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When Takiia Anderson graduated from Boston College Law School in 1999, she was a single mother with a 2-year-old child, a student loan of almost $ 100,000, and a new government attorney job at $ 34,102 per student. year. She did not like these maths.
"We are talking about 20 years to repay a student loan, and my daughter will go to college in 16 years," recalls Anderson, now 47, Atlanta-based. "I did not want to be in a situation where I helped him pay for school while I was still paying my student loan."
Today, Anderson student debt has long since disappeared. She has close to $ 500,000 in retirement savings and her daughter, Taje Perkins, has completed her third year at Spelman College in Atlanta with no student loans to cover her nearly $ 30,000 a year in tuition fees.
How did she do it? She defined a series of goals and maintained a focus similar to that of a laser who, even though she later became a top employee and rode on a booming stock market, can serve as a lesson to others today.
"Every time I get an increase, a bonus, or a tax refund, I put it in my debt, in my daughter's savings, and then in my retirement," says Anderson.
A DIFFICULT CHOICE: SAVING FOR RETIREMENT OR COLLEGES?
Many financial advisors advise reversing the latter two priorities: "In the same way that airplane ads tell us that parents should put their own oxygen mask on before helping their children, parents must first and foremost save money. retire and get into a good financial situation before saving their children's education, "said Paul R. Ruedi, CEO of Ruedi Wealth Management in Plano, Texas.
Yet more parents, such as Anderson, are giving priority to savings instead of retirement: 56% of them exercise this right, compared to 54% for the latter, according to a recent poll by Sallie Mae, one of the largest student loan lenders in the country.
"Even though the university was not so expensive when I went there in 1989, I know what it is like not to pay those bills, and that 's it. what I wanted for her, "says Anderson, a graduate of Howard University.
S tackle his big debt first
Anderson first tackled his student debt with determination.
"We had no cable, no internet," she recalls, adding that instead, they were watching old or borrowed DVDs or VHS tapes. "I was literally living in overdraft protection, but I paid my bills on time, I drove the same car for 12 years, cooked at home and prepared packed lunches."
As her salary increased and she was promoted to the US Department of Labor in Maryland, Philadelphia and Atlanta, she was injecting more money into her debts.
"Even when I was doing six low numbers, I rented 1,200 apartments – a lot of money for some people, but a lot less than I could afford," she says.
In the end, Anderson was able to repay his $ 100,000 debt in nine years instead of twenty.
ECONOMY AT COLLEGE: $ 135 CHANGE AT $ 12K PER YEAR
Anderson started saving for his daughter's studies when Taje was 3 years old. She started small. Following the advice she's heard on "Oprah", Anderson paid the daily cash expenses and, at the end of each day, threw the change into a drawer. After a year, she had $ 135 to open a savings account for Taje. She then incorporated this into a 529 savings plan and started paying $ 50 a month.
Once Anderson paid off her education loans and credit cards in 2008, she started saving $ 12,000 a year for her daughter's education. By the time Taje started his studies, Anderson had saved $ 56,000 and added another $ 22,000 in his early years.
But to do this, Anderson has stopped contributing to his government pension plan for two years – a decision against which most financial advisors would not want to warn.
"Fortunately, the two years I did not contribute to my retirement plan were during the financial crisis," she says. In 2010, she started contributing to her employer-sponsored pension plan back to the legal limit of $ 16,500 a year at the time, to "catch up," she said. she.
Anderson's maximum contributions have aligned well with the current nine-year bull market, in which the S & P 500 Index has recorded annualized returns of about 10%.
WITHOUT DEBT, MORE CHOICE OF LIFE
Some might consider the story of Anderson as a story of sacrifice, but she thinks that paying off debt aggressively has given her freedom, such as the ability to choose early retirement this year after 20 years of work for the government.
Anderson has made emergency savings of $ 15,000, owns a house and is doing contract legal work to keep making money. She also writes a personal finance blog, "The Frugal Biddy". Her daughter started her last year at university and she will take care of her mother's payments and get a student loan to graduate.
Spending five or ten years of career reducing their debts "may seem to some that they die, but they do not realize how much they earn," Anderson said.
This article was provided to The Associated Press by the NerdWallet Personal Finance website. Kevin Voigt is a writer at NerdWallet. Email: [email protected]. Twitter: @kevinvoigt.
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