by Steph Sarff

Paloma Medina got savvy with her student loans. And you can too.

Performance coach and financial wellness facilitator Paloma Medina paid off $100,000 in student loans in just three years. Here’s how she made it happen.
Paloma Medina Photo cred: Carly Diaz

Nine years ago, Paloma was living paycheck to paycheck, consistently overdrafting her checking account and constantly stressing about her finances. After setting a goal to find a higher paying job, she realized she’d need to go back to school first, even though doing so would set her back even further financially.

She ended up getting a Masters in Organizational Coaching from NYU, and also accruing about $100,000 in student loan debt. Today, she owns 11:11, a brick and mortar store in Portland, OR and facilitates workshops on everything from equity and inclusion to reaching financial goals. Her store’s mission (including everything they sell) is to make every person feel capable and empowered to create better days and better lives for themselves.

Here, she shares her strategies for paying off $100,000 in student debt in just three years.

Strategy #1: Actually look at the details in loan statements

When Paloma started planning how she was going to pay off her student loans faster, she realized she’d been avoiding all the details. The complexity of her loans overwhelmed her, so she initially chose the easy route, which involved turning a blind eye to the whole situation.

The first step Paloma took was scheduling some time with herself and her student loan debt. She needed to spend some quality time with it. She sat down, went through her statements and inspected the interest and principal balance (the amount that’s actually due before interest or other charges are applied) of each of her loans. Before this, she’d never actually looked at what she owed and how much interest she was going to end up paying over time.

Strategy #2: Overcome the mental block

Half of the reason she’d been avoiding her student loans was because of her own internal fears. Here were all these sums of money, spread all over the place with different interest rates, and knowing where to even start was mind boggling. She decided that instead of thinking of it as an impossible problem, she would think of it as a riddle to solve. Meaning, that even if the organization of her loans was time consuming and frustrating, it would be worth it.

Strategy #3: Consolidate the debt

Once she familiarized herself with the overall amount she owed, she embarked on a mission to come up with an easier way to handle her loans. Managing the details of several loans was overwhelming, so consolidating them to one central location would make things easier, plus it would give her hope for a quicker payoff plan. Even though it wasn’t going to be a quick or easy process, it was worth the time and energy.

Strategy #4: Principal balance payments

After reading a ton of blogs and articles about student loan debt, Paloma was making great progress, but started to understand she was paying off a lot of the interest, rather than the principal balance (remember that’s the actual amount due before the interest is applied).

She did some more digging and worked with her loan provider on a plan that would help her pay off the principal balance faster. Any time she made a payment that was over the the minimum amount she owed for the month, the extra money would be applied directly to the principal balance instead of the interest. In the end, she was able to pay about $40,000 against the principal balance, which drastically helped her timeline.

Strategy #5: Get a better rate

Initially, with her consolidated loan, she was paying a random bank 7% interest. She continued to research places with lower rates but wasn’t able to find any. After some hesitation, she decided to reach out to family and friends who could potentially help her out, and ended up finding someone willing to give her a 4% interest rate. She approached friends and family with a win-win proposal: If they loaned her the money, they’d be getting a similar or better interest rate than having it in a savings account, and the money would stay in the community. She signed a promissory note (a legal document where one person promises, in writing, to pay an agreed upon sum of money to the other by a specific time under specific terms), and the deal was done. She knows this isn’t common, but if there are some people you can reach out to for a lower rate, she definitely recommends it.

Strategy #6: Additional income = additional payments

Paloma had made sure she chose a masters program that met two requirements: a high job placement success rate and an average graduation starting salary of $60,000 or more (her financial goal). Upon graduation, she was persistent in her job search until she found a role that paid $100,000. Success! However, though tempting (it was $40k over her goal!!!!), Paloma did not go on a shopping spree. She continued to live the same lifestyle she’d been living.

Instead, she set a little extra aside for herself to make sure she felt a life upgrade, such as going for a nice cocktail with a friend each week or getting an extra snazzy blazer for work each quarter, but otherwise acted like she was making the same amount of money. By behaving this way, she had a sizable amount of money left over each month, which she used to pay down her loan. By making larger loan payments each month, she was able to pay off the loan off quicker.

Strategy #7: Don’t stop poking

The reason Paloma was able to pay off $100,000 of student debt in three years was because she didn’t just sit back and do the very minimum. She put in effort to consolidate her loans, find a lower interest rate and make more than just the minimum payment each month. She didn’t stop asking asking questions or poking around for more information. She remained curious and determined, which she said really helped her achieve her goal.

Thanks for sharing all these great strategies with us, Paloma!

To learn more about Paloma, or attend one of her workshops, check out 11:11’s website. The store’s Instagram is obviously cool too.

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