I paid off $40,000 of student loans in 2 years thanks to a maths-based strategy I’d recommend to just about anyone

Paying off student-loan debt is hard, no matter which strategy you use. (The author is not pictured.) Guido Cavallini/Getty Images

In 2012, I followed the debt avalanche method to pay off my $US40,000 in student loans from my MBA program exactly two years and six days after graduation.

I started my MBA program, with an estimated $US90,000 cost of attendance, while making about $US40,000 a year as a low-level financial analyst at a big company. I got a modest bonus and raise along the way, which did help me pay off my loans. But even with the raise, I made under $US50,000 a year for most of my student-loan payoff and under $US60,000 over the entire payoff period.

How did I pay off my loans so fast while earning a modest income and making significant retirement contributions? Even though I was technically using the debt-avalanche strategy, a big part of using it so successfully is that I lived on a tight budget. By keeping a laser focus on my monthly spending, I was able to squeeze out every penny for debt payments.

I also used automated payments and put every single lump income I earned into my loans. But at the core of the strategy was living on a college-student budget in an inexpensive apartment with low bills.

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The debt avalanche starts with the highest-interest loans

The debt avalanche is a twist on the popular debt snowball debt-payoff plan. With a debt snowball, popularised by money guru Dave Ramsey, borrowers order their loans by balance and pay them off from smallest to largest. The debt avalanche uses a more mathematically beneficial approach, ordering loans from highest to lowest by interest rate.

Once your loans are organised on a spreadsheet or other tracker, which can be as simple as a sheet of paper, you can put the plan into action. You pay the minimum payment to every loan and then as much as possible to the one with the highest interest rate. When that one is paid off, you concentrate your money to the next on the list and so on until your debt is paid off.

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The ‘debt snowball’ and ‘debt avalanche’ might sound gimmicky, but they’re both highly effective strategies to get out of credit-card debt

You can use this method on your student loans as I did or with credit cards or any other type of debt. In fact, you can use it to build a complete debt-payoff plan across multiple types of loans in one debt snowball or debt avalanche.

$US40,000 later, my best advice applies to any debt-repayment strategy

A successful debt payoff of any type requires engagement and work. No one ever ignored debts and had them magically pay off themselves. But when your loans are paid off, you have all of that extra cash each month to use any way you choose and don’t have that big payoff looming over your head.

Using a favourite budgeting or personal-finance app, you should check in with your accounts at least weekly. During my debt payoff, and most of my time since graduating from college, I typically look at my finances daily to make sure things are running as expected.

When paying off debt, keeping a close eye on your budget and debt balances keeps you focused and motivated. Using a goal-tracking tool, you can track the payoff and get inspired with each dollar your balance falls.

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If you are able, increase your payments as much as you can during your debt payoff. I started with just the minimum payments split into two monthly payments on payday. Every few months, I would increase the payment amount. By the end, I was paying the minimum payment amount twice a month, effectively doubling the minimum.

When you add that to things like bonuses, tax refunds, and other lump income, it becomes easier to put a realistic payoff debt on your calendar. From there, it’s up to you to stick to the plan.

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