On the surface, Stephanie Bousley is a typical college student in America. She thought if she worked hard and followed her passion, she could have the career and life she wanted.
On her journey, Bousley accumulated six-figures of student loan debt while going to film school in New York, which is one of the most expensive cities in the world. But here’s where it gets interesting. She’s well on her way to paying it all off.
And she’s helping others to face their student loan debt with her new book: Buy the Avocado Toast: How to Crush Student Debt, Make More Money, and Live Your Best Life.
The shame of having $300k in student loan debt
When Bousley graduated, she was looking forward to conquering her debt. She quickly learned that real life isn’t “anything like what they had told us in school.”
She was told starting as an intern and working hard would land her a job with excellent pay in the film industry. “None of the people that I knew who were interning at that time got any chance to ever move into a paid role,” said Bousley.
This left her with $280,000 in student loan debt and no way to get a high paying job after school.
“I know that sounds crazy, but keep in mind I always thought I could work my way out of it,” she said. Her grandfather was a farmer, and she knew the value of hard work. Even though Bousley graduated at the top of her class and got into good schools, having that much debt hanging over her head made her feel irresponsible.
“It was a big source of shame and secrecy for a long time because it just felt so unlike me to have that type of debt,” said Bousley.
The shame and weight of the debt led Bousley to struggle with alcohol abuse, and she picked up a habit of smoking cigarettes.
To make her payments, she’d have to get up at 5 a.m. to go to work at a job she didn’t enjoy.
She remembers thinking, “I don’t like feeling like I have to live this way because I’ve made poor choices with my student loans.”
When she was writing her book, she discovered she wasn’t alone. Many borrowers talk about debt, depression, and suicide. “There are so many people out there who are just really suffering,” she said.
How refinancing helped to pay off student loan debt
Intrigued by the idea of making student loan payments based on her income, Bousley signed up for an Income-Based Repayment (IBR) plan.
She started working abroad in a country with a much lower income tax rate. It also gave her access to write off her first $100,000 of income under the Foreign Earned Income Tax Exclusion. “That allowed me to save and put about $20,000 to $30,000 per year additional to what I was paying on the debt,” said Bousley.
Refinancing also became a big part of her student loan strategy. When she would make a little more money or get a raise, she refinanced again. Bousley was able to continually reduce her interest rate, so more of her monthly payment went toward the principal balance.
“My whole goal just became getting my monthly payment down to a lower interest rate, so when I made the payments, they were actually reducing the total debt,” she said.
An alternative repayment option
If Bousley were my client, I would have advised her to stick with the IBR plan. When I ran the numbers, her payment would have been about $500 a month based on her loan balance and income projections.
Because student loan interest is simple interest, not compounding like other loans, the IBR plan could have saved her about half the cost versus refinancing.
If you compare the perfect student loan repayment strategy to the wrong repayment strategy, it costs you about one to two years extra of your working life. In other words, you may have to work one or two years longer than you would have otherwise had to work.
The real success in all of this is finding a way to increase your savings rate. Bousley was able to do that while repaying her loans through refinancing. And she pursued a life that made her the most comfortable – one that took her to places like Singapore where she earned an excellent income.
Even though she didn’t pursue the film industry, Bousley is happy with where she’s at on her journey. “This is the way that my life panned out, and I’m not complaining,” she said.
Why it’s okay to buy the avocado toast
You can spend money on and eat all of the avocado toast you want, and it won’t have nearly as big of an impact as other strategies to help you financially. For instance, trying to increase your income, spending less on housing costs, and staying away from buying cars on credit have a more significant impact on your finances.
Bousley understands this concept and shares key strategies to conquer student loan debt in her new book, Buy the Avocado Toast.
“It’s about working smarter,” Bousley said. “When I see people with $100,000+ student loan debt getting told to drive Uber and don’t go to Starbucks every day – those changes are not going to make the kind of dent that people really need.”
Instead, Bousley focuses on putting more effort into things that will make a bigger impact. She advocates reducing your income tax, getting a higher salary, having the courage to look at your financial picture no matter how bad it is, and the importance of rewarding yourself on your journey.
“Sometimes, spending money just to keep you feeling like you’re making progress in your life,” she said, “not just punishing yourself day in and day out.”
You’re not alone with student loan debt
The more Bousley talked about her student loan debt, the more she heard other people in the same situation. Now, she knows that you shouldn’t let your debt define who you are as a person.
“My book is kind of like the therapist for getting the actual work done, but also for motivating yourself to look at that part of your life,” said Bousley.
You can find her book, Buy the Avocado Toast, at Amazon, Barnes and Noble, and Target. And learn out more about Stephanie Bousley on her website, You Are Not Your Debt.