If you had told Guenevere Garrido, 32, of Los Angeles, CA, just a few years ago that she would find herself in New York City, popping champagne in celebration of being 100-percent debt free, she would have surely thought she was dreaming.
But last month, this was real life. After making her final payment towards her student loans in July of 2016, Garrido treated herself to a massage — and then entered a competition (which she won) for a trip to New York courtesy of SoFi, the company that also made it possible for her to refinance, and ultimately pay off, her debt.
But the journey to living her best life debt-free was anything but easy.
“When I was applying to schools, I was conscious of how expensive it was. I considered starting in community college, but a lot of people said to me, ‘You got into UCLA! Not a lot of people can say that, so just do what you have to do.’” So she accepted the offer of admission, and the hefty price tag that came with it. “I wasn’t taught anything about money,” she says. “I wasn’t taught how loans work; so I was in that mode where my parents want me to go to college, anything that they offered me when I applied for the FAFSA, I took. I just thought, whatever it takes to go to UCLA.”
Garrido, who initially took out approximately $40,000 in student loans and signed up for a work study program to pay for college, is far from alone. Roughly 70 percent of grads leave college with student debt, and over 44 million Americans hold a total of $1.4 trillion in student loan debt. According to data from the Federal Reserve’s 2016 Survey of Consumer Finances, people under the age of 35 with student debt owe an average of $32,900. And while the standard payment plan for federal student loans puts borrowers on a 10-year track to pay off their loans, research has shown that the average bachelor's degree holder takes 21 years to pay them off.
Research shows that the average bachelor's degree holder takes 21 years to pay off loans.
“Everyone said, ‘Don’t worry, you’re going to get a good job and be able to pay them off really fast. Well that wasn’t the case,” says Garrido. “I [majored] in child development so I became a pre-school teacher right after I graduated; I was only making, at most, $13 an hour.” That’s when Garrido, who also enjoyed working with computers and was good with numbers, decided to make a career change. “I applied for a corporate job and started working for quality assurance and got a raise; totally different from a teacher, but that was the way I knew to make more money.”
But making more money wasn’t the only issue — her mindset was much to blame for her mounting debt.
“I thought, I’m never going to pay these off, because that’s the norm. Everybody has student loans, so I didn’t think it was an urgency,” says Garrido. “I was finding any way to minimize the amount I needed to pay for them. I heard about loan forgiveness, so I applied for the income-based payment plan and thought after a certain amount of years they would just be forgiven.”
With interest, that $40k slowly grew. Add in credit card debt and personal loans on top of that and Garrido quickly found herself in a $68,000 hole.
But with interest, that $40k slowly crept upwards. Add credit card debt and personal loans on top of that and Garrido quickly found herself in a $68,000 hole. “That’s when then I started realizing the weight of it: 20 years is a long time, and I’d end up paying a lot more in interest.”
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The Turning Point
Garrido knew she needed to get a hold of her finances, but it took an ‘ah-ha’ moment to really convince her to make paying off her debt a priority.
“2013 was a really, really, bad year for me. I got out of a relationship of five years; we were financially co-dependent on each other and I had to figure out how to be on my own financially and emotionally. On top of that, my dad was diagnosed with cancer. He was the main breadwinner of the family; we love our dad and we were also scared for the whole family, too. Thankfully he got better, but it made me think, what if in the future something were to happen again to my family and I don’t have an emergency fund? I can’t even help my dad financially right now because I’m still in this deep hole of debt. I knew I needed to get rid of the debt so that I could have savings to take care of my family.”
That’s when Garrido finally took a long hard look at her finances and began researching her options.
“I thought, why didn’t I research this before? They always say the teacher finally appears when you’re ready,” she says. “I started picking peoples brains; I found SoFi in March of 2015 because one of my student loans was at 10.5% interest rate. I wasn’t paying attention to that, but that was eating up most of my minimum payment. No wonder I wasn’t making any progress! So I refinanced and I got myself down to 6%."
Driving an UBER: A lesson in money management
Now that her loans were at a more manageable rate, Garrido decided that she needed another source of income to make a significant impact on her debt, and she signed on to be a ride-share driver with Side Car and UBER.
Working a side hustle, on top of her full-time job, wasn’t easy. “I would work from 8 a.m. to 4:30 p.m., alternate between taking a nap and going to the gym for 30 minutes, then get in my car and work until midnight. I set a stop time of midnight for my own sanity and safety and because I wanted to get enough sleep. I would occasionally work past midnight if I didn’t meet my goal for the night. I would do one or two more rides, because after midnight is when surge pricing happens and I would get more money.”
Her goal for each weeknight was $50, and on the weekends at least $100; on busy nights, she would come home with a couple hundred extra dollars in her pocket.