I graduated from Harvard Business School with my MBA and $95k of student loans ($101k including accumulated interest) in 2009 at the age of 26. After graduation, I started a job with a modest income (relative to my banking and consulting peers) in the tech industry of Austin.
Since graduation, I’ve made 21 monthly loan payments at $1,057 each. After paying $22k towards my $101k of loans, the balance stands at $90,717.
That’s absurd. The math indicates that I’ll pay $42k in interest if I go to term (10 and 15 years) with the various loans.
Thanks, but I’ll pass. Enough is enough. I’ll do everything in my power–short of lying, cheating, and stealing–to pay down this debt in the next ten months.
I don’t have a huge stockpile of cash, my 12-month salary after tax is less than the principal of my loans, and the ten-month timeline is completely arbitrary. So, quite frankly, I have no idea how or if I’m going to pull this off.
From this blog, you can expect an account of my adventures as I cut costs and look for supplemental income in an attempt to pay down this enormous debt weighing down my balance sheet.
Today is 8-29-11 and the target completion date is 6-29-12. I’ll track monthly progress in the header.
Will I be successful? Does it even matter? After all, “It’s not the destination in life, it’s the journey that matters.”
To freedom!
-Joe Mihalic
Questions or comments? Send an email to nomoreharvarddebt@gmail.com
Liability #1 ($65,610)
Liability #2 ($25,000)
Liability #3 ($5k)
Hi there. Love your quest for debt freedom. I’m the CEO and Founder of Payoff.com and would love to talk with you about what you’re up. Email me at scott@payoff.com and let’s talk.
As a JD/MBA with a boatload of student debt who lived in Austin for about five years, I’m digging your blog on multiple levels. Good luck!
Love to hear comments like this, and glad you’re digging it.
Hi Joe, I am now in the exact situation as you were 10 months ago. I was shocked learning about my student loan balance, I could not believe in my eyes, and felt totally trapped. Your block is very inspirational, it gives me the strength and the courage to go through what is waiting ahead for me. Thank you so much for sharing your experience – Tom
Why 10 months instead of a round number like 1 or 2 years?
No idea. A friend asked me the same question and told me that it’s “such a Harvard thing to do!” So there’s your answer, I guess.
I’ve been thinking a lot lately about why I chose ten months instead of a year, and I think that at the time I made this challenge, a full year of a hyper-frugal lifestyle (relatively speaking) seemed completely unpalatable, but ten months was something I was willing to stomach. It’s a difference of only two months, but ten months seemed disproportionately less harsh than “a year.”
Good luck! I’m hoping to pay off my loans soon too.
Thanks, Michelle! Best of luck!!
So true:
He concedes now that a shift in his lifestyle occurred during his two years in the MBA program at Harvard. “At HBS, $100 dinners for one person in downtown Boston are a standard affair,” he says. “Nobody thinks twice about taking an international vacation — they just go. I remember a friend told me she was going with a group of students to Oktoberfest for the weekend. I asked her what bar she was heading to. She laughed at me and told me the bars in Germany — she was going to the actual Oktoberfest — for the weekend!”
His conclusion is obvious, yet filled with truth. “A lot of people in this country — regardless of socioeconomic status — have an unhealthy obsession with things and experiences and statuses. We shop brands; we drop names. We try to keep up with the Joneses. We comfortably tolerate an unhealthy level of debt.”
– I loved this and the practical lifestyle you lived given your debt. I couldn’t agree more with your quote on cnn. My ex and his fiancee both have prestigious MBAs, but when his employment with a top mgmt consulting firm ended, he refused to modify his lifestyle. Don’t know if it’s peer pressure or just narcissism. But in the time he has been unemployed he has traveled around the world for such things as the Stanford GSB’s Miami FOAM party, European weekends, exotic vacations, bought a second home, weekends on Nantucket, and on and on… all while petitioning the court to pay reduced child support due to his unemployment. I also have an MBA but was wise enough when becoming a single parent to disregard what my former classmates might be doing (and more importantly what they might think) and modified my lifestyle to fit my means… and on potentially less child support (trial still a couple months away) while my ex continues to live the MBA lifestyle while unemployed.
