18, 2015, 10:13 AM

Posted On: September 23, 2014

canada goose A quick calculation spurred one man to pay $14,000 of student loans in 3 years Kate Ashford, Magnify Money Dec. 18, 2015, 10:13 AM Natalie Cass/Getty When Andy Pollen graduated with his MBA in 2009, he was happy to have a job in public relations in Indianapolis – but was less than thrilled about the $14,000 in graduate student loans that were hanging over his head. The shackles of debt were not only preventing him from progressing to the next phase in his life, but the interest payments were going to add up over time. So Pollen decided to take his take action and attack his debt. Running the numbers – and getting motivated Pollen did some calculations afan , and at the 6.75% interest rate on his debt, he was looking at paying nearly $4,500 on top of his $14,000 balance if he stuck with the prescribed 10-year payment plan. “I knew that within the next five years I wanted to be able to have my own house, and I wanted to make sure I could afford the kind of place I wanted,” says Pollen, now 33. The breaking point for him was seeing how much that $14,000 would cost him over time. “When you run the numbers, you see all the money you’re really giving back, as opposed to how much would be in my pocket if I was a little more aggressive,” explains Pollen. RELATED: Top 6 Things to Know Before Taking Out a Student Loan Devising a repayment plan Even with the numbers in front of him, Pollen wasn’t sure exactly how to tackle the debt afan.dk , so he reached out to a financial advisor in the area, outlined his situation and long-term goals, and asked if the financial planner would be willing to help him devise a plan. “He jumped at the opportunity,” Pollen says. The two of them went through Pollen’s finances, analyzing his cash flow and pinpointing areas where he could cut back. Pollen was making $55,000 a year at his PR job for a local hospital system, and he noted that he was spending a lot of income on non-necessities like eating out, buying clothes and going to concerts. “I was able to see that if I shifted some of that money elsewhere, how quickly I could pay off my loan,” he says. Pollen started tightening his budget, limiting himself to one lunch out and one night out with friends per week. He dumped cable but kept Netflix, and got rid of satellite radio. Instead of buying new music, he checked out CDs from the library. “The amount of money I was saving by not buying new really made a huge difference,” says Pollen. RELATED: 18 Common Student Loan Terms, Explained Small changes add up to big debt payments All the sacrifices paid off. Pollen was first able to pay off his car loan — nearly an additional $6,000 — within the first year. After that, he put $600 to $800 per month toward his student loan, and by mid-2011, he was making $1,000 payments about every other month. “In my mind, I’d been thinking of all those things I could have spent that money on, but seeing that number drop by that much in a month made me feel like this is the right thing, this is going to be over before I know it,” he says. Pollen made his last payment in 2012, just three years after graduating, and in 2014 he was able to make good on his housing plans, purchasing a three-bedroom, two-bathroom condo in downtown Minneapolis, where he lives now. “Not only was it great to see my dream of home ownership coming true, but I was able to buy a place I loved, in the neighborhood where I wanted to live,” Pollen says. “I thought back to the sacrifices I had made during my loan repayment and wished I could go back and tell myself, ‘See, it was worth it.'” MagnifyMoney’s action plan Andy Pollen’s dedication to tightening up the purse strings in order to aggressively pay down debt is one effective way to get back in the black. But an additional tactic would be to refinance those loans to a lower interest rate so even more of the aggressive payments go towards the principal balance. Reducing a 6.75% interest rate to a fixed rate of 3.50% on a 5-year term could save $4,009 before even making the increased payments to get out of debt sooner. Those with federal student loans and modest incomes should consider an income-driven repayment program in order to ensure the monthly payments are affordable. MORE FROM MAGNIFY MONEY: How I Saved Enough to Travel for Three Months 5 Things You’re Probably Doing Wrong With Your Money Use Chase Freedom To Earn 10% Cash Back At Amazon.com Your Script For Negotiating Credit Card Fees 4 Things You Need to Know Before Applying for a Mortgage Read the original article on Magnify Money. Copyright 2018. Follow Magnify Money on Twitter. SEE ALSO: Why I'm glad my wife had $80,000 of student loan debt NOW WATCH: Watch this Ball State freshman sink a half-court shot and win free tuition canada goose parka