Wiping Out $90,000 in Student Loans in 7 Months

[Johnny Rico]

http://finance.yahoo.com/news/wiping-out--90-000-in-student-loans-in-7-months.html

Economists are increasingly worried that many young Americans will spend coming years buried under student debt. Joe Mihalic was determined not to be one of them. Faced with $90,000 in student debt from his days at Harvard Business School, Mihalic vowed last August to eliminate every penny by this summer. He did — three months early. The 29-year-old from Austin, Texas, is now becoming an Internet celebrity of sorts as financial advisers and young Americans link to his blog, NoMoreHarvardDebt.com, which had 180,000 hits as of Thursday morning. His story is touching a nerve at a time when young Americans are more indebted than ever.

So how did he cut through $90,000 in seven months? It helps to have a low-six-figure salary, as Mihalic does working for Dell Inc. But he also recommends getting roommates, a second job (in his case, landscaping), forgoing all restaurant dining (even McDonald’s), selling all unnecessary items around the house — and getting a flask.

Mihalic said he spent months taking a flask of liquor to bars so he could continue to go out drinking with friends without running up a tab. (Be warned: this is typically illegal.) Instead of the movies, he took dates out hiking, or for bagels and coffee. He ate protein bars packed from home and walked several miles to the city, to save a few bucks on transportation, during a trip to Michigan. He got two roommates to rent out his house.

Mihalic also took steps that financial advisers typically say are a no-no: He liquidated his individual retirement account, drawing a tax penalty, and stopped contributing to his 401(k), even though his employer offers a matching contribution. “My mentality was I want to be done with these student loans as quick as possible,” Mr. Mihalic says in a phone interview, adding: “It was an emotional decision.” He made his last student-debt payment six weeks ago. He said he saved roughly $40,000 in interest that he would have paid had he stayed on the 15-year schedule for repayment of his loans.

(more at link)

[PCIntern]

1. Great advice...

1. Get a low six-figure job
2. Plan Carefully
3. Succeed


Easy...



On edit: anyone else recall the apocryphal J Paul Getty advice: "By the time I was your age, I'd inherited my first million."

[Liberal_in_LA]

6. hee!

[HiPointDem]

11. "Get a six-figure job" = exactly. That's 1% territory, especially for recent college grads.

[MH1]

18. I seriously doubt it's "1%" territory. 5 or 10, maybe. More likely 20.

But I guess that's close enough. Especially to someone in the other 80%.

[HiPointDem]

21. He paid back $90K in 7 months. Which means he is making at least $12.8K a month, even if he's

living with his parents and sending every buck to pay off his loans.

$154,285 a year, to be precise, if he's sending every penny to the loan corp.

How many recent college grads make that?

Top 10% of all taxpayers starts at $112K.

Top 1% starts at $343K.

http://www.irs.gov/taxstats/article/0,,id=102886,00.html

I will bet you good money he's in the top 1% for people aged 21-25.

[dkf]

28. He cashed in his retirement accounts, got a second job, sold a bunch of stuff on craigslist

Rented out a second bedroom and a lot more.

[HiPointDem]

32. Um, he's in his early 20s, how big of a "retirement account" do you think he has?

second job, rented bedroom, sold stuff on craigslist = PIFFLE.

He paid back $13,000 A MONTH. What don't you get?

Most recent grads aren't doing much better than $13K A YEAR, and don't have access to $13k a MONTH no matter how much crap they sell on craigslist. They don't own a place so don't have spare bedrooms to rent & any "second job" they get is likely to pay minimum wage.

[Godhumor]

85. He is 29, and a Harvard MBA, so he had professional experience before enrolling

Its program typically requires 3 to 5 years post 4 year degree professional employment, so he had money in his retirement. He might have had a decent amount, too, if his previous employer price-matched.

Which would be necessary, because a typical job described as low 6 figures would not net 90k after 9 months. From the sounds of it he put almost the entirety of his salary towards paying off his loan debt.

[HiPointDem]

89. The most employment he could have had was 4 years if he took the usual amount of time to

do his coursework. If he financed half his repayment with his retirement account, that means he had more than $45K in his account after 4 years, which means he was probably making in the neighborhood of six figures even before he went to grad school.

He paid about $13K A MONTH to pay off his debt. That means he had access to $13K A MONTH. You can slice it anyway you want, but few people have that kind of money AT ANY AGE.

Why is he the poster boy for frugality?

It's not hard to pay off a student loan when you make that much money. He was making a payment on a 3-bedroom at the same time, he obviously wasn't hurting for money. Wherever it came from, the point is HE HAD A BOATLOAD OF MONEY.

[Blue_Tires]

26. I'm 11 years out of grad school and haven't even gotten close to HALF of six figures

[HiPointDem]

27. Most of the population *never* does either. Which is why publishing an article like this as if it's

"advice" or "role model" for the peons is so ridiculous.

[dkf]

30. Read his blog...

You could probably get pretty far if you did all the things he did.

http://finance.yahoo.com/news/wiping-out--90-000-in-student-loans-in-7-months.html

The question is do you want to live like that.

