This Recent Grad Paid Off $34K in Student Loans and Launched a Business (In Just 4 Years)


Stephanie Halligan had just graduated from Boston University with $30,000 in student debt and no clear plan to manage her payments. A degree from a top tier university like her alma mater is a huge accomplishment for anyone, but it was even more so for Halligan, who was the first in her family to graduate from college.

Despite her top notch degree, Halligan had difficulty with her job search. (It was 2009, after all, one of the worst years of the recession, and jobs were scarce.) Halligan had landed a $1,000 per month internship and was living in downtown Boston, where rents are notoriously high. "What had seemed like an insignificant amount to borrow while I was in school was actually a lot," she says. "After graduation, I didn't really know what I had gotten myself into. I didn't know how I was going to add up the dollars and cents to cover everything."

Learning the Money Ropes

Halligan knew something had to change if she was going to make ends meet. Coincidentally, as part of her internship, Halligan was offered the opportunity to teach personal finance classes to refugees new to the U.S.

"I taught them about the banking system in this country and about how credit cards work," she recalls. "Ironically, I was earning minimum wage and was starting to rack up credit card debt because I couldn't pay my monthly bills."

Halligan realized she was learning marketable skills through her internship, which she could likely parlay into a new career. "I realized the only way I was going to work my way out of this [debt] was to find higher paying work," she says. "I knew I had to be creative about how I found my next job, so I started taking more responsibility at my internship and started my job search in earnest."

Halligan's tenacity paid off and she was soon able to leverage her new experience into a full-time offer at a nonprofit in Washington DC. Her starting salary was $47,000 per year, a nice boost from what she was bringing home as an intern. "I felt like I was making more, but D.C. is also expensive," she says. "But, once I had a salary, I had something to work with and was able to start getting aggressive with my student loan payments." (See also: You Should Always Negotiate a Raise: Here Are 10 Reasons Why)

Negotiation and Debt Repayment

Halligan's overall debt now totaled $34,000, and she knew she wanted to pay it off as fast as possible. She'd grown up with parents who'd almost lost their home to foreclosure because of their own debt struggles. It was a cycle she didn't want to repeat.

At first, Halligan worked to keep her living costs as low as she could. Her frugal life choices allowed her to chip away at her balances, paying a little extra here and there. After her first performance review and salary increase, she realized she'd need to make more money if she was going to make a significant impact on her hefty student loans. "I started doing research about how to negotiate my salary and started taking on side work." Halligan admits the side work didn't amount to much at first, but that her negotiation research yielded almost immediate returns as she learned to articulate her worth to her boss. Over the next two years, Halligan's net negotiation gain was $13,000. (Here's how she did it.)

Soon after, she left the nonprofit for a higher-paying startup, where her incoming salary was $70,000. Halligan was living frugally and had been incrementally increasing her monthly student loan payment. "I started with $300 per month, which was my minimum," she says. "I started adding to that in $100 increments. I'd also earmark half of all unplanned income like my tax return, job bonus, and even a $20 birthday gift and used it pay down my loan balance." (See also: How One College Grad Paid Off $28,000 in Three Years on a $30K Salary)

Around this time, Halligan realized that it was within her reach to pay her remaining $10,000 student loan balance within a year. In addition to the salary increases she'd negotiated, she was running a successful personal finance blog and freelancing on the side.

As Halligan started to see the light at the end of her debt tunnel, she got increasingly aggressive with her payments. "I didn't want lifestyle increases to creep in when I received salary bumps," she says. "I knew I'd have more life options if I had the loan paid off." She increased her monthly payment to between $800 and $900 per month. "I had set a goal to pay them off by the end of 2013 and I did. I made my last payment in October of that year. It was a little less than four years from when I'd started repayment," she says.

Going Solo

As her final payment date approached, Halligan realized she wasn't happy with her job. She was designing online financial games for students, which she loved. It was the requirements outside of that work that were off-putting. "I was looking for a new job, but as I got close to paying off my debt, I started to realize it was possible to start my own business," she says. "I'd been saving, I had the expertise, and I realized my skills were in demand." (See also: Starting Your Dream Business Is Easier Than You Think: Here's How)

A week after she made her last loan payment, Halligan left her job. She's been debt free and working for herself since — now a little over a year. Today she is a financial education consultant, program designer, and marketer at her company, Empowered Dollar. Halligan currently earns less than she did at the startup but, she says, "I measure my career differently now. I feel like I bought time and freedom." Halligan works flexible hours, can work while traveling, and even recently returned from a five week trip through South Africa, Mozambique, and Tanzania. "Even though I'm not richer income-wise, I don't have any debt to pay off. That makes my life feel richer," she says.

Are you paying back your own student loans? What strategies work best for you and how long do you expect your plan to take? We want to hear your story in the comments below.

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Guest's picture

She sounds like a student of I Will Teach You To Be Rich!

Guest's picture

Way to go, Stephanie! I love that not only did you pay off your debt, but you created a new career for yourself, too!

We shared this post on 1099 Mom to inspire others who want to make the leap to self-employment.

Guest's picture
Lina Chahrour

A very interesting article, which sets Stephanie as an example on how to go debt- free and later on create her own business. It is true that livin frugally is not easy, especially if one is living in a consuming society. The fact of starting one's own business is very courageous and beneficial, as the rewards are greater, even if, as the article states, the earnings are a little bit less!