Jump to content

Havard Business Grad Pays Off $90,000 In Student Debt . . . In 7 Months


Recommended Posts

This is just . . . no.

http://blogs.wsj.com/economics/2012/05/17/wiping-out-90000-in-student-loans-in-7-months/

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.

He says he learned other lessons, too.

“The flask thing, it’s kind of demeaning,” he says. “The funny thing is that girls weren’t really sketched out by it…They did laugh, and I could still get their phone number. It taught me a lot — you don’t have to be this flashy dude, buying drinks.”

Link to comment
Share on other sites

  • Replies 69
  • Created
  • Last Reply

Top Posters In This Topic

This is just . . . no.

http://blogs.wsj.com...ns-in-7-months/

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.

He says he learned other lessons, too.

“The flask thing, it’s kind of demeaning,” he says. “The funny thing is that girls weren’t really sketched out by it…They did laugh, and I could still get their phone number. It taught me a lot — you don’t have to be this flashy dude, buying drinks.”

The 401K decision is questionable because you are giving up free money, the rest is a lesson we could all learn by.

Link to comment
Share on other sites

The 401K decision is questionable because you are giving up free money, the rest is a lesson we could all learn by.

I wouldn't advise anyone to withdraw from their 401k but temporarily stopping contributions to get debt free is something I'd advise but the person has to really be serious about getting out of debt. The loss of the match vs. lowering of risk (debt = risk) and interest saved is pretty much negligible especially when you consider what someone could invest if they were debt free...

Link to comment
Share on other sites

I wouldn't advise anyone to withdraw from their 401k but temporarily stopping contributions to get debt free is something I'd advise but the person has to really be serious about getting out of debt. The loss of the match vs. lowering of risk (debt = risk) and interest saved is pretty much negligible especially when you consider what someone could invest if they were debt free...

This guy was on a mission and the results speak for themselves. I can imagine he was in a "zone" at some point and saving money became his obsession.

Link to comment
Share on other sites

It's still impressive. Not many people have the kind of personal responsibility and discipline that this kid had (perhaps minus the 401k and flask thing).

It's will power no doubt but being single and making a low 6 digit pay, he could of easily of payed it off in three years without all the sacrifices.

Link to comment
Share on other sites

I do very well salary wise and I just payed off my student loan this year...and I've had it for...a while... And my student loan wasn't nearly as big as this guy's. I don't think you can pay off $90k in 3 years without making sacrifices. The main sacrifice would be living with mom and dad.

Sure some sacrifices have to be made but not to that extent. Think about a 6 digit salary , single and living with room mates to split the cost.

Link to comment
Share on other sites

The 401K decision is questionable because you are giving up free money, the rest is a lesson we could all learn by.

In his defense, he gave up maybe $5000 of matching to help eliminate $40k in interest. So that's not as bad as some might think. It's not a good idea to do that longterm. But for 1 year to eliminate debt, eliminating debt is not a bad thing.

Congrats to him. Unfortunately, most college students don't attend Harvard getting $100k+ jobs out of school. A lot of them have $50k in debt with no job or a job paying $30k. Show me the financial timeline getting out of that debt while paying for rent and bills...

Link to comment
Share on other sites

Not to be a hater, but the only way to rack up that kind of debt at Harvard is to come from a wealthy family in the first place.

If your family makes under 100,000, you go completely free. Your family has to be really rolling in it to have 90,000 in student loan debt.

Link to comment
Share on other sites

It's not easy to do in the time frame that he did it. The 401k sacrifice is mitigated by his age. I find people's observations (not just on this board, BTW) of this story remarkable because few can conceive of sacrificing the luxuries of modern life for a year, even when they can't afford many of them.

Link to comment
Share on other sites

Not to be a hater, but the only way to rack up that kind of debt at Harvard is to come from a wealthy family in the first place.

If your family makes under 100,000, you go completely free. Your family has to be really rolling in it to have 90,000 in student loan debt.

if his family is wealthy that makes it all the more impressive that he had the personal responsibility to take care of it himself.

Link to comment
Share on other sites

if his family is wealthy that makes it all the more impressive that he had the personal responsibility to take care of it himself.

I'd like to be impressed with the single guy who had a 6 figure job and paid off his debt, I just can't make myself be lol.

Link to comment
Share on other sites

I'd like to be impressed with the single guy who had a 6 figure job and paid off his debt, I just can't make myself be lol.

it's pretty impressive to me to work hard enough to be in that situation in the first place. it's not like he was just given that job, he earned it.

Link to comment
Share on other sites

Too many people perceive debt as being acceptable. Whether it takes one year or ten, everybody should draw up plans to be debt free and do whatever it takes to achieve them. If that means you don't buy the new iPad or the SUV you really want, then don't buy them. In a few years, you can buy them out of pocket, so IMO, it's better to do without now for a comfortable and secure future.

Link to comment
Share on other sites

Too many people perceive debt as being acceptable. Whether it takes one year or ten, everybody should draw up plans to be debt free and do whatever it takes to achieve them. If that means you don't buy the new iPad or the SUV you really want, then don't buy them. In a few years, you can buy them out of pocket, so IMO, it's better to do without now for a comfortable and secure future.

I agree. It is hard doing that with all the ads and marketing you see for new products. It takes some serious will power.

Edited by KGrillz
Link to comment
Share on other sites

His lessons on sacrifice hopefully won't fall on deaf ears or blind eyes. With the avg starting salary only in the low 40s his story is an aberration, but grads need to realize they can't live like a celebrity their first few years after landing a job. The lure of a nice new car, expensive furniture and electronics is not limited to college grads. Most pro athletes end up in deep financial doo-doo in only a few years after retirement. We live in a nation where too many people seek satisfaction and fulfillment through material objects, which explains why they're only as happy as their next purchase.

Link to comment
Share on other sites

it's pretty impressive to me to work hard enough to be in that situation in the first place. it's not like he was just given that job, he earned it.

Maybe. Ivy league students don't always earn their way into school and they don't always earn the jobs they get afterwards. But maybe he did.

Link to comment
Share on other sites

Maybe. Ivy league students don't always earn their way into school and they don't always earn the jobs they get afterwards. But maybe he did.

to be honest that sounds like something that some people say about rich people.

JMHO but the guy got into harvard, racked up some decent debt, and had the personal responsibility to pay it off.

doing the right thing>>>>

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share


×
×
  • Create New...