[HiPointDem]

37. He paid back $13K A MONTH. I live on less than that A YEAR. He SAID he makes over $100K a YEAR.

Bullshit on "selling stuff on craigslist" and all the rest of that crap.

[dkf]

46. You have a boatload of student loans?

[HiPointDem]

52. no, unlike this rich dick, i put myself through grad school with no debt and a 4.0 by working while

in school.

but no one is ever going to come around to ME and ask me how i did it without being a rich dick.

[dkf]

55. Hey you were even smarter than him by not getting into debt period.

Props to you.

[HiPointDem]

62. why is it always prep-school dicks and dickettes that are featured on the evening news telling

everyone else how to pay off their debts and live their lives?

bloody ridiculous.

[dkf]

104. Because its harder for a normal state university grad to incur that much debt?

At least I hope that is the reason.

[riderinthestorm]

111. Annual cost for 2012 at the University of Illinois, a public state school for undergrads is $30k nt

[closeupready]

118. Not worth that, unless you study accounting or engineering.

You are MUCH better off going out of state to a low-cost state university elsewhere. IMHO.

[riderinthestorm]

120. I put that out there for people who think going to an in-state, public university

will somehow mean the student isn't going to end up in debt, or that they've made a better financial decision than the kids going to a private university.

The fact is that even engineering students are finding it hard to get entry level jobs. You can't work enough hours while you are in school to reduce the amount of debt significantly enough to make a big dent.

You're damned if you do (go to school and incur debt) and damned if you don't (go to school and get locked out of any chance at all of a better paying career).

[coalition_unwilling]

72. How did you do it without being (or becoming) a 'rich dick'? I

dropped out of a Ph.D. program rather than take on massive debt to finance a career crap-shoot. Myself, I'm not rich, although my wife goes back and forth on the 'dick' part

[HiPointDem]

74. Median income for a male MA = $70K. For a female MA = $54K. Only a minority of MA holders

top $100K, contrary to popular belief.

I worked 8 years before grad school and lived like a student the entire time, worked two jobs during grad school (TA & other), lived in a one bedroom apt with a roommate, and didn't have a car.

I've always been deadly afraid of debt, as I saw from family experience how the accidents of life can wipe out a lifetime of work.

Possibly I am a dickette. But I'll bet that I and many other people know more about pinching pennies than this guy.

[coalition_unwilling]

75. The dick cited in the OP probably had an "MBA" and, with

the Harvard Biz School imprimatur, I would say that $100K/year is probably sub-standard for his demographic (if he went into investment banking, say).

I'm always amazed at how many undergrads here in LA drive much nicer sets of wheels than I do. Of course, I don't view my car as an extension of my penis (but that's grist for another thread, I guess).

If you worked as a TA and held a second job at the same time, by definition you cannot be either a 'dick' or a 'dickette'. That's hard labor and qualifies you for 'salt of the earth' status, imho

[HiPointDem]

79. Maybe i'm a dickette for other reasons. How many of those nice wheels are financed, belong to

parents, etc. As the median BA holder in the US makes $40-$51K: Median for ALL holders, recent and otherwise.

[a la izquierda]

106. I do. $120K to be almost exact...

And no, I don't have a 6 figure job, and never will unless I whore myself out to Wall Street or the government.

I'll pay a fraction of that and in 25 years, when I'm 59 years old, they'll be eliminated. But maybe I'll be dead by then and won't care.

[CreekDog]

115. what kind of job do you have?

[bluestate10]

47. He liquidated his retirement fund.

After penalties that should have given him a lump sum to apply against the loan. His payback average may have been $13,000 per month, but his out of pocket amount was likely much lower than that.

His experience reminds me of how I paid back my student loans. I had to leave home due to getting a professional job offer in another state. I didn't have a roommate, but my rent was low. I slept on a pad on the floor with a pillow for 8 months. I didn't go out or eat out. I didn't date. I walked everywhere I went. I paid off my loans during that 8 month period and saved up enough money to buy cheap furniture for my apartment. A few months after I paid off the student loans, I had enough to make a down payment on a car.

[HiPointDem]

50. Since when do recent college grads have big retirement funds after 7 months of work?

Only if you're making a "six-figure-income" PLUS an equally upper-crust retirement fund.

The article is insulting.

[bluestate10]

65. The guy is a 28 year old newly minted Master Degreed worker.

28 for a Master degree is older. He likely worked for several years before going to grad school. Some companies match and even double what employees pay into retirement accounts. Those accounts are typically available to EVERYONE, regardless of position. My own experience out of college was that my employer at that time forced me into a retirement plan after I finished my probation period. The company put in double what I put in. After 3 years, I had an account of over $7,000. Every employee of the company was required to participate in the plan and everyone got the same level of company contribution to their account. If you assumes that the man had a technical of finance degree at 22 and worked for four years before going back to school, he could have rather easily accumulated what I did in 3 years and even more than that.

[HiPointDem]

76. If he has a MA, that means that if he was on a normal timeline then the *most* he could have worked

would have been four years. (18-22 = BA + 2 years for MA = 24).

