If Steven Donovan could sum up his thoughts on taking out loans to pay for his education, it would be “nonchalant.”
“I understood it as, ‘I want to go to school, so I’ll need to take out loans,’” said the author and founder of Even Steven Money. He planned to major in business and he figured that after those four years in college, he would land a high-paying job and would easily be able to pay back what he had borrowed.
Donovan is hardly alone in his ideas about taking out loans to pay for an education (or more than one). Nearly 44 million Americans owe close to $1.5 trillion in student loan debt. The delinquency rate for student loans is 11.9%.
Donovan’s share of that student loan debt came out to $60,000 when he graduated with a degree in finance in 2005. That high-paying job he imagined getting after graduation, though, didn’t happen.
“I didn’t really get a full-time, 40-hour-a-week job until 2007,” he said. And when he did get the job, it was nowhere near the salary he’d imagined. It was a bank job that paid $10 an hour. “I had no idea what I was getting paid I was just happy to get into my field,” he said.
With that $60,000 student loan debt hanging over his head, he deferred his student loans for as long as he could. Certain situations, like being unemployed or working part-time, allow people to delay or reduce their student loan payments.
When he could defer no more, he started making the minimum payments he owed every month.
Donovan spent two years at his bank job and then decided to take a leap of faith for love, packing up his life and moving to Florida to see if a long distance relationship would pan out. (Spoiler alert: It did, they’re now married). He had a little bit of savings, but he struggled to find employment once he was settled. He started piling up debt in other areas of his life, too.
“I was barely making ends meet,” Donovan said. “I was barely making minimum payments.”
And then came his awakening. He opened a letter from his student loan company that said the minimum payments on his account were about to triple. He knew he couldn’t afford those payments and that something needed to change.
At that point, he owed $46,500 in student loan debt. Donovan set a goal to pay off his student loans in two years. He missed the goal, but only by three months. He made his final loan payment in June 2015.
To pay back his debt, Donovan become laser focused in his quest to spend less and make more. That meant he made major life changes with the intention of becoming debt free.
The first thing he did was to increase his income. That may seem like a trite statement, but it meant sacrifice and change for Donovan and a little bit of swallowing of pride. He and his now-wife left Florida for the Chicago area and Donovan returned to an old job on a golf course that paid better than the jobs in his chosen field.
“It was a humbling experience, but it was necessary,” he said. “I also knew it wasn’t going to last forever.”
He stayed at the golf course job for just three months. He became a student of personal finance and started listening to money podcasts and trying to find every advantage to save and put money towards his student loan debts.
“I really immersed myself in paying off my debt,” he said. “I soaked up every tip, every strategy I could.”
He also started tracking where his money was going which helped him create a “rock bottom budget” of necessities.
“I would do things that were frugal in nature to me,” he said. This included eating out less, drinking less coffee and shopping for a much cheaper cell phone plan.
But all of this wasn’t going to get Donovan where he wanted to go in two years. So he needed what he refers to as the “secret sauce” or his side hustle. Donovan started selling gently used or new men’s clothing on eBay. That was something he’d done in college to make some money. So he resurrected the practice to help infuse cash into paying back his student loans.
Donovan isn’t alone when it comes to the side hustle. A 2018 Bankrate survey found that roughly 37 percent of Americans have a side job.
“It was pretty much all forward,” Donovan said. “I was always making bigger payments.”
He also got a big boost to his income through house-hacking, the practice of buying a multi-unit home to live in, and renting out one or more units to pay or help pay the mortgage. Donovan and his wife bought a multi-unit home foreclosure in Chicago in 2012 and used a renovation loan to fix it up. They lived in one of the apartments, rented out the other and created a third basement unit for more rental income. Eventually, they sold the building for a profit and returned to Florida.
Now Donovan makes his living helping others with their money goals as a money coach.
“This wasn’t the plan I had. I just knew I liked personal finance and money starting out,” Donovan said. “But it has been extremely rewarding.”