How a cou­ple of Philly mil­len­ni­als paid off $150K in stu­dent loans, early

The Buffalo News - - MONEYSMART - By Erin Arved­lund

PHILADEL­PHIA – When it came to pay­ing for col­lege, Celeste Her­nan­dez Rev­elli wishes she could go back in time – and tell her younger self to avoid all those mis­takes.

Rev­elli is now the direc­tor of fi­nan­cial plan­ning at eMoney Ad­vi­sor in Rad­nor, Pa., and she cre­ates in­ter­ac­tive plans for fi­nan­cial ad­vis­ers to help their clients avoid the er­rors she made.

Rev­elli grew up in Voorhees, N.J., the daugh­ter of a nurse who em­i­grated from the Philip­pines. “My mom ac­tu­ally wanted a ca­reer in fi­nance, but that wasn’t a tra­di­tional ca­reer path for women there,” Rev­elli said. “So she be­came a nurse, and sup­ported me and my brother and put us through col­lege” in the United States.

To pay for col­lege, her mother, a sin­gle par­ent try­ing to do the right thing, went to a lo­cal bank and took out a fed­eral Par­ent Plus loan.

“What we didn’t know was how much it would cost down the road,” said Rev­elli, who grad­u­ated from Loy­ola Uni­ver­sity, a pri­vate Je­suit col­lege in Mary­land, in 2008 with $90,000 in debt.

Look­ing back, Rev­elli, 32, would have done things very dif­fer­ently.

“I would have re­searched all the op­tions for col­lege in­stead of loans – such as grants, schol­ar­ships, and fi­nan­cial aid. Or per­haps I should have gone to a com­mu­nity col­lege for two years. I would have looked much more closely at the costs ahead of time, cal­cu­lated the loan re­pay­ment sched­ule. Now that’s what I do for fi­nan­cial ad­vis­ers” at eMoney Ad­vi­sor, she said.

When she met her hus­band, Tom Rev­elli, he had $60,000 in school loans from the Art In­sti­tute of Philadel­phia.

Nei­ther of their par­ents had col­lege sav­ings plans set up, and so “we had to fig­ure out how to prop­erly ap­ply on our own, and we strug­gled with debt for years af­ter,” she said. “Ob­vi­ously, we would have made bet­ter choices about the schools we chose and the tu­ition we paid if we only knew more.”

In about a decade, the cou­ple have al­most en­tirely paid down their com­bined $150,000 in school loans. Tom, 37, has just a few monthly pay­ments left, and in 2017, he and a part­ner opened Ur­ban Vil­lage brew­ery in Philadel­phia’s North­ern Lib­er­ties.

How did they do it?

“A lot of money that we would nor­mally have been sav­ing went to­ward pay­ing down more debt each month,” Celeste ex­plained. She con­tacted her lenders and ini­tially went on an in­come-based re­pay­ment plan. And af­ter she started work­ing, she put ex­tra money to­ward her loans from a sec­ond job, which she kept un­til 2016.

She worked in fi­nan­cial ser­vices while tend­ing bar on nights and week­ends.

“Now, every dol­lar that comes in to our house­hold has a job,” she said.

She also got a higher-pay­ing full­time job at eMoney Ad­vi­sor.

“We both nearly tripled our in­comes be­tween then and now,” she added.

Pri­or­i­tize, pri­or­i­tize

Sav­ing was key. “We knew we’d have to save to get mar­ried in 2017, and a week later the brew­ery opened,” she said.

“Tom and I just only re­cently started go­ing on trips out of the coun­try to­gether. Be­fore, we would take road trips and other things like that, but I have al­ways wanted to travel more and never re­ally had the means or the time to do so since we pri­or­i­tized work, help­ing out our fam­i­lies, the wed­ding, and the brew­ery.

“For years, Tom and I both worked on week­ends, many times with no days off . ... We missed fam­ily get-to­geth­ers and nights out with friends, but in the end we ... knew that we wanted to be in a bet­ter place fi­nan­cially.”

Set re­al­is­tic sav­ings goal

Sav­ings as a per­cent of in­come may not be re­al­is­tic – at first. In­stead of beat­ing your­self up for not sav­ing, “start with as lit­tle as you want – even $5 a month” to get in the habit, she said.

Another method is to con­sult with coun­sel­ing com­pa­nies, such as Stu­dent Loan Hero and PayForEd, which promotes less bor­row­ing to start out, and bud­get­ing apps such as EveryDol­lar.

“When we bud­get every dol­lar, I started us­ing sealed en­velopes for funds,” Rev­elli said. “For ex­am­ple, one en­ve­lope had stu­dent loans, one ded­i­cated to va­ca­tion, rent, a new car, com­puter. Then I had a sec­ond job, so I did it in my bank ac­count, or dif­fer­ent ac­counts that al­low you to name your goals. I paid off my loans in eight years,” in­stead of the typ­i­cal 10 or 20 years.

Bor­row smart

Con­sider tack­ling the stu­dent loan with a fi­nan­cial ad­viser be­fore you bor­row. Some may of­fer help, while oth­ers may have no ex­pe­ri­ence, but you should at least re­quest a road map.

Some “ad­vis­ers aren’t used to this dis­cus­sion, and, typ­i­cally, they don’t have ex­pe­ri­ence,” said Adam Holt, founder of As­set-Map.com, a soft­ware start-up for fi­nan­cial plan­ners.

“I tell my clients that mort­gag­ing their own re­tire­ment for kids to go to ex­pen­sive schools isn’t a plan,” Holt said.

Know the true costs

While the me­dian tu­ition and fee price for full-time stu­dents at­tend­ing pri­vate non­profit four-year in­sti­tu­tions in 2018 to 2019 to­tals $36,890, 11 per­cent of full-time stu­dents at­tend in­sti­tu­tions with prices be­low $15,000. And an ad­di­tional 20 per­cent at­tend in­sti­tu­tions charg­ing $51,000 or more, ac­cord­ing to the Col­lege Board’s lat­est Trends in Pric­ing.

Alex Bot­tom, co­founder of LoanBuddy.us, says gov­ern­ment loan pro­grams are “com­pli­cated and not cen­tral­ized. So we’re work­ing with CFPs, cer­ti­fied fi­nan­cial plan­ners, to help their clients man­age stu­dent loan debt.”

As for Rev­elli, she stresses some ba­sics. Even a tiny sav­ings ac­count will pay off in the long run, form­ing the habit now and auto-sav­ing, or adding a com­pany match, she said.

“Many mil­len­ni­als think they can­not save any­thing right now, and are fo­cused on debt and liv­ing ex­penses, which is so un­der­stand­able, as I was def­i­nitely not sav­ing any­thing dur­ing my first year or two af­ter col­lege,” she said. “But pay your­self, too (into sav­ings), along with ev­ery­thing else, and even­tu­ally with hard work and per­se­ver­ance, you will end up earn­ing more money, hav­ing less debt, and will have even more to save.”

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