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How One Woman Paid Off $50K In Debt While Renting In America’s Most Expensive City

pay off student loans
How can you rent in San Francisco while paying down tens of thousands in student loan debt? One woman explains the formula she followed to pay off nearly $50,000 in debt in 5 years.

Paying off debt is never an easy task. It’s made arguably harder when you try to manage your student loans while renting in one of the most expensive cities in the U.S. But that’s exactly what Katie Austin managed to do. Austin lives in a rental in San Francisco, CA, and started life after college in 2011 with $100,000 in student loan debt. Her parents agreed to help her by paying off 50% of it. That left her with $50,000 to pay on her own — while managing an extremely high cost of living.

Austin started paying off her student debt six months after she graduated. Today, she’s left with a balance of just $3,600 on her loans. She’s proud of crushing $46,400 worth of debt in five years, and plans to knock out that last few thousand dollars with the same fervor she used to demolish the rest of it. What motivated her to pay off almost $50,000 in debt while living in San Francisco and managing high rent payments at the same time? And more importantly, how did she do it?

Take advantage of any benefit your job provides

Austin began her career working at a San Francisco–based ride-sharing company when it was still a small startup. “My role there was an interesting one that allowed me to begin paying off my debt fairly quickly,” says Austin. “I worked as a city launcher, which meant I moved to a new city every few weeks, and most of my living costs were covered by the company.”

She took advantage of the fact that a perk of her job allowed her to lower her own personal costs and started making headway on her loans from the start. But she says she still wasn’t being intentional about paying down her debt — changing her mindset came later.

Get intentional about your financial goals and make a plan

Austin found herself truly inspired and motivated to knock out tens of thousands of dollars’ worth of student loan debt when she left the ride-share company to take a position with a small FinTech, or financial technology business. “The company really kicked off my education in finance,” says Austin. She also attended her first financial conference, FinCon, and realized that changing her mindset could exponentially accelerate her journey toward financial freedom and success.

“It wasn’t until I went to FinCon and met people 100% focused on crushing their debt that I realized being debt-free was really an option,” explains Austin. “Having people around you who are so driven and focused on financial health is incredibly motivating.” Once she realized intentional action could make a big impact on her financial situation, she made a plan and started actively working toward paying off the rest of her loans.

Utilize a formula for debt freedom: refinance, cut back, and automate

Austin said her first step was to refinance her loans with a lower interest rate. From there, she looked at her expenses to see what she could cut. Her previous experience of moving frequently helped shape her mindset around material possessions, and she continued to live like a minimalist even after settling in San Francisco. “I am a firm believer in spending money on the right thing, rather than all the things,” says Austin. “So I don’t spend money on much stuff.”

That focus on her financial priorities freed up her cash flow. Austin realized putting $1,600 per month toward her student loan payments would allow her to knock out the rest of her balance in 15 months.

“I set an automatic payment to be $1,600 per month, instead of the $537 minimum payment I had been paying. This big automatic payment made me think twice before spending any extra money,” Austin explains. “I knew I would never want to put in the effort to change the payment back!”

Lower your cost of living when (and if) you can

Austin didn’t struggle to pare down to the essentials when it came to her monthly spending. But she still wanted to make bigger changes to create more room in her budget. That proved challenging in a city like San Francisco, where rents are high no matter what neighborhood you live in unless you take extreme measures to find cheaper living space.

“Once I buckled down, my loan payments were costing me more than my rent each month,” she says. “In San Francisco, $1,400 per month for rent got me a room in a duplex with three roommates. Even so, I started looking for less expensive and rent-controlled options.”

Austin went on multiple housing interviews, but any living space renting for less than $1,000 per month came with fierce competition from other hopeful tenants. She also realized she’d have to go from three roommates to six to reduce her rent any further. “I ended up stuck where I was, but even this is reasonably priced for San Francisco,” she explains.

Lessons learned from paying off $50K in debt while renting in San Francisco

Austin says the high cost of living in San Francisco forced her to get aggressive in reducing her budget, which helped her slash the balance on her loans. But it came with a dangerous financial trade-off. “I have no savings right now,” admits Austin. “I’m in the danger zone. If I had gotten unlucky and had any unexpected expenses pop up, I would have been wrecked with credit card debt.” She estimates she’ll be able to start saving again in the next month or so. “If I had to do it again,” Austin says, “I would have planned more wiggle room for myself. Wiggle room is a must.”

She also notes that having supportive people in her corner helped her succeed in paying off thousands of dollars in debt. In addition to the financial conversations she joined and participated in through financial conferences and her work, Austin says her boyfriend extended an offer to help her with her debt through another FinTech company.

“He actually volunteered to buy all of my debt through WeFinance and let me pay him back with zero interest,” says Austin. “I’m very lucky to have people in my life who have the means to help me overcome my debt. I want to tip my hat to him — and encourage others to use their networks if they have them,” she advises. “You don’t have to do it alone.”

Have you made a plan to pay off student loans while renting in a pricey city? Share your tips in the comments!