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In an effort to help younger generations learn to break free from debt and fight the taboo of money within the Latinx community, Sofia Bastida, a 24-year-old Mexican-American, created @savingwithsofie. Through this platform, she shares her experience paying off $ 120,000 in student loans in 26 months on an income of less than six figures.
Like many students, Bastida was unaware of many of the basics of finance until she took on a student loan and felt pressured to pay it back on her own. Without college funds, Bastida took out federal student loans to attend Drexel University and a Parent PLUS loan to cover the remaining balance of tuition, which ultimately became a large part of her debt. Ignoring the impact of interest rates on loans, it wasn’t until her first payment was due that she realized how much her debt had grown compared to what she had initially incurred.
What started out as a $ 75,000 Parent PLUS loan grew to around $ 90,000 – just while Bastida was in school.
Through her own research, Bastida learned about refinancing as a method of lowering the interest rate on her Parent PLUS loan. She also found that paying off her loan as quickly as possible was the best way to pay less overall, rather than delaying the process, allowing more interest to accumulate. It became his motivation to develop a system to act quickly.
The experience itself has taught her to manage her expenses and she is now motivated to help future generations of students take control of their debt. Here are some lessons she learned along the way.
Research and plan your expenses
Refinancing student loans doesn’t always make sense, but Bastida did. It was able to lower its interest rate from 7.8% to 4.98% with a private lender and therefore save thousands of dollars in interest.
Each month, Bastida made at least two loan payments immediately after receiving each paycheck. âThat way I wouldn’t be tempted to spend money on something I didn’t need,â she says.
Prior to refinancing, Bastida saved money in a savings account throughout her years in college, and although she gave herself permission to dip into that pot of money while paying off her debt, she made sure to keep three months of savings in the account.
With a plan (and a good dose of emergency) to motivate her, Bastida began to consolidate her monthly expenses. She paid less than $ 1,000 in rent living at Philadephia while sharing an apartment with her roommates. Then, when she landed a job as a talent recruiter for TD Bank in New York City, she managed to keep her rent at the same level by continuing to have roommates.
As for other expenses, Bastida is a bargain buyer. She has made an effort to keep her fixed expenses low by finding deals on clothing and products and researching weekly advertisements. She walks and takes the metro whenever possible to avoid the cost of carpooling and preparing meals instead of spending money on lunch. For her social life, Bastida opts for free outdoor hangouts with friends, making sure they’re on board and helping her stay on budget.
Who are the best private lenders for student loan refinancing?
Take responsibility for yourself and your debt
Bastida knew she wanted to attend a private out-of-state university for her own independence. Although she was not sure how much debt would accumulate over the years, she understood that this was a challenge she had to face.
âAlthough it is very overwhelming to have such a high amount of debt, I have learned that it was I who chose to take out these loans and therefore I must take responsibility for the choices I make. ‘did when I was younger, âsays Bastida.
But responsibility doesn’t mean doing everything on your own. Debt can take a have a major impact on your mental health, and it’s important to reach out and find support. Some 73% of Americans recently ranked their finances as the number one cause of stress in their lives. For Bastida, one of the most important aspects of paying off her debt was being her own cheerleader and being encouraged by her mom and close friends throughout the process.
âBeing in debt took a toll on me when I graduated from college. I felt stuck and hated hearing negative things from people. I quickly learned that tackling six digits wasn’t going to happen overnight and it sure was wrong. be easy if I continued to allow myself to hear the negative things others would say. “
Bastida has discovered that there is more to learn about finances than what you are taught in school and that there are many more who share their knowledge in space. As an ambassador of Snowball wealth, a platform designed to help people with student debt develop a system for repaying their loans based on their financial history, she continues to share her journey with others.
Most recently, Bastida landed a new job as Campus Associate Recruiter for Black rock. She wrote on her Instagram account that this was a result of sharing her successes on LinkedIn – she also managed to negotiate a 30% increase in base salary. Her focus continues to teach others about finances and how they can build generational wealth.
âNow that I’m done with the loans, I keep the same strategy in that I live below my means and basically invest the rest, because I hope to achieve FIRE“, she says.” I don’t know if I want to retire early because I love what I do, but I think wealth building is what I love, especially because in my family it doesn’t exist. “
Editorial note: The opinions, analyzes, criticisms or recommendations expressed in this article are those of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.