Their gifted hand-me-downs populated most of my wardrobe and the few pieces I bought that first year did not total more than $100 altogether.

I brought my breakfast and lunch to work most days. When I worked late, my firm paid for my dinner and a cab home. The firm also had a free gym and free personal trainers.

I put my favorite form of entertainment (traveling) on hiatus. I did not go to any movies. I did not buy any music or books. I went out to eat and for drinks with friends because I still had to exist and I needed some form of entertainment, but almost never more than a couple of times a week.


I kept about $4,000 (a few months of expenses) in my checking account for breathing room — the “emergency fund” that everyone should have. Each paycheck, I would calculate how much I would need for the next month’s bills and then I would gleefully make an additional payment to my student loan debt with the excess the very day I received it. I put up to 85% of my net income towards this Operation. My bonus, my tax return, every extra cent went to maximizing that percentage. I was obsessed. At any point, I could tell you exactly how much I had left to pay down to the penny. I calculated and recalculated payoff dates and how much interest I would pay to the bank. I may have cackled a few times.

And then I bucked the typical personal finance advice. One year later, almost to the day I started my legal career, I (nearly) emptied out my bank account and spent my “emergency fund,” to pay off my last student loan with a not-horrifying interest rate of 5%. I declared myself debt-free and danced a jig.

The stressful job was infinitely more tolerable. I was no longer afraid of getting laid off and having a large student loan payment hanging over my head. The process wasn’t rocket science and it was a stressful year, but it was absolutely worth it when I could say that I was debt-free. Crossing off Operation Get Rid Of That Debt, Man still ranks in my top ten favorite moments.

23 thoughts on “How I paid off $95,000 of debt in one year

  1. Brad

    Why no comments on this post?! I recently stumbled across your blog and love your style in the posts I’ve read so far. It’s nice and digestible. I can relate a lot to this post, especially: “Any time point, I could tell you exactly how much I had left to pay down to the penny. I calculated and recalculated payoff dates and how much interest I would pay to the bank.”

    In fact, I was so crazy about the completeness of my Financial Independence spreadsheet, courtesy of the Mad Fientist:, that I contacted all my lenders and got my records for every. single. payment I made so I would know just how much of my money I poured away.

    After very poorly executing a loan payoff plan for 30 months, once I finally got my sh*t together, it took me 17 months to payoff my remaining balance (~$112k), for a total of $153,111.64, to be exact. September 2015 was my first month without a student loan payment due. I happily put the money in my retirement account. Feels good. 🙂

  2. Jen

    I would also like to pay off debt. Debt sucks and has prevented me from moving forward on so many things in my life. Great blog.

  3. jay

    Wow, that is incredible. I have roughly 3x your debt from med school, and would love it if I could have your discipline once I finish my training in two years.

    1. Thriftygal Post author

      Where there’s a will, there’s a way! The good news is that you’re already reading websites like this. I think you’re on the right track. Plus, you’ll be a doctor, which I assume means you have a passion for your career and plan to work for a while to justify the years in school.

  4. Aperture

    Hey Thriftygal – read your interview with MMM and have been cruising your blog. I really like the way you write and think. I especially like how you planned for what you would do and how you would live after retirement. I love the bucket list, and the goals and breaking down the goals into chunks and examining why you want to achieve the goal. You must be very proud to have accomplished so much. I look forward to reading more of your blog and tracking your adventures yet to come. Best wishes, Aperture.

  5. Anita

    Hi Thriftygal! Great post. I currently have a goal to pay off my only debt, my mortgage, by the end of 2016. It was August 2015 when I first got the inkling to get serious about paying it off, and my total debt was $96,707 at the time. It took me until October 2015 to actually overcome inertia and start taking real steps including re-evaluating how much buffer I really needed in my checking account (I was sitting on a small hoard) and closing out little investment accounts that weren’t doing much of anything to apply the excess money to the debt. My current loan balance is $60,451, and I achieved that while still keeping my 401(k) contributions maxed at $24,000 per year. (I turned 50 in 2015.)

