DON'T CASH OUT RETIREMENT ACCOUNTS: Mihalic withdrew $12,235 from his individual retirement account. But after paying early withdrawal penalties and taxes, he only received a check for $7,953. Mihalic recognizes that it didn't make sense financially, but emotionally it provided more motivation to carry out his plan.
Tapping your retirement account should be an absolute last resort. Mihalic might be able to rebuild his balance because of his high salary, but he still had to pay the steep penalty and is missing the potential compounded earnings of his entire original balance.
Mihalic also stopped contributing to his 401(k), another mistake, especially if your employer is matching your contributions. Always take advantage of an employer match. Don't ever give up free money.
GET A ROOMMATE: If you don't own a home, renting a place with a roommate will help keep housing costs down, says Lauren Lyons Cole, a certified financial planner.
Mihalic rented out two rooms in the three-bedroom house he owns. He hated losing his privacy, but says it was an easy way to bring in more money.
Mihalic has no regrets about the sacrifices he made during the seven months. He's now replenishing his retirement accounts and continues to cut costs. But he's not getting any more roommates. The last one moved out in August.
No longer burdened by student loans, Mihalic plans to use the extra money to start a business one day, or take time off work and travel.
"I've built up a 12 month nest egg," he says. "I can pay my mortgage, fuel, groceries all for the next 12 months."
Such rapid repayment may not be feasible in your situation. But even so, the key bit of advice to take away from Mihalic's story is to put together a plan. Even if you only set aside an extra $10 a week toward your loan, that helps.
Joseph Pisani can be reached at http://twitter.com/josephpisani
- Farm owners fined for refusing to host a...
- Romney casts Arkansas race as way to fight Obama
- US diplomats barred from ice bucket challenge
- A tough label to chew on: What does...
- Twitter tries to block images of James Foley...
- Federal judge: Florida gay-marriage ban...
- Obama vows justice for killers of U.S....
- Israeli airstrike kills 3 senior Hamas leaders
- Farm owners fined for refusing to host... 108
- 'Don't know' if Missouri teen shot with... 26
- Obama vows justice for killers of U.S.... 26
- Police, protesters collide again in... 25
- Texas Gov. Perry assembles high-powered... 23
- Allow student loan bankruptcies,... 17
- Emerging solar plants scorch birds in... 14
- Another American hostage at risk by... 12