By: Zack Friedman, Staff Writer for Forbes Magazine and Media
*Image Credit: Forbes*
Zack Friedman is a keynote speaker and Founder & CEO of Make Lemonade, a personal finance comparison site that helps you save money and live a better financial life.
Muneeb Ahmad, a 24-year-old University of Michigan graduate with a computer science engineering degree, repaid $61,400 of student loans in full in 1.5 years.
Zack Friedman: How did you pay off your student loans so quickly? What strategies did you use?
Muneeb Ahmad: All my elder siblings finished their schooling in Pakistan and came to the U.S. for university.
They all racked up loans, but were able to maintain a humble lifestyle and pay them off quickly. Following their path, from the beginning I knew that short-term sacrifices would lead to long-term gains.
Upon graduation, I moved into my brother’s one-bedroom apartment, spent within my means, prioritized the things that were important to me and maintained a strict budget.
Zack Friedman: What financial sacrifices did you make when paying off your student loans?
Muneeb Ahmad: When I moved into my brother’s one-bedroom apartment, I slept on a mattress on the floor in his lounge.
Moreover, working at BMW meant that I got a hefty discount on a car lease and despite the fact that most of my coworkers had a car, I chose not to keep one in order to save a few hundred dollars every month.
I almost always took public transit, and if public transit was not available, I would take Uber Pool as it is half the price compared to the regular Uber.
In the moment it only seems like a $4 difference, but over the months it adds up, and those are the types of recurring expenses one needs to watch out for.
Zack Friedman: What would you have done differently, if anything?
Muneeb Ahmad: I racked up a lot of interest on my loans while I was still in college.
If I could go back, I would have refinanced some of the high interest student loans that I took in my freshman year of college.
Furthermore, I would also try to pay off some of those while still in college, rather than waiting to graduate to start the repayment.
Zack Friedman: Did a budget help you achieve your goal? If so, how?
Muneeb Ahmad: Creating the budgets was probably the easy part, but sticking to it was difficult.
I maintained a separate Excel spreadsheet that I used to keep track of how my money was actually spent in the last month compared to what I had budgeted.
If I came across any category on which I overspent, I would make sure I spent less in that category the following month.
Zack Friedman: What advice would you offer to someone who wants to develop an action plan for student loan repayment?
Muneeb Ahmad: I think the most important thing is to know where you want to be in two years and work backwards from there.
The day I started working, I knew that I wanted to pay off all my loans in two years and so every expense I took on had to fit in that budget.
Knowing what your priorities are really helps.
For example, my health is extremely important to me and even though $100/month on a gym membership is a lot of money, I knew that it was more important to me than going out to bars, restaurants and concerts like most people my age.
Zack Friedman: Do you see student loans as a major burden for your friends? Do you have any perspectives on how to help solve the student loan crisis?
Muneeb Ahmad: Yes, I know people with large amounts of student loans and they are always intimidated with how they’ll repay them.
In my opinion, it’s not about your salary, but about how self-aware and self-disciplined you are.
I think a lot of students lack awareness about how to refinance student loans or how much they will actually end up costing them if they make minimum payments every month.
The biggest step in solving the student loan crises is to educate students on what they don’t know and to educate Millennials on personal finance.
Zack Friedman: What does it feel like to have financial freedom?
Muneeb Ahmad: It’s kind of unbelievable that I am finally debt free.
I have always had an entrepreneurial mindset and continued to invest money in stocks and cryptocurrencies on the side.
Now that I have financial freedom, I can be a little more risky with those investments and plan on investing in other long-term assets.
Zack Friedman: How will you celebrate now that your student loans are repaid?
Muneeb Ahmad: To celebrate, I plan on going to Russia with my family for the 2018 FIFA World Cup.