Today I’m sharing a valuable guest post about how one person paid off $65,000 in student loans while continuing to invest.
Student loans are a reality for many, and getting out from under them can feel overwhelming. This article recounts my journey through student debt and how I balanced paying it down while investing and saving for a home.
My student loan background
I attended a large out-of-state university, which came with significant tuition, room and board, travel, and living costs. To cover those expenses I relied on student loans for all four years. At the same time I worked part-time to cover food and rent, which meant I graduated without credit card debt—an unexpected benefit.
As a finance major, I was naturally drawn to personal finance. I read about investing and planning in my spare time and felt driven to build a strong financial future right after graduation.
That urgency led me to design a clear wealth strategy roadmap focused on three goals:
- Invest;
- Eliminate student loans; and
- Save for a home.
I knew I wanted to pursue all three simultaneously, which required sacrifice and discipline. Below is the exact process I followed.
Step One: Start investing immediately
From the moment I started working, I prioritized investing to benefit from compound returns and employer contributions. I contributed the maximum allowed to my 401(k) at the time and also maxed out a Roth IRA.
At first, my take-home pay was very small and I had to live frugally, but committing early to retirement savings turned out to be one of the best financial moves I made. Investing early gave me confidence: as my career progressed, income would rise and those investments would grow.
My approach to retirement accounts focused on low-cost index funds to avoid high fees that can erode long-term returns. I treated investing as a priority because it offers unlimited upside over time, unlike most debts.
Step Two: Quantify and prioritize student loans
Next I created a table to calculate the weighted average cost of my debt. While many personal finance voices say “all debt is bad,” I took a more nuanced approach: pay down debts that carry interest rates higher than the expected after-tax return of long-term investments like stocks or real estate.
Why pay down low-cost debt if you can earn a higher return by investing? I organized my loans by interest rate and focused on eliminating the most expensive loans first.
When I graduated, I discovered a private loan with a 10.50% interest rate that had been accruing while I was in school. I later refinanced that loan. My rule of thumb was to pay off any debt with an interest rate above a conservative after-tax market return threshold (I used 4.2%–5.4% as a guide after accounting for taxes).
Any extra income above my living needs went to repay loans with rates above that threshold. Refinancing and targeting high-rate debt allowed me to lower my overall cost of borrowing while continuing to invest.
Step Three: Use side hustle income to fund other goals
Once my loan rates were below my threshold, I redirected attention and extra income toward other goals—primarily saving for a home. To accelerate progress, I took on side hustles including freelance consulting, graphic design, and selling photography. I funneled side-hustle income into separate accounts earmarked for specific goals, like a down payment fund.
Side hustles provided more than income: they built relationships, diversified my revenue streams, and increased flexibility. I recommend focusing on a few hustles and getting really good at them—be disciplined and treat those projects like small businesses.
After four years of disciplined saving, investing, and side-hustle income, I purchased my first home.
Lessons learned from paying off student loans and buying property
I went from roughly negative $65,000 in net worth to around $500,000. Here are the key lessons that helped me and can help you:
1. Debt isn’t always the enemy
Strategic debt can be beneficial. If I’d aggressively paid off a 4.625% loan before buying a condo, I might have missed the gains from rising home prices that later produced a strong return on my down payment. When used wisely—on appreciating or income-producing assets—leverage can boost returns.
2. Be flexible but follow a plan
It’s fine to pursue several financial goals at once, but planning upfront is crucial. Stick to your plan and adjust as needed. Diversified income and careful risk management protect you during setbacks.
3. Start early and work hard
Begin as soon as possible and be prepared to put in extra effort. Treat your desk like an income-generating space—work later some nights and invest in tools that let you work anywhere. I prefer side hustles that require minimal equipment, are location-independent, and are scalable.
Keep progressing in your career; it will often provide the greatest leverage toward long-term financial freedom.
4. Find motivation that keeps you moving
Look for inspiration that helps you persist. For me, solving problems and setting measurable financial goals kept me motivated. I even carried quotes about financial freedom in my wallet to remind myself of the bigger picture. One line that resonated was:
“Money speaks one language… If you save me today, I’ll save you tomorrow.”
Your financial plan should suit your situation and risk tolerance—personal finance is personal. With a clear, realistic plan and disciplined execution, you can repay debt and build wealth.
What will you do to pay off your student loans and pursue financial freedom? Share your plan and progress and learn from others who have walked this path.
Author bio: Millionaire Mob shares practical financial and travel advice focused on dividend investing, passive income, and travel hacking. The guidance aims to help readers build wealth and enjoy more freedom. Follow their content on social platforms for more insights.