How many BA holders can pay for a Harvard graduate education after working 4 years? Tuition and fees alone run about $40K a year (varies by discipline).

Who paid for his undergraduate degree?

When did he buy his three bedroom house and how does he make the mortgage payments *and* pay off his loans?

What is your point? We already know the guy is rich and his parents probably are too.

[Blue_Tires]

43. unless he plans to hire me for a six-figure job, i have no use for him

From time to time, I do enjoy these stories where the upper class try to pretend they invented frugal living or something...

[bluestate10]

40. You're wrong. A salary of low 6 figures puts the man in the

5-15% group.

[HiPointDem]

44. I linked the IRS page for 2009 which clearly shows that the top 10% starts at $112 and the

top 1% starts at $343 K. He repaid $12.8K/mo = ~$150K a year.

As I said, I will bet you good money he's in the top 1% of people 21-25.

[bluestate10]

51. He is 28.

Why are you so fixated on whether the guy is in the 1% for his age group? Your concern should be whether he pays taxes and doesn't avoid paying his fair share. People that have some specific professional disciplines make lots more than other people in their age group that don't have training that leads to high pay, it is a fact of life, get over it. I am more concerned about whether a person meets his or her responsibilities of citizenship than I am about how much that person earns, as long as the earnings are gained with integrity.

[HiPointDem]

56. Fine, he's 28. If he graduated in usual time & got a job immediately after, he worked 6 years

for more money than most of the population will ever earn, bought a home with at least 3 bedrooms, and then paid off his debt in 7 months. Woo-hoo!

I don't give a damn about this particular dick; i'm offended that dicks like this are held up as some kind of model for the masses, whatever the hell they do. There's nothing special or spectacular about him except that he makes a shitload of money.

As for "integrity," he's already admitted that he breaks the law by taking liquor into bars so he won't have to buy it from the barkeep (who may very well make less than he does).

Get over it yourself.

[Blue_Tires]

91. I think the point of it is

Mr. MBA ain't exactly re-inventing the wheel on debt management...Yeah, he's been blessed with opportunity and made the most of it, but he doesn't deserve a medal just because he checked out a Clark Howard book at the library...

[Starry Messenger]

12. ¥eah, I stopped reading after that part "six figure job".

lol

[bluestate10]

53. That fact doesn't disqualify the guy if he earns the money through

hard work and integrity.

[Starry Messenger]

64. Disqualify him for what?

His situation is not universally applicable, is the point. I wasn't suggesting he wasn't fit to be human or anything. I live in a one-bedroom apartment with my partner, eat in, go nowhere, make 5 figures (under $30k) and pour my own drinks at home. The only reason my loans got paid off early is that my partner's mom died and with a little money left over, he generously got me out of debt. I will never be able to repay this act of selfless generosity, except with love and home-cooked meals.

[bluestate10]

68. I paid off my student loans in around 8 months.

I earned $21,000 before taxes and had to rent my own 1 bedroom apartment in a state that had a 7% personal income tax rate. I made honest, tough choices because I feared the loan total more than I feared sacrificing person comfort and owning stuff. Most people have a burden to carry.

[Starry Messenger]

70. And other people live that way too, and still can't get ahead.

It's the 21st century, things cost more, college fees/loans are higher. You can't just apply the experience of this one *highly-paid* person to everyone. Some people are exiting college with very little chance of a job. This country isn't drowning in jobs. Before you know it, you're using the credit card to buy groceries and then living with mom.

You are implying that most people don't make honest, tough choices. Most of the people I know live like paupers and have been working for two decades.

[HiPointDem]

80. $20K - FICA = $18,760. $18,760 - 7% = $17,447. Cheapest 1-B in very cheap area = $300/mo =

$13,847. Let's say that includes utilities.

$150/mo for food and household necessaries (e.g. toilet paper) = $12,047.

Let's say you walked everywhere, didn't have a car, didn't have any kind of insurance, never got sick, didn't participate in any social or family events, didn't have cable, never drank coffee, never bought yourself *anything* and borrowed everything in your house from your parents.

The most you could have paid off in a year would be about $12K.

[Blue_Tires]

25. Yeah, yahoo is painfully obvious in some of their finance stories

check out some of their health and weight loss pieces as well

[stevenleser]

98. Yeah, these kinds of articles are infuriating

Complete useless bullshit for 99% of the people out there.

Its the 1%'s way of saying, look, he did it, you have no reason to complain so shut up.

No, no we wont shut up.

[MindMover]

2. "It helps to have a low-six-figure salary" pretty much says it all and

is quite the understatement in this post.......

I dare anyone except maybe Harvard or Yale graduate (whose families are wealthy and among the 1%ers) to land a six figure salary.....

and if you did, you must go out and keep buying lotto tickets.....

[Liberal_in_LA]

7. a high sex figure salary is even better!

[pnwmom]

8. Certainly. And yet few people with those salaries would do what he did.

I would recommend his approach to recent college grads at every income level. Live with your parents, if possible, and try to pay off your loans as soon as you can.

The average loan total students are graduating with these days is in the 20-30 K range -- which is bad enough. The sooner they can pay it off, the better.

