How One New Grad Paid Off $30K of Student Loans in a Year on a $48K Salary

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A portrait of a young, white mail wearing a flannel shirt and a book bag over his shoulder.
Photo courtesy of Phil Risher

Phil Risher changed college majors a few times before settling on international business. He studied in Italy and China, and envisioned finding a dream job after graduation that would lead to a jet-setting career.

“And then real life hits you in the face,” Risher said, looking back.

Risher didn’t speak a foreign language, so he decided to capitalize on his communication and customer service skills. His first full-time job using those skills was at a car rental company, where his duties included cleaning out cars between customers. But it paid $48,000 per year, which could go a long way to pay off his $30,000 in student loans.

How does a new college grad in the expensive Washington, D.C., area make headway paying his student loans right away? By setting a big goal — and blogging about the experience so others can replicate his success.

Risher paid off his entire student loan debt in 12 months, but he had to make some compromises for it to work.

How This New College Grad Made $500 Per Month Last

Yes, Risher moved home for the duration of his aggressive debt payoff. But it wasn’t the easiest choice.

When Risher approached his father and stepmother about living with them, they wanted rent. He explained his financial goal and what it would take to achieve it. Then he volunteered to cut the grass, clean the gutters and serve as on-call babysitter for his two young brothers in lieu of rent. They accepted.

“It’s a win-win if you can hold up your side of the bargain,” Risher said. “If they saw me out spending a bunch of money, that wouldn’t look good. They saw I was working and grinding on this budget.”

Risher brought home about $3,000 per month after taxes. He paid $2,500 toward his student loan debt and stretched the remaining $500 per month to cover his expenses.

He stashed $65 to $70 each month for his twice-a-year car insurance bill for coverage on the used Saturn he paid cash for in college. He spent $20 for gas twice a month. Since he was under 26, he could stay on his parents’ health insurance, and his mother added Risher to her cell phone family plan instead of buying him a Christmas gift.

What about savings, or an emergency fund? “Dave Ramsey says to have at least $1,000,” Risher said, and so Risher decided he should have that amount ready in case of emergency — especially since he owned an older car. He saved up a $500 emergency fund in college, and he put the money he received as graduation gifts into that fund.

His first paycheck at his full-time job gave him the extra kick to get his emergency fund up to $1,000. When his second paycheck came in June, he started his aggressive loan repayment.

He started with his unsubsidized loans first, which accrued interest immediately after graduation. Risher knew his subsidized loans had a six-month grace period before interest started accruing, so he strived to make progress paying those off next — before the interest kicked in.

And then there was the lifestyle change required to live on $500 each month and not go a little stir-crazy in his parents’ basement. When he wasn’t tending to chores for his parents, Risher tried to stay busy.

“Find things that are free and fun that you like to do,” Risher said. He loves playing basketball and even coached his little brother’s basketball team. “I like hiking, and that’s free, and I can take my dog,” he said. His frugal hobbies have even carried over post-debt.

The Legend of Yum-Yum Fridays

When Risher told his co-workers he would bring his lunch to work four days a week and read in a park near work, it was all jokes at first.

“It’s weird for a 22-year-old social butterfly to bring a book,” he said.

But he dubbed the fifth day of the workweek “Yum-Yum Fridays,” the one day each week he could buy lunch.

Before he knew it, his co-workers were excited about his dedication to his budget, along with his dedication to Yum-Yum Fridays.

“Each week I would set aside $20 for eating out,” he said. “Yum-Yum Friday was so much fun to look forward to, and my co-workers started getting in on it and wanted to come.”

Lunch in the Washington, D.C., suburbs can be pricy, and one popular sandwich shop was off limits because a single trip there ate up more than half of Risher’s dining allowance. Any money left over from Yum-Yum Friday went toward the occasional cup of coffee or iced tea, but only if he had the cash.

“Sometimes I would find change in the cars I was cleaning, and I would add it up and go to McDonald’s to get a sweet tea to go with the lunch I packed,” Risher said. “One time I only had a dollar, and I knew I needed a dollar and 10 cents to cover the tax. I saw a homeless man on the corner, and he asked me for money. Instead, I asked him for 10 cents. My co-workers couldn’t believe that I asked a homeless man for money.”

Risher explained Yum-Yum Fridays to the man, and on the next one, Risher delivered an order of McNuggets to him in return.

“Most people would have just put it on the credit card and swiped away,” Risher said. But he was determined to stick to his plan.

He said the mindset of having a brief reward to look forward to helped him stay focused on his goal. “Packing lunch four days a week was a sacrifice, but if I wanted a different life later, I knew I had to do things differently right now.”

Risher’s Life After Debt

Risher achieved his goal of paying off his $30,000 in student loans in 12 months. And then… he continued to live at his parents’ house.

He made an arrangement to pay rent, while still serving as babysitter and gutter guy, as he saved $60,000 to buy a condo outside Washington, D.C.

He knows his path is anything from normal. “I could have moved into someone else’s basement or rented a room and it might have taken a year and a half or two years to pay my loans,” he said. “Just because your dream looks different [from mine] doesn’t mean you can’t achieve it.”

Beyond the benefit of knowing he’s out of college debt, Risher said, “I’m no longer scared of money.”

He said that since we don’t learn much about personal finance in school, we rarely have a chance to fail with our money until we graduate. Once we reach that point, we’re scared to fail — and scared to even talk about money and budgeting. The mindset was hard to shift, but Risher now feels he’s in charge of his money.

“When I hit my goal, I thought, ‘Well, now I can really do anything if I set my mind to it,’” Risher said.

His girlfriend of nine years gets scared when Risher starts talking about a new idea, he said, because she knows he’ll do it. “I don’t want to be the guy that just talks,” he said. “I want to be the guy doing things.”

What about all the travel he planned to do when he was an international business major? “That’s actually my goal this year,” he said. “I’m planning an epic road trip for March 2018.” Aside from yearly summer treks to the beach and a trip to Florida this summer, he hasn’t had a chance to travel much.

But there’s always time to work on a new goal.

Lisa Rowan is a senior writer and producer at The Penny Hoarder.

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