How to Pay Off a $105,000 Debt in Five Years

Monique HarpsWhen Monique Harps makes the last payment on her student loan debt, she plans to celebrate with a cake–and perhaps a trip to Brazil. After all, she’s about to have a whole lot more spending money; after four years of hard work, she’s less than a year away from putting her $105,000 in debt to rest.

Graduating with debt is hardly unusual: The National Center for Education Statistics estimated that the class of 2011 will owe an average of $22,900, and many students drag those loans along for years as they work their way up the career ladder. About 8.8 percent default on their loans altogether.

Harps, however, has paid down more than $80,000 of her debt so far, and is buckling down to free herself from the rest of it within the next year.

Just how did she do it? For Harps, it all boiled down to a choice, a plan and a lot of dedication.

Make Being Debt Free Your Mission

Upon graduating with an MBA in supply chain management, Harps landed a job in Tulsa, Oklahoma, working as a senior commodity manager for American Airlines.

“I got the biggest paycheck of my life, and I wanted to right by that,” she said.

Caught up in trying to divide her salary between her huge debt load, paying into her retirement plan and building an emergency fund, Harps found herself spinning her wheels. Then, after reading “The Total Money Makeover” by Dave Ramsey and attending a few seminars, she had a breakthrough–she’d focus on paying off her debt and then move on to the other financial goals on her list.

Get Aggressive about Debt Repayment

Harps began by cutting her expenses. She moved to a smaller apartment she shares with a roommate, put expensive hobbies on hold and stopped paying for cable TV.

She also cut down on travel, a tough choice with the airline discounts she receives through her employer.

Then she took up a few ventures on the side to generate more income, such as reselling discount clothing on eBay, selling rum cakes for Christmas and even selling her plasma twice each week. It worked, and Harps managed to devote a whopping 40 percent of her income to student loan repayment, taking $25,000 off her debt in the first year.

“The key,” she said, “is to stop using debt and start aggressively repaying it. Once it’s paid, then you can move on to bigger and better things,” which for Harps include an emergency fund, a retirement plan and few more “wants,” such as travel.

Harps also learned to start living within her means, an oversight that helped contribute to her debt while in college.

“I’d like to say that my debt paid for my tuition, but it didn’t. I can only assume it went to maintaining a certain standard of living,” Harps said.

Giving things up isn’t always easy, and Harps isn’t a stranger to being called cheap, but she says she has a plan and she isn’t willing to let other people distract her from it.

“I realized that if I could just say ‘no’ to a few more things, I could be done with my debt in 2012,” she said. “At the end of the day, I know I could go out and buy whatever I want. I just choose not to.”

And, while she has big plans for her money once she’s debt free, she knows she’ll never fall back into debt again.

“Many people can’t even imagine being debt free,” she said. “I’ve learned that the things that most people don’t think are attainable–like saving for retirement or saving for your kids’ college–are attainable. That’s what keeps me going.”

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  • Ann Murphy

    It is refreshing to read about someone who is willing to take responsibility for the debt they obtained. With all the talk lately about debt it seems nobody wants to be held accountable for the debt they got themselves into. Congratulations to you and I know your hard work will pay off for you in the long run!!!

  • Eagleyez

    Ms Harps,

    Thanks for your wonderful advices to the readers! Congrats to you and know your time will be paid off by earning a tremendous reward ahead!

  • finlitmaniac

    Way to go, Monique! As someone who regularly presents financial literacy information to college students, I will be sure to tout your story during presentations. I frequently use the words “delayed gratification” and your story certainly reinforces that!

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