[HiPointDem]

23. Baloney. Plenty of people would do what he did if they made $13K a month.

[bluestate10]

57. Many of the posters are so glued to the 1% claim made by some,

that they can't see the logic in what the man did. Yes, he makes low six figures, but he had $90,000 in loans. On a equivalent basis, if he had a $20,000-$30,000 loan total, he could have done the same payoff with a salary of $40,000 or less. A person with a salary of $20,000 could have paid off a typical student loan in little more than 1 year using the level of discipline that the man showed. People, let's not get into finger pointing and excuse making because those tactics weaken the many legitimate arguments that we have against some high earners not meeting their responsibilities as citizens of this country.

[HiPointDem]

73. The median income for men with a bachelor's degree = $51K, for women $40K. That's for ALL

holders, not just recent grads.

http://www.infoplease.com/ipa/A0883617.html

50% of recent graduates are unemployed or under-employed.

The average student loan debt is $25-$28K, not $20K.

Paying off $20K in 7 months means paying $2857 a month, which means you need to make more than $34K a year to do it (since $34K is really $32K after FICA).

If you make $40K, you're making $37.7K. Which is $3141 a month, which means that this hypothetical person would have $284 left in his check for those 7 months, or $17.7K to live on for the entire year.

Now tell me how you make the mortgage payment on a THREE-BEDROOM HOUSE on $17K.

[pnwmom]

90. I never said the loans could be paid off in one year -- I said several years.

Which is still far better than the 20 some people take.

I also suggested that a new graduate could live with his or her parents -- not pay a mortgage on a 3 bedroom house. (How many new college graduates have ever been buying houses?)

If you pay off your student loan by age 30, you can get a mortgage in your thirties.

[HiPointDem]

100. and i gave you the example of my cousin the recent *nursing* graduate, supposedly a safe field,

who's not been able to find a job in the area where her parents live.

if you didn't say one year, other people did.

i gave a scenario here of the $10/hour ($20K/yr) worker whose disposable income is actually about $16K after taxes.

This grad has debt amounting to 60% of his salary, just like the $150K worker, but it's going to take the lower-wage worker at the very *least* two years to pay off.

That's if he doesn't have unexpected medical expenses (as he can't afford to buy insurance and it's unlikely his $20K job offers insurance, let alone insurance that actually covers anything).

And that's without being able to buy a home (like the Harvard guy in the story is doing), own a car, or do much of anything.

And it's still cutting it fine, because over 2 years, after paying the loan, this person has only $10K a year left.

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=707079

What is an "appropriate" amount of time for this person to repay their loan if they are unable to or don't want to leech off their parents (who may not be that well-off themselves)?

[pnwmom]

122. I won't argue that there are many people in way over their heads.

But there are also people who could stretch themselves , right at the beginning, to pay more -- just as the young man in the OP did. (Who made in the low 100,000s, not $150,000, so his debt was closer to 90% of his income -- not counting whatever he made in his second job.)

As to an appropriate period of time, I don't know. Of course it will vary with each family. The best thing, though, would be for people to figure out their long term plans before they take on all this debt. I think it's terrible that so many families were misled by confusing loan documents and didn't realize how much debt they were getting into. The amounts are comparable to getting a mortgage, so the disclosure should be just as clear.

[KansDem]

10. Well, *I* landed a six-figure salary!

Unfortunately, it had a decimal point...

[bluestate10]

60. What type of training do you have?

A person either does the work they love and accept that the work may not pay much, or train for a career that does pay well. There is simply no way around that set of choices. Complaining about one's station in life means that the complainer made wrong choices and is trapped in unfulfilling work.

Me personally, I chose my professional field because I had a burning passion for doing the work that it entailed. I didn't think once about how much I would earn. As events worked out, I ended up in a well paying professional field.

[Habibi]

67. These days, you may train for a field that does pay well,

and find that the field has collapsed before you can get a job in it. Sheesh.

[bluestate10]

69. It is wiser to train for a field that one loves.

Anytime a young person ask me, I give the exact same advice. When a person loves what they are doing, sacrifice comes easier.

[KansDem]

108. I trained for a profession I would love doing

However, after graduating college, I could not find a full-time position. So now I have a crappy job at a fraction of the salary. But, hey! As folks tell me, "Just be happy you have a job!" So I'm happy I have a job--but I'm looking to move on as soon as possible.

(And the previous post was intended to be a joke:
"Six-figure salary" = $xxx,xxx...
"Six-figure salary with a decimal point" = $x,xxx.xx...

[HiPointDem]

95. My young cousin told me today that she hasn't been able to find a nursing job in our area

as a new grad, despite a 4.0 and good recs from her practicum.

Everyone wants a couple of years of experience. So now she's looking at the big city and out of state.

That really surprised me. This town has a hospital and lots of medical/sr care facilities, and i'd thought nursing was a pretty good bet.

[villager]

3. "It helps to have a low-six-figure salary..."

Yes. Yes it does.

[KansDem]

4. Very resourceful

I suggest the bankers and brokers do this the next time they need a bailout...

