Thank you for landing on my blog post! My website was originally created for me to record my adventures in my early twenties, to hold myself accountable for keeping those memories near and dear. I had some wonderful experiences the past 3-5 years that I would never want to change, and they all contributed to who I am today. But…
Over the last year, I’ve become quite interested in personal finance. You might even say it has become a passion project. I made the shift from working as a travel occupational therapist and paying a monthly minimum on my loans, to landing a permanent (yikes!) job and paying off double to triple what I used to. Along with student loans, I became obsessed with the FIRE principle- financial independence, retire early. But more on that another time…
As I write this blog post (December 2020), I am tantalizingly close to paying off my student loan balance. That is, approximately 7 months away, which in all reality, is not that long. I’ve been crushing them down for two years now, and the light at the end of the tunnel is so, so close.
Here’s a little background on how I ended up in Nome, Alaska working as an occupational therapist, with an added snapshot of my student loans:
I graduated high school in Michigan, and then I headed to Ohio State University for college, starting in 2011. I was on a pre-med track, and I lived within a health sciences scholars community. Thinking back, I’m guessing that 80% of that group was also “pre-med” … because everyone wanted to be a “doctor”. I quickly realized that career was not for me, but I stuck with a Biology degree. I switched from a pre-med track to a forensic track, which would allow me to be a forensic scientist in the future. I kept those plans through the middle of my third year, and then I started thinking seriously about occupational therapy.
I was a counselor briefly one summer for a Muscular Dystrophy camp, and that’s where I initially found out about OT. I then pursued a college job with the adapted sports department at the rec center working with children. I thought my future would be filled with pediatric practice! Years later, I realized my strengths lie in working with the adult population- whether that be inside the hospital or as an outpatient. Funny how things change.
I graduated with my BS in Biology during May 2015, and I immediately started graduate school in June, pursuing a doctorate in occupational therapy, which was a three year stint taking me to 2018.
May 2018 arrived, and I had just been in Ecuador for 6 months finishing up my capstone. I paid OSU tuition for those months, but my cost of living was dramatically less, so it was actually cheaper for me to live in South America as a student than in the States. I was living my dream lifestyle. I traveled by public transit across the country, ate healthy with all the fresh fruits and veggies, walked everywhere for my day to day tasks, and had a “work”-life balance that could never be achieved as an OT back home.
Once I returned, I had to defend my capstone project, much like a thesis. The defense was in front of a three person committee, and it lasted only 10 minutes. All of my work for the past 6 months came down to TEN MINUTES, and it was mandatory to do it in-person. I appealed to the graduate school handbook in attempts to try and make the defense virtual so that I could stay in Ecuador for as long as possible, but I had to return to Columbus.
Ultimately, in May 2018, I graduated with 122k in student loans. Don’t get me wrong, that’s A LOT of cash. But as I speak with those around me who are also in healthcare, the numbers aren’t any better. 200+k for PT school, 400+k for dental school, 150+k for optometry. Holy smokes!! And that is just for the graduate program, no matter to any undergrad loans (my parents graciously paid my way).
My attitude was similar to others, thinking “Well everyone else does it, so I guess I’m supposed to do it, too”…. I had no knowledge in regards to the implications of taking out this money, and I ultimately put myself in a dangerous situation.
One of the initial mistakes I made was during the six month grace period after graduation, where payments are not enforced.
The six month grace period exists to allow for a buffer between graduation and one’s first “real job”. However, during that time period, interest was accruing on all my PLUS and unsubsidized loans. So by the time November rolled around, that extra interest had built up to $6,000. Looking back, that was a huge mistake I would not make again. Start paying off those loans as early as possible, no matter how little!
Here’s a snapshot of what my loans looked like, beginning in November 2018.
And here’s a recap.
Federal loans: 102,000
-average interest rate: 6.53% accruing DAILY during and after program completion
Private loan: 20,000
-interest rate 2.0% accruing ANNUALLY beginning after program completion
Minimum monthly payment: $1100 for 10 years
You can see how the federal loans dig you deep into a hole rather quickly. From the moment that money is deposited into your account, your balance is accruing interest on a daily rate until the day it is paid off (different from compounding daily). The private loan I got is through an organization that promotes higher education for women, and this loan is a STEAL with only one interest payment per year around $200.
The first year of OT school, I was considered an out-of-state resident, as I was unable to prove full financial independence within the state of Ohio during my time of undergrad. So even though Columbus had been home for the past 4 years, I was paying the out-of-state tuition difference for the first year of school which set me back an additional $27,000. During that year, I took all the steps to become an Ohio resident for tuition purposes. Let me tell you, that was a full time job!!!! I had to track every penny spent, make sure I spent no more than 30 days in Michigan/elsewhere within a calendar year, and meticulously go through “A-Z” to get that in-state status. For my second and third year, I luckily got in-state tuition.
Let’s also not forget I took out loans for living expenses. What was the ratio? I wish I kept track. Grossly, I estimate about $80k for schooling costs, and $40k for living costs over the span of 3 years, about $13k per year.
That was the state of affairs two years ago, November 2018.
Currently, in December 2020, I have $3k remaining on my private loan, and $33k on my federal loans. I have busted my butt in a variety of ways to get those numbers down over the last year, because the entire first year I was more or less paying my monthly minimum. Want to gander how much money was going toward interest from November 2018-January 2020? THIRTY-SIX PERCENT. That’s 36%!!!!!!!! Over one third of my monthly payment. That is bananas.
After realizing this, I made all sorts of calculations, created a giant spreadsheet and color coded it, researched some techniques and other blogs on rapidly paying down loans, and put forward an all out effort in order to get my balance to $0.
I am so close now that I can feel it. To me, my student loans feel like a huge rock holding me back from achieving what I truly want, i.e. the potential to live in South America, the ability to work part time, the choice to live a semi-nomadic life. Instead, I need to work this 8a-5p permanent job with full time hours and benefits, so that I can earn a good income, pay off the loans, apply for loan forgiveness, and eventually make my dreams a reality.
At the end of the day, I absolutely love where I am living, up in rural Alaska. I love my community here in a town of 3,000. I love the distinct change between seasons and daylight. I love the ability to pick berries, fish, ski, mush, hike without trails, and everything in between. I really don’t see myself leaving anytime soon. Nome is a special place, and I landed here for a reason.
But that reason still has the baggage of student loans, and I cannot WAIT for them to disappear. Over the past year, I’ve come across tips and hints that have immensely changed my trajectory with both student loans and early retirement.
If I had learned some of these things a few years earlier, I could have prepared myself so much better.
I can’t wait to share more.