You may have recently seen the story of Joe Mihalic, a Harvard Business School graduate who paid off $90,000 in student loan debt in 7 months.
If you haven’t read the story, he graduated in 2009 with $101,000 in student loan debt. He got a good job at Dell, and lived the lifestyle of someone in his position—he bought two cars and a house. He regularly paid more than $1,000 a month on entertainment, and he dutifully paid $1,057 a month on his student loans.
After 22 months of making those $1,057 monthly student loan payments, he still owed $90,000. Yes, he had paid over $23,000 in minimum payments, but only $11,000 of that money had made its way to principal.
Mihilac got angry then and vowed to pay off the debt in 10 months or less. He sold one of his cars, his motorcycle, cashed in his retirement, cashed in an investment, and used his emergency fund. Then, he gave up eating out and other entertainment; he didn’t buy clothes, and he didn’t go to visit his family at Christmas. He missed two friends’ weddings. He started a side job as a landscaper. He found two roommates off Craigslist. He wrote about his experience in his blog, nomoreharvarddebt.com.
I find Mihilac’s store inspiring. He got made, got to work, and made the debt go away.
What I find annoying are those who dismiss his achievement by saying, “Sure, he could do it because he has an MBA from Harvard and he made $100,000 a year after taxes. I could do pay off all of my debt too if I had those resources.”
I don’t think that. I think he made significant sacrifices and reaped a great reward—he is now debt free. Yes, he makes more per month than we do, but his debt was also greater than ours.
Honestly, our debt is about equal to our income for a year, as was his. We have kids and he doesn’t, but that just tells me he was smarter to tackle this all before he had dependants.
Could you reject all consumerism and not set foot in a restaurant or a movie theater for 7 months? Could you avoid buying clothes and having a hole in your shoe? Could you miss out on two friends’ weddings? Those are memories you will never get to make and events you will never get to share. Could you work at a Fortune 50 company and start a side job as a landscaper?
He did what he had to do to get it done. I congratulate him for that, and I take inspiration from his story.
What do you think of Joe Mihalic’s journey to debt freedom?