I really enjoyed reading your blog. I could go on and on about the high cost of education and the debt burden many face… but that isn’t in your control… I admire what you did given the situation.
All the Best!
WOW! This is something ALL (pre and post) students need to watch. My 3 daughters are wallowing in debt from education. It makes me ill when I think of how I pushed them. I am considering a different route for my 4th daughter and that’s saying alot since I work at a university! Aren’t I supposed to be selling the product? Something has to be done so thanks for sharing some incite and ideas for those still buried. . .
That’s interesting…maybe try pushing the fourth toward a degree with a high ROI?
Hi.
I know many Americans are impressed with your actions, but I am not. I was born in India and have been living in US for more than 10 years. I completed part-time MBA from Chicago Booth (incurred flight costs) and my wife will do so from Haas. We are student-debt free from day one. Instead of going to both extremes like you did, we planned our future and lived frugally. Used maximum of employer tuition reimbursement and, at the same time, maxed out both 401 (K) accounts and received employer matches. We are hardly alone. I know many Indian couples who do so.
Your blog is a fun read because you took extreme decisions. But what we did has more value (in my opinion) because we were consistent in our lifestyle.
Really great perspective–thank you for sharing it.
Boothhaas, it’s strange to compare two different cultures. Maybe in the Indian culture you don’t accumulate student loan debt but here in America it’s business as usual. I think comparing apples with oranges is a wash. As an AMERICAN I am very inpired by this young man’s achievements!!
Wow – That’s all I can say.
I too, am trying to widdle down a series of loans from a top tier school that totals more than my after tax wages. I feel two things after reading some of your entries – One, I really have absolutely to whine about and I’m barely doing anything to help myself. Two, complete inspiration to make some drastic changes to dig myself out this hole! Will I stop buying clothes? No, because well, I’m a girl and I just can’t do that, but there are PLENTY of other sacrifices I can make to get myself out of debt. THANK YOU FOR TELLING YOUR STORY!
Best of luck!!!
followed a link from cnnmoney. I’m stressed about my student loans (along with all other expenses, given the current state of the economy) and will soon be pursuing an advanced degree to better my job prospects and possibly change careers. Reading how you did it, I know it’s possible and that is reassuring. Congrats on your success.
Good luck, dude. You can do it.
Stumbled across a fortune/cnn article today that led me to your blog. I funded most of my law school education with earnings from a previous career, but still graduated in May 2011 with 65K in debt. I’m lucky to have found a job in late 2011, but I’m still stressed about paying bills, a mortgage, and student loan payments. Thanks for showing us that it IS possible!
You can do it, Leslie! Believe in yourself.
Hey! loved your pursuit. I’m going in HBS this fall, and so great timing for me to stumble across your experience. I’d def keep this in mind and be mindful – thanks tons for sharing.
Congratulations! You’re famous!
http://blogs.wsj.com/economics/2012/05/17/wiping-out-90000-in-student-loans-in-7-months/
This is so awesome! I immediately called my husband and sister (plenty of student loan debt between the two) while I was reading this. My sister’s first words “how did he do it?” I think she was expecting some quick-fix but I explained some of the tougher parts like you didn’t go to a movie, buy an item of clothing, etc. I am currently in grad school and the first thing I want to do when I graduate is pay off these loans. Your blog is very motivating. Any advice for a grad-student accumulating loans?
Congratulations to you! May you continue on your path of “doing well and doing good”. You have the potential to help many others and I think you will.
I too know the crunch of pulling out of debt, and couldn’t agree with you more about the freedom of living with a lot less stuff and the (unforseen)benefit of reduced lifestyle choices.
pretty inspirational, im gonna try this too. lets go!
Congratulations, Joe! Such a huge accomplishment to pay off your student loan in less than a year–I am impressed! I just read your story on Huffington Post and was inspired! I’ve been planning on going back to school and getting my MBA but was afraid of student loans. Then I read your story and now I’m motivated to go just for it! Thank you for sharing your experience with us, I will definitely cut back on spending.