[Nye Bevan]

5. Nobody who is serious about reducing debt should *ever* eat fast food.

A brown bag meal is much cheaper and usually healthier.

And Starbucks should also be off-limits.

[pnwmom]

9. Right. People who eliminate one cup at Starbucks a day could save a thousand dollars a year.

All those small expenses add up.

[HiPointDem]

24. They don't add up to $12.8K a MONTH. Which is what he paid back.

You think he paid off that kind of money by skipping coffee?

What a joke.

[dkf]

31. Plus getting a second job, cashing in all retirement funds, and selling his belongings on Craigslist

And renting out his extra room...

[HiPointDem]

48. I didn't realize 20-somethings typically had big retirement accounts and owned houses with extra

bedrooms they could rent out.

Clearly, this Harvard grad with a self-acknowledged "six-figure-income" should be a role model for us all.

[bluestate10]

71. I was a 20 something that had more in my retirement account

after 3 years than my father AND mother together made in 3 years. I was fortunate in that my parents nurtured me and gave me the opportunity to train as a skilled worker. Tha make a long story short, 20 somethings can have money.

You assume that they guy lived in a nice home in a suburb. He could have simply purchased a home that was sold at distress pricing with little money down. His house could be a rundown fixer upper.

[EOTE]

77. Very few people make that kind of money out of college.

THAT is the point that you seem utterly incapable of getting. You seem incredibly dedicated on defending the "integrity" of this man you know practically nothing about other than the fact that he makes a lot of money. I'm kind of interested in why you think this man, who admits to illegally screwing over legitimate businesses and workers, is such a paragon of virtue. Some people have far different value systems than mine.

Being thrifty is certainly something to aspire to, but anyone with a lick of sense can see the subtext of this article. It's saying; if you only work as hard and save, you can live like the wealthy, if you're unable to do this, you're simply not trying hard or saving enough. It's ludicrous, and this very insidious kind of propaganda relies on "rugged individualists" such as yourself to propagate in society. If you honestly think that the point of this article is to inform recent college grads on how to eliminate college debt quickly, I've got a number of bridges you might be interested in.

[bluestate10]

81. I am not calling the guy virtuous.

I do know something about the filed that he likely works in and the industry, he is doing honest work and would be fired if he was not. I don't approve of his flask trick, my choice when in a similar situation out of college was to not go out or join friends for inexpensive cookin potlucks. Choice that people make do have consequences, you are so high on your high horse that you ignore that fact. In one other post, I did math for a person making $10 per hour, with no overtime and a $20,000 student loan total. You can contest the conclusion all you want to, but simple math says that person can pay off the student loan within 5 years with some sacrifice.

I think you are also trying to paint me as a blind low percenter. I apologize if that isn't the case. I happen to think that a college or trade school education should be FREE for every student that wants one. The benefit that the country gains in taxes paid over a person's working life cries out for free higher education. But the reality is that we DON"T have free higher education and students come out of college or trade school burdened with loans. In that context, my point was paying off those loans is not the impossible task that some here make it.

[EOTE]

84. You very well are.

You make multiple references to the guy's "integrity". You're clearly holding him up as an example of such "integrity" to be emulated by others. I certainly don't need a lecture on personal responsibility. I know the benefits of being responsible, what I don't appreciate is bullshit propaganda disguised as an article advocating thriftiness.

For the great bulk of grads, paying off one's student loans in anywhere near the time this asshole did IS impossible. Yes, even when cashing in their life savings (what a joke!). You would really do yourself a favor by recognizing this objective fact. The article is utterly insulting for a number of reasons. It doesn't surprise me that the right eats lazy propaganda like this up, what scares me is that there are a number on the left who interpret this as anything other than the tripe it is.

[HiPointDem]

93. You're saying your mom and dad made less than $7K in 3 years? Because that's what I thought you

said you had in your retirement account after 3 years of working your $20K job.

Or was this in 1966?

[pnwmom]

54. I never said it did. But a thousand dollars is a thousand dollars.

And they add up.

As I said, the average student loan amount is in the low twenties. So his situation would be more comparable to someone making 30-35, trying to pay off their 20K loan loan in several years. It could be doable, if they lived with their parents -- that's what I did for two years.

[HiPointDem]

61. average student loan debt = $25-$28,700, per this:

http://www.latimes.com/news/local/la-me-student-debt-20120520,0,7421626.story

50% of new grads are un- or under-employed, per this:

http://abclocal.go.com/kabc/story?section=news/national_world&id=8633117

I have a cousin who recently graduated. She can't find a *nursing* job in the town where her parents live, or anywhere near. She has a 4.0 from a decent school and good references from her practicum. Everything around here (which isn't much) wants at least a couple of years of experience.

Talking about coffee in this employment environment is insulting. Talking about how some Harvard-twit paid down his debt on a 6-figure income by renting out his house & selling stuff on craigslist is insulting.

