Fast-Tracking Student Loan Repayment with $25

Guest Post: Nick Baldo, Co-Founder, OwnMyLoans

If you’re like us, you feel like your student loans are holding you back. Your student debt follows you no matter where you go or what you do. You can’t wait to eliminate your debt so you can get on with your life!

What would it take to shed significant time off your repayment? Many are surprised to learn that as little as an extra $25 per month can save you 4 years of repayment and $5,000 in interest. 

The Huge Impact of a Small Extra Payment

It’s amazing how such a small extra payment can make a huge impact. Consider a 25 year old borrower with a loan of $25,000, an interest rate of 6.8% and a minimum monthly payment of $190. If this borrower pays the minimum amount each month, it will take her 20 years to pay off this one loan. However, if she was able to allocate $215 per month (an extra $25), she could reduce that repayment time by 4.2 years and save $4,999 in total interest!

Check out the Comparison Below:


The key is to make a commitment to allocate that extra payment every single month. You should think of that extra $25 as an investment. If you’re putting that money toward a high interest loan (say at 6.8%), you’re effectively getting a guaranteed return of 6.8% on your money! Compare that to the 0.50% interest rate you’re getting in your bank account. What a deal!

It’s Easy to Find $25 per Month

Student Loan Borrowers often argue that its too difficult to commit an additional amount of cash to their loans every month. The minimum payments are tough as it is. “How could I possibly come up with an extra $25?” In reality, its very easy to establish your budget to allow for this extra monthly payment. Its all about psychology. At first it may seem tough. But after you find 1-2 monthly expenses that you can part ways with, this extra payment becomes a way of life.

How difficult is it to find $25 per month? Its a lot easier than you may think. For the typical 20-30 year old, you could allocate an extra $25 to your loans by making any of these relatively simple sacrifices:

  • 1 night out at bars / clubs
  • 1 restaurant dinner
  • 3 fast food / quick meals
  • 1 week of buying coffee every morning
  • 1 case of beer
  • 2 bottles of cheap wine
  • 1 bottle of liquor
  • 2 iTunes albums
  • Premium cable/internet upgrade

Think of this list as a “menu” of sacrifices. Each month pick 1 or more of these items off the menu and commit to eliminating it from your spending. This will allow you to allocate an extra $25 to your loans without feeling the hit on your wallet. You may find that its easy for you to eliminate one of these items. If that’s the case, challenge yourself to eliminate more spending and allocate even more to your extra monthly payment. 

For many, it helps to automate this extra payment. If you don’t have to think about the extra payment, you won’t notice the impact on your wallet. You can set up an automatic payment through your bank or set up a recurring payment through OwnMyLoans!

Where does this extra payment go? Your extra payments should always go to your highest interest loan. We call this the “Avalanche Repayment Strategy”. To learn more, check our previous blog post explaining how and why the Avalanche Strategy works.

Reaching out for Help

Many borrowers are surprised to find out that their friends and family are willing to help with their student loan payments. Have you considered reaching out to friends, family, or co-workers for help? At first, it might feel a bit awkward. But think about all the occasions when these people give you gifts. Your birthday, graduation, anniversary, Christmas, and Hanukkah are all perfect opportunities to ask others for help with your student loans. Instead of spending on material things, they could make a small payment to your student loans and immediately increase your net worth.  Make sure that they know that every little bit helps. Even $25 dollars per month can make a significant impact on your repayment.

Getting Started

Hopefully you’re convinced: It’s worth the effort to try to allocate a little bit extra each month. Here’s how to get started:

  1. Keep a budget – Use a free service like to track your spending and find out how you allocate your income. This will allow you to determine an acceptable budget for student loan payments.
  2. Create a Repayment Strategy – Download the free repayment calculator to figure out how long it will take you to pay off your loans. Experiment with the “Monthly Payment” and decide on a goal for your allocation to student loans. The more you can allocate, the quicker your loans will be repaid.
  3. Sign up for OwnMyLoans – Be proactive about your student loan repayment  Create a profile on OwnMyLoans and share your story. You can then reach out to friends, family, and co-workers for contributions. Remember, every little bit helps. 

Be proactive, set a goal, and Own Your Loans! 

More information about OwnMyLoans: OwnMyLoans was started by Mike and Nick Baldo with the intent of curbing the student loan crisis. The founders themselves post a combined personal student loan debt of over $270K . Necessity and frustration drove the brothers to build a solution

The OwnMyLoans web application is intended to decrease student loan debt through cooperative, rewarding repayment. By applying the features of OwnMyLoans with their personal advice and coaching, these entrepreneurs are devoted to helping others pay off their student loans faster. You can get in touch with Mike and Nick by emailing: or on twitter: @nicholasbaldo & @Mike_Baldo

Edgar @ Degrees and Debt

AuthorEdgar @ Degrees and Debt

Founder of Degrees and Debt. Edgar just wrapped up his MS in Project Management with a focus on Information Security Management. Battling back to even from student loans, mortgage and credit card debt is an art Edgar is learning to master. This is his journey.

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