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A 35-year-old who spent 9 years paying off $81,000 in student loan debt shares her big wake-up call

CNBC Select spoke with Melanie Lockert, author of the book, "Dear Debt," about what jump started her journey to pay off $81,000 in student loans.

Photo courtesy of Melanie Lockert, "Dear Debt"
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The fact that Melanie Lockert, 35, lives in Los Angeles near her family is a testament to how serious she was about paying off her $81,000 in student loan debt.

When Lockert was in her twenties, living in Portland, Oregon, and side hustling almost seven days a week just to get by, she created what she called "a debt-freedom dream list." On it was everything she would do once she paid off her debt: take her mom to Italy, get pet cats and move back home to Los Angeles.

"I never wanted to be in this situation again," says Lockert, author of the book, "Dear Debt," which is based on her long-standing blog of the same name. "I realized I had to stay focused so I could have a better future."

But it wasn't just a list of goals and dreams that inspired Lockert, she also had a wake-up call about just how much her student debt was costing her.

CNBC Select spoke with Lockert about what inspired her to accelerate her plan to pay off all her student loan debt and how she did it.

Lockert's big wake-up call

Lockert had a total of $81,000 in student loans: $23,000 she borrowed for her undergraduate degree from California State University, Long Beach, and $58,000 she borrowed for her graduate degree from New York University. She guesses that she probably paid closer to $100,000 with interest.

While it took her a total of nine years to clear her loans completely, it was during the last four years that Lockert worked hard to speed up her debt payoff.

Throughout her time at NYU, Lockert held multiple part-time jobs, including teaching theater in Harlem after classes, working in the study abroad office during the week and as a receptionist at The School of American Ballet on weekends. During all this time she was making monthly payments on her student loan debt, so when she graduated from NYU in May 2011, she was surprised to see that she still had a hefty $68,000 in principal left to pay off. 

At this point, Lockert had been making payments every month for the last five years, yet there was still a staggering balance remaining. She soon realized the reason: For all those years she was only paying the minimum.

"When I graduated from NYU, I started to do the math and I realized I was paying $11 a day in interest," she says. "That just really woke me up."

Unlike credit cards, where you only accrue interest if you carry a balance, student loans accrue interest daily.

For Lockert, she didn't realize how quickly these loans were ballooning until after graduate school.

"When I was 17/18, I signed up for student loans not knowing how interest worked," she says. "I subscribed to the idea that everyone has student loans, that it's good debt. It wasn't until I graduated from NYU when I was more broke than before that I realized the only way I was going to get out of debt was by paying more than the minimum. It was such a mind shift."

Not only did Lockert then spend the next four years committed to paying off her remaining loans as fast as she could, she even became more wary of accruing other sorts of debt.

"I became so debt-averse that I didn't get my first credit card until I was 28," she says. "I was finally like, 'OK, I should have diversity in my credit.'" Her first card was the Capital One Quicksilver Cash Rewards Credit Card, but now she only carries her Chase Sapphire Preferred® Card for personal or business expenses and makes sure to pay it off in full each month.

How Lockert paid off her student loans

In December 2011, following her graduation from NYU, Lockert moved from New York City to Portland, Oregon. Though she didn't want to leave New York, her partner at the time was in Portland and moving would mean her rent dropping by half.

Lockert began working a series of side hustles via TaskRabbit and Craigslist to get by while she waited to land a full-time job. These included selling bottled water at overnight raves, helping someone plan a 50th birthday party and pet sitting.

"I did any task — big or small — that I could find on TaskRabbit or Craigslist," Lockert says. At the time, she estimates she was making $800 to $1,200 per month. Her rent on a studio apartment she shared with her partner was $400. She didn't have health insurance or any other big expenses to pay for, like a car.

But "side hustling like crazy" began to take a toll on her mental health.

"You deal with the five stages of grief when you pay off debt," Lockert says about her denial at first. "Debt starts affecting your life choices and you don't have any options because debt is making those decisions for you — and that's what I was reckoning with at the time."

In January 2013, she began to chronicle her debt journey and started the blog, Dear Debt (which later became a book). More than anything, she used the blog as a "public accountability tool" to pay off her debt and in it, she talked about the various ways she was paying off her student loans. From there, she started freelance writing on the side.

After a year, she had built up her freelance writing career so much that she was making the same amount of money as she was in her full-time job as an events and community coordinator for a nonprofit paying her a $31,000 salary.

She quit her job to freelance full-time and doubled her income to $60,000 within a year. "That turbocharged my student loan payments," Lockert says. "Suddenly, I was making four-figure payments."

By December 2015, Lockert had paid off the last of her student loan debt.

Bottom line

When it comes to any sort of debt — on credit cards or student loans — make sure you understand exactly how much the interest alone is costing you. For Lockert, it was an expensive wake-up call to see that she was paying interest with every day that went by.

If you are having trouble affording student loan payments during this time, speak with your servicer to see if you qualify for any of the new policies that have been launched amid the coronavirus pandemic. The coronavirus stimulus package, also known as the CARES Act, allows federal student loan borrowers to get a break from their monthly payments through September 2020, and any interest accrued during this suspension is also waived.

Information about the Capital One Quicksilver Cash Rewards Credit Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.