[bluestate10]

78. Using some of the statistics from the links you posted.

The typical student has a $20,000 loan debt. The wage that I saw in one of your articles was $10 per hour, that amount works out to $19,200/yr gross if no overtime is worked. The tax rate of the low six figure worker should be in the region of 22-25%. The taxrate of the typical student should be in the region of 14-17%. Add in an 8% state taxrate for both people. The low six figure person's yearly take home pay would be $105,000, using your claim of a $150,000 per year salary. The average student'f take home pay would be $14,976. If the average student lived with his or her parents or had a roommate, that person, if living frugally should be able to pay off the $20,000 student loan in 4-5 years tops, that is without working overtime, OR taking a second job. My claim is that the so called impossible is within everyone's reach, if specific choices are made.

[HiPointDem]

86. I just linked an article which said average debt = $25-28K, so what do you mean by "typical"?

Salary: $20,000

Debt: $12K (60% of total income)

Minus Federal income tax = $18201
(2011 tax tables for single)

Minus SS tax (6.2% applied to all) = $16,961

Minus Medicare tax (1.45 applied to all) = $16,716

Disposable income = $16,716

Effective total tax rate: 16%


Salary: $150,000

Debt: $90K (60% of total income)

Minus Federal income tax = $109,666
(2011 tables for single)

Minus SS tax (applied to first $106K only) = $103,094

Minus Medicare tax (1.45 applied to all) = $100,919

Disposable income = $100,919

Effective total tax rate = 32%


1. Mr. Six Figures will undoubtably itemize, which means he'll pay less.

2. Mr. Six Figures owns a house with two bedrooms he can rent out, and it's likely he'll do it under the table, as he's already demonstrated he's willing to cheat. Unlikely Mr. $20K will have a house, let alone one with 3 bedrooms.

3. Mr. Six Figures is getting a generous retirement account, at least part of which he can cash out and pay less tax than he would on ordinary income. Mr. $20K is unlikely to have any kind of retirement account at all.

4. Mr. Six Figures undoubtably gets his health care covered. Mr. $20K is unlikely to have any health care.

5. Mr. Six Figures may get perks like a company car or company-subsidized transportation. Mr. $20K will most definitely get none.

6. Mr. Six Figures can pay his *entire* student loan off in one year, after taxes, and still have enough money to survive ($10,919 = $910 a month).

7. If Mr. $20K tries the same, even though his debt is the same fraction of his income, he will have to survive on $393 a month.

[pnwmom]

88. I agree with you that that is doable under the circumstances you mention.

I lived with my parents for a couple years, which allowed me to save money; and after we married, my husband and I continued to live very frugally till we paid off his school debt, too. Some people don't seem to realize how the little items can add up.

[pnwmom]

87. I don't think it's insulting to talk about saving a thousand a year by forgoing Starbucks.

When we got married, we bought our stuff at Chip and Dent sales, and clothes at second hand stores, because we wanted to pay off school debts as soon as possible.

You can save more money than you think by living frugally.

[HiPointDem]

92. Of course it's insulting, because the assumption behind it is that people other than yourself

are too stupid to understand how to economize.

Are too stupid to know starbucks is expensive, or how to buy second-hand.

Or perhaps "condescending" is the better word.

And it's especially insulting in the context of an article about some Harvard MBA making over $100K a year, which puts him in the top 10% of the entire population and probably the top 1% for his age group.

[a la izquierda]

107. I don't drink Starbucks,

I don't smoke. I drink at home and rarely go to the movies.
I'll never be able to afford to have children.

I've done a budget. I'm not coming up with the $10,000 a year the government wants back, let along the $13K this kid paid back. I make $10K less PER MONTH than this kid paid back, and I have a halfway decent salary. I'd love to tell the government to go scratch until it makes Exxon pay its taxes. It can eat my $120K in debt.

But I'll be ruined while Exxon execs buy golden toilets or whatever the hell they do with all their billions.

[pnwmom]

121. That is a huge amount of debt you've taken on.

Did it start out that high, or is it because of lots of interest added on? In any case, I'm sorry you've been burdened with that. It must feel overwhelming.

[a la izquierda]

129. 13 years of school.

BA, MA, and PhD.

I can't even care anymore. If I did, I'd hang myself. It'll never get paid off completely, I can just pay for 25 years and get it forgiven.
Or die first.

[Phentex]

20. I have a friend who does this on a regular basis...

It's true they have very hectic schedules and it's so easy to just pick up something. But I keep telling her how much it really costs overall. They are having serious financial troubles but she doesn't see that all these quick trips add up!!

[Zalatix]

13. He just cost the student loan industry a pile of money. The combat drones are on their way.

Seriously, though, this will only make the student loan companies push for the right to raise his closing costs to cover their loss of $40,000 in interest.

Really, watch for that. I got hit with that closing costs (aka early payment fee, etc.) bullshit when I paid off my car note and mortgage early; I believe it's standard in the industry.

[dkf]

33. If only people realized the best way to get at "the man" is to pay off debts ASAP.

Get in control by using their money to your benefit...use credit cards and pay it off every month.

There are a million reasons why it's "impossible" to do but that only disadvantages themselves.

[Zalatix]

35. If you physically can come up with the money to do so, then you're right.

Oftentimes it's either pay down the mortgage right away or eat.

