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How I Plan to Use the Avalanche Method to Pay off my Student Loans

Overview:
Where are you from? Dominican Republic
Where do you live now? Bronx, New York
What do you do for work? I am a Process Manager for an off-price retailer.
Do you have any side hustles? I’ve had a few! I’ve tried MLMs (multi-level marketing) that didn’t work. I tried Etsy, and realized that wasn’t my passion and I don’t like selling. I also tried being a Zumba instructor. I wanted to do something that needed less of my time and something I didn’t have to always be home for. I started a Youtube channel where I review movies and shows in June, and we are on track to get monetized in April! I am so excited, but also wow! I have a video that has 20K views right now. I didn’t have makeup on, I’m reviewing a documentary. It’s like wow, I don’t have to be hard on myself and these videos will do the whole work for me, which is the point of me doing this.
Salary (if comfortable sharing): My salary is currently 92K
How much student debt are you tackling (or have tackled)? I am tackling about 40K in student debt.
How did you start your early career? I graduated college and didn’t know what to do. I thought I wanted to have my own business (retail), and then I realized I didn’t want to do retail. I started in my current job as a temp and moved up the corporate ladder. I’ve been here for 10years.

What was your financial upbringing?

We weren’t poor, but we always had a scarcity mindset. Such as, we won’t have enough saved, or don’t use up the nice stuff because something might come up and you may need that later on. That was the same way I was living my life, saving a little here and there but really being afraid to spend money or do something to make my money work for me because an emergency might happen and I may become homeless. That is where my brain went. I never set myself up for success, such as setting up an emergency savings account. I didn’t set one up until I joined the Snowball community, and I learned how much I should have saved up for emergencies. (You can join our community here.) I thought 3K was fine, but you actually need about 4 months of living expenses. Or something like knowing my net worth was, something I never thought about. That made me look at how much money I had, and how much money I was spending on debt. It made me realize I was spending money on random stuff and I could really focus and put my debt to bed and save and have enough money for an emergency. Like what happened in 2020, when people were getting laid off, I would have been in a really bad situation if that had happened to me. Having a community of women of color and realizing that I can do it, and that it can be done, was a big eye opening experience for me.

Can you tell us a little about the student debt story?

We had no money saved for college. I went to college on a very small scholarship, and all student loans. My loans are all federal, but I have under my name and also have Parent Plus. I’m paying for all of them, because I’m not letting my dad, who I know, make more money than pay for it. The pay off plan starting in February is to pay it off in 18-22 months. That is the aggressive pay off plan, if not it would be 4 years and I refuse to spend 4 years of my life doing this.

I plan to use the avalanche method to aggressively pay off my student loans. I had my 15-min consultation with Snowball in July of 2020, and found out I had a negative 10K net worth. (When you sign-up for Snowball, you can book a consultation with our specialists here.) At that point my goal was to have a zero, clean net worth by the end of the year. I accomplished this, so I was like yay, and I had an emergency savings account, so yay again!

This past year, I’ve been tackling my debt. I had 4 credit cards I wanted to pay off and so far I’ve paid off three. I have one left, and since I’ve been using the Avalanche method, I am on track to pay it off in two months. I’m going to use all of the money that I was previously using to pay down my credit cards on my student loans. Don’t look at it, don’t touch it, it will go straight to student loans. I’m doing a seamless transition.

Prior to 2020, I would become debt free and then come back to debt because I didn’t have an emergency fund. An emergency would come up, and use my cards and get back into debt. I am going to cut the cycle. Having an emergency fund will keep me out of debt. I am now more prepared.

What are some money habits you’ve adopted?

Budgeting - like really budgeting, and tracking where my money is going. Having specific savings account for specific things like trips, or spending funds. I have an opportunity account, a travel account. For Thanksgiving, I rented a hotel because there were way too many family members and I needed some me time. I had the money in my travel account. I am not spending any money that I could be doing for anything else. This money was meant for this particular thing. This helped me realize how much I can save when I don’t think about it.

At Snowball, we give you the best course of action to tackle your student debt and compare refinancing, optimizing payments, and federal decisions. You can learn more and sign up here.

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