Woman shares how she paid off $20K debt in under 2 years
A 28-year-old woman who prioritized getting out of debt is revealing how she paid off nearly $20,000 in less than two years.
NiaChloe Bowman told "Good Morning America" she was still an undergraduate student at Babson College in Massachusetts when she decided to prioritize paying off her student debt and said being debt-free now was worth all the short-term sacrifices she had to make.
"I had roughly $20,000 in student loan debt. I remember my accounting class, I projected out how much my student loan liability could have been, and I did not like the number," Bowman recalled. "It made me very scared."
With a standard 10-year student loan repayment plan, Bowman's $20,000 could have increased an additional $5,000 so after she graduated in 2019, Bowman said she set her sights on paying off her debt quickly.
Bowman said it took her just 16 months to climb out of debt.
"I felt like that was more of an accomplishment than my actual degree," she said.
For others looking to follow in her debt-free footsteps, Bowman shared three key tips that helped her achieve her goal.
Visualize your debts
Bowman emphasized getting clear about the amount of debt you owe and what you're working with.
"Put it on a piece of paper, back of an envelope, get an Excel sheet," Bowman said. "Just write it all down."
Arrange for automatic payments
Bowman credited automatic bill payments for helping her stay on track.
"I had a bank account for bills, a bank account for personal spending, and two savings accounts," Bowan said. "I was able to have all of my money that was going towards my bills into my bills banking account and then my auto debit was linked to my bills banking."
Don't refinance federal loans
For anyone with federal student loans, Bowman said getting a new loan under new terms might not be the smartest option.
"If you have federal loans, do not refinance. Don't do it because you'll lose out on the federal protections," said Bowman.
Other tips Bowman offered included making small increases to minimum payments -- a move she said can add up over time -- and applying extra money to a principal balance and not just interest payments.
Bowman said paying off student loan debt first might not always make sense for everyone. Others should take their own financial situations into account and consider building emergency savings funds before chipping away at large debts, making 401K contributions and getting employer matches, or tackling higher interest debts, such as credit card debt, first.