Best of luck to you with your career and continued success!
you, sir, are inspirational! congratulations and many thanks for inspiring others to try the same!
You are my hero.
I am in a similar financial situation after pursuing undergrad and an MBA at a private university. It is very inspiring to see this can be accomplished, and that I, too, can pull myself out of debt. I commend you for the sacrifices you made to get to this point.
This website is interesting. I am like the Indian fellow above in terms of frugality. I graduated from my PhD with mere 8K in student debt (that I plan to reduce to zero in a matter of months as soon as I start my new job next month; I also have outstanding credit card debt that I will reduce at the same time which is why it will take longer than I want). What worries me though is the future of extremely high tuition rates at good schools, public and private alike even for undergraduates. Will there be any way to avoid a situation such as yours in say 10-20 years for anybody who is not born into a super rich family?
Love your story! While there are different ways of achieving higher education (I went the company tuition reimbursement route and saved/paid cash for the balance like another person did above for my MBA), you went perhaps the more challenging route and came out more successful than you may have thought before going in. You are a true role model to society today and I hope that your story is shared across the masses. Our society seems to have lost touch with the concept of financial security and the value of cash. Congratulations on an amazing achievement!
Fantastic! What an inspiration. I am in a similar situation, paying off my student loans. I am looking forward to put some of your techniques into action for myself.
Thank you so much for sharing.
The Harvard student loan officer made several punctuation errors in his correspondence letter. LOL
Wow this is an amazing and truly inspirational story! Congratualtions and good luck to you in your future endeavors.
Ok, time to get on my armor, get those boots, and start paying the other 25k of my 50k debt lol… Hey saw you on Yahoo by the way, I guess time to re-think the “never monetize” policy :3 Hey,
what kind of software did u use to track your spending and income
Great job! As someone who also has a lot of student loan debt, it is nice to see a story of someone else making sacrifices. With a kid its a bit harder to pick up a second part time job, but I am trying to start a couple websites in hopes of making some money. Besides the registering the domain and paying for hosting (which isn’t much), I get all my info from the library or online rather than buying books.
How soon should I start increasing the amount payed towards my monthly off my loans after i graduate? I am a nursing student and I’m hoping on getting myself established in San Diego so I can start investing in properties, start a business, etc. I have about 25-30k in loans by next year. What would you suggest as my initial actions post-grad?
Thank you and your blog is AWESOME! Congrats on reaching your goal ahead of time.
I think this is absolutely amazing and inspiring. I am always trying to think of ways to downsize or save money. Now you have a huge weight lifted off your shoulders and some free time to go out and continue living. Get married, start a family, now that you’re “famous” I am sure neither of those things will be hard to find/do.
Hey Joe I came to your blog via Yahoo News. What American doesn’t love a good success story?
Congratulations that is really awesome. And I’m sure it must be totally overwhelming to go from being Joe Blow…(sorry I couldn’t resist…) to all over major media outlets overnight. I love the humbleness and perspective of your most recent post. You didn’t ask to be the poster child and solve everyone’s money problems. You just started a blog….like millions of people do. So really, ignore the haters. They’re just jealous.
Joe, welcome to the golden path of debt freedom… there is no such thing as good debt… it is a myth… amazing what can be achieved when you write down your goals and work out a strategy to achieve them…
Joe, your story is inspirational for me. I am a 2011 graduate from Columbia University College of Dental Medicine. I’m finishing my residency next month and have racked up an astounding $355k in student loan debt after interest. The total amount borrowed to cover the cost of my education was $299k. I’ll be starting work in July with a base salary in the mid-100′s but I’m constantly stressed about making the payments on my debt, which will be around $4200 per month. I am definitely going to use your budgeting model to guide me through my repayment years ahead!
What do you think about joining Teach for America, working at a low-income school or joining the military as a way to pay off loans (and of course being a respectable form of service)? It seems like it doesn´t pay so much in the end if you just make x salary and put all that you have towards it…but I wanted to know what you thought.