Day 1 | $0 paid | $90,717 till freedom
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.
Will I be successful? Does it even matter? After all, “It’s not the destination in life, it’s the journey that matters.”
Here We Go
I graduated with my MBA from Harvard Business in the middle of the Great Recession: May 2009. I had a truly fantastic experience, and am grateful that I went. I learned a lot and made a lot of friends. I have no regrets.
I was lucky to land a job at a Fortune 50 tech firm in Austin as a pricing analyst. (I’m now a product line manager.)
Thank God I found a decent job in the doldrums of the recession–I had borrowed $95k to fund that education, and that was after Harvard gave me a fellowship of $54k. (All I had to do was write two thank you notes to the trustee to get that particular award. I had been a superivsor in factory prior to enrolling, so they knew I wouldn’t turn down a hand-out.) Once the interest I accumulated on the loans over the two years that I attended school was capitalized, I owed just over $101k. It is a veritable loan cocktail: a mix of Federal loans (Stafford/Ford, Grad PLUS, Perkins) and private (CitiAssist and a subsidized HBS loan).
I had a six-month grace period after graduating, and made my first loan payment during the same week as Christmas in December 2009. The monthly payment is $1,057, which can actually pay the rent on a decent-sized, brand-new apartment in the middle of downtown Austin.
My thoughts at the time: Merry Christmas! Bah humbug!
Yesteryday–21 months after that first payment–I logged on to a couple of sites to review my various loan principals. What started at $101k has been worked down to $90k. And then it hit me: I don’t want to be paying these notes until I’m 41 years old. In fact, I don’t want to be paying them when I’m 30. It’s not that I can’t afford the $1,057/month–I’ve budgeted for it, and I live accordingly. It’s just that I don’t want to pay the $42k in associated interest–when all is said and done, I’ll have paid $137k at my current payment rate–and I don’t want this drag on my paycheck for the next 15 years.
Unfortunately, I don’t have any get-rich-quick schemes. I don’t have a killer business idea, I don’t gamble, I don’t play the lottery, and I didn’t interview for banking or consulting roles that would have made short work of that $101k. I enjoy my tech job and living in Austin, and I’m doing exactly what I wanted to be doing when I graduated from HBS two years ago.
It’s worth mentioning that I’m not insanely talented at anything, so I can’t sing and dance my way out of this, either. And Peace Corps can only defer loans and forgive 10% of a Stafford loan. Trust me, I checked.
That being said, there are only two ways I am going to be able to pay down this $90k in 10 months:
- Cut costs
- Increase revenue
The “cut costs” part will not be easy, as I already live fairly frugally…for the most part. My biggest expense–after the mortgage on my home–is entertainment (including travel). The past four months, I have averaged around $1,300/month in entertainment dollars. That is a little less than my mortgage+property tax+insurance, which is $1,440/month. So the entertainment side of my life is roughly equivalent to my mortgage. What can I say? I like to party. That will need to change.
My (used) car and (used) motorcycle are paid off, and I don’t have any expensive hobbies. So, with the exception of three trips in October–Ann Arbor for a Michigan alumni event, Ashville for a wedding, and Detroit for a wedding–I’m staring at ten months of lots of free (read: boring) fun. Reading comes to mind. But so does cycling and running, so maybe it’s not all bad. That is, if I don’t sell off my bike to meet my goal. And can afford to replace my running shoes. And in case you were wondering, yes, I do regret booking those trips, but the tickets were purchased before I set this goal, and they’re non-refundable. It’s a sunk cost and I’m going.
The “increase revenue” part is where this blog gets fun. I already tried to cash out my 401k, but that was a non-starter–I’d have to quit or get fired to get that cash, and subjected to a 10% early-withdrawal fee and income tax. So it’s going to come down to working more. I don’t really want to work evenings as I value my gym time way too much, and my job often requires me to take nighttime conference calls with Asia since my colleagues there work during those hours. So I need to find a weekend gig, which invariably means something related to manual labor.
So today, I spent my lunch break on Craigslist looking for jobs. Here are the unedited CL titles of what I found:
- Weekend Delivery Driver (NorthCentral Austin)
- Field Service Labor Technicians (Austin Tx, )
- Pedicab Driver: Flexible, Paid Workout! (Downtown)
- raking hay and digging bushes (NCentral Austin)
- Roof Assembly (Buda, TX)
- Warehouse Workers (Austin)
- Janitorial (Downtown)
- Warehouse Positions (Buda)
- Assembly/Warehouse (Round Rock,Texas)
- On-Site Supervisor (Austin, TX)
- construction labor (austin area)
- Security Officer Needed – Start Immediately (Austin Round RockTaylor)
- Seo Company (Austin)
- Demonstrators needed (Austin & all surrounding areas)
- Extras Needed (Austin, TX)
The weekend delivery driver actually sounds like the perfect gig:
We are a small business seeking a trustworthy, capable delivery driver/general maintenance man. This is a part-time job (20 hrs/week) taking place on Saturdays and Sundays with daytime/evening hours. We need someone who can make a long-term commitment and can appreciate working with a small, close-knit family type of environment while still maintaining an appropriate level of professionalism. Job duties and requirements include but are not limited to the following: – Repeated heavy lifting (100lbs +) to load and unload our truck – company vehicle provided
– Driving of delivery truck within the Austin area (valid driver license required)
– Attention to detail in handling of our delicate product
– Reconciling petty banks and tills at our retail locations
– Cleaning and general up-keep of delivery vehicle and containers, as well as retail locations
– Landscape maintenance such as weed-eating, raking, etc.
– General maintenance and repair of simple issues (leaky faucets, etc.)Please email us your resume with a cover letter or a few paragraphs telling us about yourself so that we may get a feel for your personality.
I mean, in all honesty, that sounds like a hell of a job! And the person who wrote it sounds pretty nice–they care about my personality!! I replied as such:
I am extremely interested in the role you placed on Craigslist. Based on my background working as a rough carpenter for four summers and my solid work ethic, I could add a great deal of value in the role you described.
A cursory glance at my resume might cause you to raise your eyebrows, but please let me explain my motive in reaching out to ask for the job in question. I received my MBA from Harvard Business School in 2009, and with that diploma came over $100,000 of debt. I am gainfully employed and have paid off 10% of that debt in less than 18 months. However, I am growing tired of the debt, and I have set an audacious goal to pay off the remaining $90k within ten months. One way I’ll be achieving that goal will be to dramatically cut back my expenses; the other way will be to take on a weekend job to increase my overall income.
My long-term goal is to own my own business, and I believe that working at your place of business, which you describe as a small, close-knit family type of environment, is exactly what I am looking for. I believe this sort of exposure–no matter how limited–will give me an idea of what it will be like to run my own business. There are some things that business school can teach, but it can’t provide one with the experience of actually working at a small business.
As I said earlier, I used to be a carpenter during the summers I studied at Michigan. I miss working with my hands and doing manual labor–it feels good to create and actually “do” stuff other than make spreadsheets and answer email all day. I also have general handyman skills that I learned from my father, and I do all of the yardwork, repairs, and maintenance at my house here in Austin.
I would really like this job, and I hope to hear from you soon. My resume is attached; thank you for your consideration. I hope to hear from you soon.
Will they reply? Will I get the job? Will they take me seriously? Am I even qualified for the gig? I’m anxious.
Please stay tuned.