    My motivation came from getting real about my husband’s health. We have been married for over 18 years, and he has been disabled throughout our marriage. Since 1998, we have dealt with kidney and pancreas transplants, a below-the-knee amputation, and many other health issues. In 2015, things got real when he was diagnosed with an internal cancer. My employer graciously let me start working from home, and I instantly became hooked to the personal freedom of setting my hours around my husband’s health needs. Now I am dreaming of the “4-Year-Plan” which includes one year of paying down debt and three years of maximizing investments so I can retire after four years. When I say “get real” about my husband’s health, I am implying that the odds of his long-term survival have gone done astronomically with a cancer diagnosis, and I would like to be financially secure in case I lose my job due to his health needs.

    I just stumbled across your blog thanks to Mr. Money Mustache. I enjoy your style of writing in that you are writing about your goals and interests while talking about frugality. I have been toying with starting a blog to talk about improving personal finances while even in the midst of serious health issues. There seems to be a trend of people rushing to “GoFundMe” and other crowdsourcing sites the second they get a diagnosis for some serious disease. I was thinking my 18 years of experience advocating for my husband while keeping our family afloat financially could be helpful to other women who find themselves suddenly thrown into a similar situation and find themselves completely overwhelmed with it all. So, there would be many posts about caregiving and dealing with the medical system in addition to the financial aspects of life. I was just not sure how to combine very different subjects into the same blog.

    Good luck with your blog and continuing early retirement. I will try to check back and become a regular reader of your blog.

  6. Chazza

    HEYA!! Just like Aperture – I read your blog last night/ this morning for the 1st time after your interview with MMM. You rock – love how simple you’ve made the concept of ditching debt and pursuing financial freedom. I’m already looking for graft paper to create my visual aid. Hope to report back with positive stuff. x

  7. FF

    Congrats on your early retirement! I’m also a class of 2006 law grad and debating my next move. I was deferred two years by my firm as well, and could conceivably retire soon, but have been working part time from home instead to see if I can deal with the compromise while continuing to build a rainy day fund. Unfortunately the cloud of billable hours still drains some life force even though I am just required to do 1200 a year now on the part-time schedule. Whoever decided billable hours was a good idea really should have their head examined.

  8. Michael @ NTPNW

    Thriftygal, great post. We too finished paying off my wife’s School loans last year. Got to tell ya it feels great to be consumer debt free. Now it’s time to pay down our home mortgage and build some wealth so some day we too can retire, lol
    Take care

  9. Joe Koss

    Thank you for sharing your example of becoming debt free and how you were able to do it. That is very inspiring how you were able to pay off so much in such a short period of time. You made a lot of sacrifice but you also were able to do smart things with the dollars you brought in to make the budget work with rent, transportation, and going out.

    I have a lot of similar things happen to me with my debt free journey. I had about half of that when I started and made a huge life change to make my goal a reality. I paid off $28,000 in 14 months working as a teacher in the area of personal finance. I was teaching students how to budget and become debt free but was not myself. I found it kind of hypocritical so I made it my mission to get out of student loan debt and had my students hold me accountable to my goal. I did similar things with having a few months of emergency fund in place and picked up as many classes as I could, consolidated a lot of expenses down, cut travel out, and applied very dollar toward debt. When tax time came around last year, I took the small return I had along with my emergency fund and paid in full. Nothing feels better to have that debt gone even if I was only paying 4% interest on my loans. The feeling of not owing anyone is better compared to paying my loan provider interest I can write off. The write-off is so little and I call it tripping over dollars to pick up pennies. It was not worth it.

  10. KrazyKortney$

    Can’t wait to do my dance this coming may! Loans are one of those things you can’t live with and you can’t without! Thank you for sharing. Stumbled upon your blog through MMM. Love it! Live simple, live freely! Glad to see more women with this mindset.

