English Major Invested Her Way Out of $70,000 in Debt
Today I have a unique story from Jenn at BachelorettePadFlip.com. I ran a poll on my Instagram account several weeks back and 53% of the followers wanted tips on savings and investing. Jenn’s journey will shed light on a unique strategy she used to invest and get out of debt.
Jenn grew up in Arkansas where she majored in English with a Master’s Degree in Education. Upon graduation she was facing $70,000 in student loan debt.
She says, “To say I was drowning is a major understatement. No matter what I did, not paying my student loans, paying the minimum, or trying to ignore them caused a lot of stress. I was forced to watch my spending because I was making so little.”
Jenn landed a job making around $24,000 before taxes were taken out. I think anyone would be “drowning” if they were in her shoes facing $70,000 in debt.
Then Jenn decided to reevaluate her debt payoff strategy
“I had been paying on my student loan debt, and I looked at the principal balance and it hadn't changed. After several payments it was still the same. I realized then I'd probably die with this debt if I didn't take drastic measures.”
So she came up with a plan to invest her way out of debt.
Jenn leaned on her family’s real estate background of 40 years to come up with a plan to get out of debt by investing in real estate.
Here is how she did it:
1) Jenn bought a bank foreclosed home that had a lot of potential “It needed quite a bit of TLC (Tender Loving Care) on the inside, but, luckily, it was mostly all cosmetic work. Through two long years, I rehabbed the house and turned it into a gem.” During those two years she lived in the house as she worked on fixing it up.
2) After two years passed, Jenn could “flip” (sell the house for more money) and take any profit tax free, she used that money to start knocking out her debt in large chunks.
Quick example: Let’s say she bought a place for 100k and after 2 years she sold it for 150k. She could sell the property and take the 50k without being taxed and use it for whatever she wants.
3) Repeat! She says, “Each time I was able to make a large principal payment ($15,000, etc.) and I literally saw the balance significantly decrease immediately, I knew I was on to something! So I kept remembering that feeling of writing big checks and seeing the balance go down.” Every two years she buys another hows and does it again.
4) Specifically to pay off her loans she, “Focused on paying off each loan individually which wasn't so overwhelming. Once I paid off the $10,000 debt, my overall balance looked smaller and made the others seem more achievable.”
Jenn used this method to crush her student loans in 5 years and learn a lot of valuable knowledge along the way.
“My life completely changed, including my career. I started house flipping to pay off my student loans. It wasn't my career, it was a means to the end. But over the course of this process, I discovered I really have a thing for this, I love it, and I'm good at it. So I left my former career, got my real estate license, and I now work as a Realtor and house flipper full time. AND I don't have student loan debt anymore!”
What is she investing in next?
She is saving up for her next investment in Florida! “The purpose of this investment property is part of my retirement plan. I plan to purchase a home now that someone else will pay for through renting, and when I retire, I have a property I can live in mortgage free or sell for another one I want mortgage free. I want to retire in South Florida, but I don't want to pay the inflated real estate prices 30 years from now.”
Talk about motivating right?!?
What advice does she have for recent college graduates with student loan debt?
“Get a 2nd job immediately. The side hustle is your friend...and you never know, your side hustle might turn into a career like me. I know you think you've graduated and that you don't need those "no future" jobs, but those jobs ARE the key to your future! That side hustle--whatever it is--can really help to pay down debt with extra money. Dedicate whatever you make from that 2nd job to EXTRA payments (not your regular monthly payment) on the principal. If you will sacrifice today, you won't have to tomorrow!”
I love Jenn’s story because it is a unique approach to investing and paying down debt. As I mentioned in the last Young Adult Game Changer story, everyone’s debt payoff has a different time frame and may even have a whole different strategy. The key is to come up with a plan and execute it daily.