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How This Couple Bought a Home While Paying Off $80,000 in Student Loans

By U.S. News & World Report

Many recent grads feel they need to pay off debt before buying a home, but Lance and Tori Cothern prove that’s not always the case. Lance graduated without student loans, while his wife Tori amassed $80,000 in loans for her nursing degree. Even as Tori underwent two surgeries and the couple bought a home, they managed to accelerate paying off their loans by bringing in extra money. Lance earned extra income from his personal finance blog, Money Manifesto, and Tori generated additional income from overtime shifts.

[See: 10 Easy Ways to Pay Off Debt.]

U.S. News talked to the couple about how they juggled multiple financial priorities and paid off debt without feeling deprived. The following excerpts have been edited for clarity and brevity.

Tell us about your decision to buy real estate. How did you know you were ready for homeownership?

Lance: We both went to college in Virginia and then I worked for a year outside of Washington, D.C., and housing was very expensive. Then, I moved to Florida and housing here is much cheaper. For us, deciding to buy real estate was [motivated by] a few different things.

First, it was a lot cheaper to own a house than to rent in Florida. For the first house we bought, our mortgage payment with insurance and taxes was probably around $500 a month. And to rent something like that probably would have cost $900 to $1,000 a month.

We bought our townhouse back in 2011 when prices had really come down a lot. A lot of the housing down here [in Florida] had been bought up for rentals and then when the crash happened these were a lot of second homes and rental homes. The prices probably came down here a little harder than they did in some other places. We bought a short sale. If I remember right, the people before us bought it for [around] $160,000 or $170,000, and we ended up buying it for $79,000.

Tori: We weren’t originally looking to buy a property, but when that came across our lap we couldn’t pass it up. I think buying real estate before the loans were completely paid off made us feel like we were still living our lives without being a total slave to debt.

What brought you to Florida?

Lance: I have some family down here and we preferred the slower pace of life compared to the rat race of Washington, D.C. Up there, we felt it’d be a lot harder to get ahead financially, especially with our student loan debt.

What happened next?

Lance: We lived in the townhouse for a total of about 18 months. When we bought it, we knew it’d be a shorter-term house for us, because we figured we could rent it out after we moved out.

It was a two-bedroom, one-and-a-half-bath townhouse and it worked for what we needed it for at the time. But we realized after we started having kids that we’d want something bigger. We decided instead of using the money from my blog to pay down the debt that we’d just buy a bigger house in town and rent out the first house. We ended up buying a three-bedroom, two-bath house.

We got engaged while we were in the townhouse, but we didn’t get married until after we moved into the second house. Tori was paying down her student loan debt by herself before we got married, and I was saving money so that after we got married I could use that money to help pay off the debt.

[Read: Trying to Dig Out of Debt? Don’t Make These Mistakes.]

Tell us about your experience as landlords.

Lance: We got really lucky with our tenants. They lived there for three years. It wasn’t a huge hassle, but we decided to sell the townhouse before we had our first kid. It worked out really well for us. We ended up selling it for $119,000.

A lot of first-time homebuyers wind up overspending on furniture or upgrades for their new house. Did you do that? If not, how did you avoid that temptation?

Lance: Physically, our house was in good shape; it was just dated. We put aside $200 a month and we would do whatever we could with that money. First, we changed out some light fixtures and installed some ceiling fans. Once we saved up some more, we did some other stuff. But with us paying down the student loan debt, we were pretty strict with what we spent our money on because we really wanted the student loan debt gone.

Tori: And we really made sure to shop sales. We waited for the President’s Day sales and Labor Day sales and whatnot for the home repairs and upgrades.

What advice would you offer someone who wants to buy real estate while paying off student loans but isn’t sure that they should?

Lance: The biggest thing I would say is if you’re going to buy real estate, make sure that after you buy the real estate you will still have some money in the bank, because something will always pop up. We ended up having to replace an air conditioner at the townhouse [we first bought] within the first year. We used some of the money we had left in savings to cover that expense, but if we didn’t have that, it would have been pretty stressful and it probably would have ended up on a credit card.

You both worked extra hours to get your loans paid off. How did you prevent burnout?

Tori: One of the biggest contributors to that was our work schedule. Lance had a typical nine-to-five job and I’m a registered nurse, so that meant that I was working three 12-hour shifts per week. While I was working those extended hours, Lance would come home from his day job and work on the blog. And every now and then, I would pick up an overtime shift.

Anything else that helped you?

Lance: We had a spreadsheet where you can input the interest rate, minimum payment and how much you’re paying off per month. [After entering these details] it’ll tell you how fast you’ll pay the debt off. Whenever we’d make an extra payment, we’d [enter] it on the spreadsheet.

Tori: It just helped keep us motivated being able to see [our remaining debt] in numbers with a final payoff date.

What money lessons do you hope to pass on to your son?

Lance: Be conscious about the money decisions you make. So many people just let life and let money [wins and pitfalls] happen to them and they don’t take an active role in their finances.

Tori: A lot of people do just passively let their money come and go and they don’t keep up with it, and I want our son to be able to make wise decisions and not just live in the moment, but think ahead of his goals.

[See: 12 Habits to Help You Take Control of Your Credit.]

Anything else you want to add?

Lance: If people are paying off debt, even if it seems hopeless, the beginning’s the hardest part. Things will start going your way the more you pay attention to what’s going on in your financial life.

Tori: A lot of my friends and co-workers ask: “How did you pay it off so quickly?” What I tell them is, we continue to live like poor college students. We didn’t know any different at the time as far as our spending habits and living expenses. We can just continue with our current budget and I think that really helped us stay on track.

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What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments

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How This Couple Bought a Home While Paying Off $80,000 in Student Loans originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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