If you're dead before you pay it off, that might stiff the man because he can't collect on an empty estate... but then you're also dead.

[Habibi]

14. Oh, for Pete's sake.

How many grads are in jobs with "low six-figure" salaries? Or even high five-figure salaries? What a pant load this is.

Yes, good on him for making some sacrifices and not living beyond his means. Good on him for his focus on paying off his debt. But my goodness, lots of grads aren't anywhere near his position, and they will be struggling for decades to pay off their college loans. To hold this guy up as some kind of model is ridiculous and insulting.

[Zalatix]

36. It's all about rugged individualism! If he can do it, everyone can!

And if others can't, well, they're just unfit to survive!

Isn't social Darwinism great!

[Ikonoklast]

45. Winner, winner, chicken dinner!

OP has strong libertarian bent, but your not supposed to notice.

[Zalatix]

58. "Winner, winner, chicken dinner!" LOL!!

I learn a new one every day!

[riderinthestorm]

15. I also like the part about liquidating his IRA

How many newly graduated students even have an IRA?

And the illegal stuff? Yeah, okay, now THAT'S great advice.

Some of his ideas are spot on - stop fast food, make your own lunch and coffee, get a second job (if you are fortunate enough to get a first job), share an apartment etc. etc. However, I don't think he's the first one to be doing all of that in order to eliminate their student debt

[uppityperson]

16. Have a high paying job. Break the law. Don't spend a lot. Clear out your IRA. If you have one. Or a

job. O.K.

[bhikkhu]

17. Good for him!

After I got out of college the scale of the problem for me was much smaller. I spent awhile selling books and things I didn't need on ebay, and paid off an $1800 debt to the college within 6 months.

Unfortunately, two more loans totaled $17k, and there wasn't anything left to sell or any extra time or money laying around to work on them. Currently I'm just making the payments and things are ok, and the reserve of determination I might have for a quick and energetic run at repaying things is fully committed elsewhere - but I'm glad to see his story!

[coalition_unwilling]

19. Jesus H. Christ, a six-figure salary??? What a maroon, liquidating an IRA (tax-sheltered) to

avoid tax deductible interest (student loan interest is tax dedectible).

I guess a Harvard MBA ain't what it used to be (not that it was ever much).

[kelly1mm]

22. Student loan interest is NOT DEDUCTIBLE if you make 75k+ filing single. nt

[coalition_unwilling]

59. Goes to show my income bracket, I guess (<$75 K). But I would

assume you still are liable for the 10% penalty if you withdraw from an IRA before 59 1/2??

[bluestate10]

82. A 25% tax rate and a 10% penalty applies to early

retirement account withdrawals.

[HiPointDem]

94. I thought part of it would be taxed as long-term capital gains.

[Marr]

66. I noticed that, too.

Not too bright on that point.

[bluestate10]

83. He is not so dumb.

While he liquidated his retirement account at still a young age, he gained a $40,000+ annuity. If he makes wise choices, that $40,000 will multiply several times. Some companies, I don't know whether his employer does, allow catchup contributions to retirement plans is a person is behind for his or her age bracket.

[coalition_unwilling]

99. He had to pay a 10% penalty to liquidate it before age 59 1/2. And

he lost the use of it to shelter gains from taxes. I fail to see how early liquidation to pay off student loans and avoid student loan interest is much of a win.

[joshcryer]

29. I can attest to restaurant dining (even McDonalds). It adds up quick.

It's simply orders of magnitude more expensive than eating the cheapest store bought stuff you can find.

[riderinthestorm]

34. It also sounds as though he has a 3 bedroom house. Did anyone else catch that part?

"He got two roommates to rent out his house. "

So beyond the fact that he had an IRA. he also owns a home. I'm beginning to suspect he's had some parental help....

THAT would make a lot of difference as well

[HiPointDem]

96. Yes, and paying a note on a three-bedroom, even if it's in a neighborhood less classy than his

salary, has got to cost a bit.

[riderinthestorm]

112. Downpayment, taxes, repairs....

So he managed to save thousands in his 401k (in 3 - 4 years of working), and make enough to put a downpayment on a house, plus pay the taxes etc. (or someone else gave him the $ for a downpayment or outright gifted him the house).

[Odin2005]

38. What a clueless, entlited, elitist dick.

I stopped reading when I read "6-figure salary". This POS is basically saying "let them eat cake".

[fishwax]

39. "It helps to have a low-six-figure salary"

Yeah. I imagine it does.

[Ikonoklast]

41. What a joke.

OK you recent grads, stop whining about your student loan debt!

Just get yourself a low six-figure salary! Earn more than 80% of all Americans right off the bat, and, voila! bills get paid!

Can't you even figure that one out?


First, though, is be a Harvard Business school grad, no leg up on anyone else, right?


Steaming pantsload.

[closeupready]

119. +100,000.

[The Midway Rebel]

42. Fuck.

Myself and countless others have been living the same austere lifestyle of this guy without the low-six-figure income for the last ten freakin' years.

[DiverDave]

49. DUH, if I had a 6 figure salary

I could pay off mine too.