  11. Drew

    I love this story. I’m in a similar boat: Just turned 28, my wife and I graduated this year with advanced degrees, a great salary ($220K), and a scary amount of student loan debt ($115K).

    We are currently putting $6,000-$7,500/month toward the student loans. We could increase this number a bit, but we have been unwilling to pause our retirement savings (maxing both 401ks in the hopes of walking away from the corporate job in a couple years), and we have a serious travel addiction (we’ve seen 13 countries and 4 states in the last 18 months).

    So thanks for the inspiration.

  12. Stan

    Sometimes life throws you a speedball to the head. I graduated high school and got certified in welding my last year through the local community college. Got a job welding, got my hand smashed in a work accident, got laid off and welding jobs in the area dried up. Got married, had a son, went back to community college, went on to the State college for an Engineering degree, got divorced, got the degree, moved out of state, bought a house, worked 3 years, got laid off, moved back to my original state, got another job, kept the house as a rental which lost about $10k a year through horrible renters, bought another house, found a girlfriend that I let move in and lived off me, broke up then things started to get better. Sold the rental house, paid off all debt, paid off the house, paid off my son’s student loan, racked up savings, 401(k) and a retirement. I went from negative net worth 6 years ago to positive 7 figures now and can retire in 5 years. There is something real to ‘Financial Security’ and not owing other people money.

    1. BurhanKhan

      Can you please elaborate on how you went from negative to positive?

  13. Tommy

    Congrats on saving enough to retire early!! I found your story through MMM and am very impressed and inspired that you managed this in <6 years on a single income! I'm 3 years out of undergrad (from your law school alma mater), and have similar spending habits and goals as yours (although probably will take me 2x your timeline since I swapped from investments to tech and my income will be capped around low 100ks, not sure now if business school would be worth it now). Would love to read more about your balance of productivity vs. laziness now that your financially independent and what you decide to do after your whirlwind travel tour!

  14. Josh

    This is an awesome post. I stumbled over to your blog from Mr. Money Mustache’s. As I get ready to finish graduate school with $56,000 in student loan debt I am preparing myself for a debt pay down of one year., Operation Pay Down Debt. However, living in California on the coast will make it difficult but your blog gave me some great ideas. Thanks for sharing and congrats on paying that down so fast!

  15. FootprintsinCulture

    I recently paid off my student loan (last Friday). I am quite proud and relieved that I can finally cross this off my list. I discovered your blog through Mr. Money Mustache earlier this year, and while I was already on the path to paying off my entire student loan, this post gave me the final push and motivation to make it happen. Whenever I felt like deviating from my plan, I visited this post to re-focus and keep my eye on the prize.

    My favorite part: “And then I bucked the typical personal finance advice. One year later, almost to the day I started my legal career, I (nearly) emptied out my bank account and spent my ’emergency fund,’ to pay off my last student loan with a not-horrifying interest rate of 5%. I declared myself debt-free and danced a jig.”

    Thanks for the inspiration!

  16. Nina

    OMG, you are so awesome. I paid off my mortgage when I was 33 using the same mindset that you have. My income was not as much but disciplines goes such as long way. You are a great inspiration!

  17. tylertutoring

    With what you know about investing now, do you regret paying that quick instead of paying minimum and investing the difference? just wondering, I have a rental unit which mortgage was paying aggressively but now I just pay the minimum and invest what otherwise would have gone to pay the mortgage quicker. I have also recently engaged on doing money transfers in my credit cards, I borrow the maximum I can (3% fee promotions, one year pay back) and invest the money. So far my investment yielded 8%, more than enough to cover the 3% fee I paid. What do you think about that?

    1. Thriftygal Post author

      Nope, not at all. For me, psychologically, being able to say I was debt free was one of the best feelings of my life. It’s like, I can’t start a new project when the old project is still incomplete.


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