There cannot be a crisis this week, my schedule is already full
The tassel on Maya’s graduation cap felt like a distant memory, now used as a bookmark for her favorite romance novels. Once that tassel was a symbol of triumph, now overshadowed by the looming bill of her student loan debt, $87,000. That was the number that haunted her spreadsheets, whispered in her sleep, and made her stomach churn every time her meager paycheck landed in her account.
Maya had been a good student, a dedicated “walk on” athlete on the university’s track team, and a firm believer in the power of education. The loans had seemed manageable then, a necessary steppingstone to her dream job in environmental science. But reality had hit hard. Her entry-level position paid decently, but after rent, groceries, and the ever-increasing interest on her loans, there was barely anything left.
Every month, a significant chunk of her income vanished into the black hole of student loan payments. She watched her friends, who had chosen different paths or had more financial support, start saving for down payments on houses, contributing to retirement accounts, and even taking the occasional vacation. Maya felt stuck, a financial anchor dragging her down while everyone else seemed to be sailing ahead.
“It’s like I’m running a marathon with weights strapped to my ankles,” she confided in her older brother, David, during one of their weekly calls. David, a financial analyst, had always been more astute with money.
“You need a plan, Maya,” David said patiently. “Just paying the minimum isn’t going to cut it with that much debt and the accruing interest. You’re essentially treading water.”
David started by helping Maya analyze her loan situation. They looked at the interest rates on each loan, the repayment terms, and explored options like income-driven repayment plans, although Maya’s current income still meant a substantial monthly payment.
“The key is to try and chip away at the principal faster, especially the loans with the highest interest rates,” David advised. “Even an extra $25 or $75 a month can make a difference in the long run.”
Maya started cutting back. She packed her lunch instead of eating out, canceled subscriptions she rarely used, and even picked up a few freelance writing gigs in the evenings. It wasn’t glamorous, but every extra dollar went towards her highest-interest loan.
Months turned into a year. The progress felt slow, frustratingly so at times. She’d see her loan balance decrease by a few hundred dollars, only to watch the interest add a significant portion back the next month. The idea of investing felt like a distant fantasy, something for people who weren’t shackled by debt.
Then, David suggested something that initially made Maya scoff. “What if you started investing, even a tiny amount?”
“Invest? David, I can barely afford my loan payments!”
“Hear me out,” he said. “Think of it as planting a seed. Even a small amount invested consistently, especially in something with long-term growth potential, can start to work for you. It won’t solve your debt problem overnight, but it can build a foundation for your future.”
David explained the concept of compound interest, not just as the enemy in her debt, but as a potential ally in her future wealth. He suggested starting with a low-cost index fund through a brokerage account that allowed for fractional shares. See below for more specific examples at the asterisk*
Hesitantly, Maya started small. With $25 a month – the equivalent of a couple of large takeout coffees – she began investing in a broad market index fund. (Broad Market just means it is 400 – 1000 total stocks included). It felt almost insignificant compared to her massive debt, but David encouraged her to be patient and consistent. Within 6 months she was able to put away $75 a month, the following year $125 a month.
Years passed. Maya diligently continued her debt repayment strategy, focusing on the snowball method after tackling the highest-interest loans. She also religiously contributed her small amount to her investment account each month. There were times when she felt discouraged, when unexpected expenses popped up, and she considered pausing her investments. But David’s steady encouragement and the small but growing balance in her investment account kept her going.
Then, a turning point. Due to a promotion and some diligent budgeting, Maya was finally able to make larger, more significant payments on her remaining student loans. The end felt within reach.
Finally, after eight long years, the day arrived. Maya made the final payment on her last student loan. A wave of relief washed over her, so profound it almost brought her to tears. She was debt-free.
The feeling was exhilarating, but it was also accompanied by a slight sense of disorientation. For so long, her financial life had revolved around paying off that debt. Now, a significant portion of her income was suddenly freed up.
Remembering David’s advice, Maya didn’t splurge on a shopping spree or a lavish vacation. Instead, she significantly increased her monthly investment contributions. The small seed she had planted years ago had started to sprout. The consistent contributions, combined with the power of compounding, meant her investment account was now a respectable sum.
Maya was still playing catch-up compared to her peers who had started investing earlier, but she was finally in the game. She had learned a valuable lesson: even in the face of overwhelming debt, starting small with investments could provide a glimmer of hope and a foundation for future financial security.
Her journey had been a testament to perseverance, discipline, and the understanding that while debt can feel like an insurmountable obstacle, a strategic approach, coupled with the early (even if small) embrace of investing, can pave the way towards a brighter financial future. The weights were finally off her ankles, and Maya was ready to run her own race, on her own terms.
*Here are some ways to start small even fractional shares are provided.
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Fidelity: Offers fractional shares for both individual stocks and ETFs (Exchange Traded Funds), including those that track indexes like the S&P 500. 800 – 343 3548
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Charles Schwab: Provides “Stock Slices” which allows investors to buy fractional shares of stocks within the S&P 500 index. 877 – 519 1403
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Robinhood: Allows fractional share investing in stocks and ETFs, including those that track indexes. robinhood.com
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Vanguard: Allows fractional share investing, but only in its own ETFs, not stocks or non-Vanguard ETFs. 1877 – 662 7447
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SoFi Active Investing: Offers fractional shares for stocks and ETFs.1855 – 456 7634
Any of these companies above will work just fine, the only need is a request to action! You can’t just sleep on it, get moving on paying things down through investments, even small ones.
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