What a 'hero'

[Marr]

63. Uh, a lot of people do all that stuff because they HAVE to.

How incredible, how amazing, how laudable. A Harvard Business grad does it for a single year and pays off his student debt and all the lazy serfs are supposed to be amazed? Give me a fucking break.

[taught_me_patience]

97. Insanely stupid to follow his footsteps

This guy must have OCD or something. Why the maniacal obsession with paying off his student loans? He has a good job... why not draw out the loans over a long period of time so that he can live some sembalance of a life? He's 28 and making money... he should have fun with it.

[high density]

101. Next from the Wall St Journal: How to buy a million dollar house without going into debt

"First start with a half million dollar or higher annual salary. Then save about $35,000 a month for two and a half years. Now you can buy a million dollar house without going into debt!"

[HiPointDem]

102. The people saying how great this guy is are the same people who'll tell you how "hard" it is for

someone making $150K to live in NY or LA. "So expensive!"

[progressoid]

103. I'm looking for a word....

Oh yes. PRICK

"It helps to have a low-six-figure salary."
No shit?

[Bonobo]

105. If this is not an Onion article, it should be.

It is a fucking joke to have a person making a 6 figure salary lecture about how to get out of debt.

[TwilightGardener]

109. Single guy with a six-figure salary, probably no other debt or obligations--

why is this news? Sounds like he lived as if he earned $30,000 instead of $120,000 for seven months. Whoopee ding dong.

[dems_rightnow]

110. Excellent, renminds me of Steve Martin's advice.

"How to become a millionaire and pay no taxes!"

1. Become a millionaire.
2. Don't pay taxes.

LOL

[NotThisTime]

113. Jealousy rears it's angry head on this thread... the guy went to the University of Michigan then

Harvard, put himself through school, didn't come from money, but all I read hear is the hate and discontent towards him. Personally I found his blog to be pertinent even if you are not living on low six figures minus 20 grand in taxes. He works for a reputable company, he's not some banker stealing your shirt, yet the hate and discontent is still here. Amazing.

[Saokymo]

114. Yes, obviously we're all just sooo jealous of him

Never mind the fact that most Americans never even come close to a 6-figure salary over their entire lifetime, let alone straight out of school. It's the flippant attitude of, "this guy who makes more than 90% of the rest of the country could do it, and you can too!" that I find so insulting.

Good on him for paying off his debts, but he had far more resources than most to do so. Is it really a smashing success story when you start on third base before hitting home?

[HughBeaumont]

117. Spare us the "Class Warfare!!1!!" crap.

We're more angry that "STFU Poor People" Yahoo Finance's writers gallingly think this person's VERY fortunate situation is applicable to everyone no matter what their income or debt size is.

[Ikonoklast]

123. Wooosh. The article is total bullshit.

"If you have enough income, you can pay down even a large debt relatively quickly."

From Yahoo Finance's "No Shit, Sherlock" files.

[white_wolf]

124. More libertarian bullshit.

This guy's story is completely different from the story of most grads. He has a 6 figure salary and likely a lot of help from his parents. To hell with him and your bullshit about "jealousy." If people are jealous, they have damn good reason to be. I'm sure the majority of graduates worked just as hard as this 1% asshole and they didn't get his breaks. Take your libertarian bullshit somewhere else, because no one here is drinking that kool-aid.

[HughBeaumont]

116. Yahoo Finance . . . the "STFU, Get off Yer Pity Pots & Pull Yourselves Up by Yer Bootstraps!" site.

What a giant rackmount of bullshit derp. I've been working for 26 years of my life and I don't even make HALF of that. If you're not MAKING any money and your savings rate is zero to negative because your wage cannot meet basic necessities, how in the hell are you supposed to SAVE money?

They once wrote an article with the title "Why You Aren't Rich" . . . well, durrr, it's because my parents weren't rich. It takes money to make money, especially nowadays. That article was mostly "blame or shift all risk on the victim", as this and many others by them do.

I quote:

You probably assume it's because you aren't earning enough money, but the truth is that for most people, whether or not you become a millionaire has very little to do with the amount of money you make.

See, this is something victim-blamers like this one love to say to give you that Horatio Alger glimmer of hope; to dangle that proverbial carrot. For many, MANY people, what they get to keep has EVERYthing to do with their financial situation.

[ellisonz]

125. Note: The OP did not make a comment in the OP or reply to a single post in this thread.

His inference of course is that people with student debt are simply irresponsible in their choices...it's a prime example of Libertarian ideology.

[stevenleser]

127. There are a number of RW trolls running around posting memes like this.

True Earthling is another one. Have to check if this Johnny Rico person has posted other RW OPs.

[Ikonoklast]

128. Heinlein lover.

Libertarians drool over RAH's fantasies.

Almost as silly as taking Rand's crapola as some sort of reality upon which to base a society.

[ellisonz]

126. "It helps to have a low-six-figure salary, as Mihalic does working for Dell Inc."

Teachers, firefighters, police officers, firefighters, nurses, and many others do not make six-figures at the beginning of their careers and will likely never reach six-figures.