Congratulations! You’ve graduated, are ready to enter the real world, start earning that cash money, and become a fully fledged adult. Oh, and then there’s your student loan. We apologise in advance for bringing this up as it’s a topic we hate thinking about. A little piece of us dies inside every time we see our student loan debt. But, this is a topic that requires a little bit of TLC from yourself. And the question is, should you pay off your student loan debt as soon as possible?

…no. Here are a few points to consider when you’re thinking about paying off your student loan straight away.

Should You Pay Off Your Student Loan As Soon As Possible?

#1 Your Money Is Better Used Elsewhere

Make money your b*tch! Ever heard of return on investment? (ROI) The experts suggest to invest in mutual funds to make your money work harder for you. We suggest to consult your financial advisor (or financial planner) when entering this kind of domain to make sure you find the right mutual fund that suits you. What is a mutual fund we hear you ask? A mutual fund is a pool of funds that has been collected from a group of investors simply for the purpose of investing in a diversified portfolio of securities. They are operated by money managers who invests the funds for you and maintains it on your behalf… they’re actually pretty cool.

#2 You Still Need Money To Live

Your student loan isn’t the only expense you have. You’ll have rent, phone, internet, car, insurance, the list goes on. And you need money to cover all these expenses plus a little extra you can actually save. Paying bills is part of being an adult, and it truely teaches you how to properly manage and budget your money. Yes, we hate paying bills, but paying bills will force you to think more about where your money is going and start budgeting. If you’re not sure where to start, we’ve got a free eBook ‘Budget Like A Pro’ you can use to get started and actually STAY on track! Just click that button below!

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#3 Build Your Emergency Fund First

You never know when life is going to punch you in the face really hard so, you need to be prepared. We suggest to build an emergency fund of 6 months (based on YOUR lifestyle) first. Calculate your expenses out for 6 months plus a little bit extra. Open up a separate account with your bank, and make it untouchable. This way you will always have financial peace of mind no matter what life throws at you. Remember, this ONLY works if you leave it untouched for true emergencies.

#4 Don’t Not Pay Off Your Student Loan

We all know student loans come with interest. The thing is, you don’t just want to be making repayments that only covers your interest expenses on the loan, you also want to be paying off your principal amount. This may mean you have to put in a little bit extra but if you don’t, that loan is never gonna get paid (it’ll magically keep growing). Analyse your loan, how much interest you are paying and calculate a repayment that SUITS your lifestyle so you’re not left with nothing. Also, take advantage if there’s any repayment schemes you can apply for that may reduce the overall amount owing. Take advantage of offers that truly benefit you.

#5 Know Your Priorities

Work out what your priorities are. You might have a priority to be debt free, and that’s perfectly fine! So, if you want to pay off as much as you can go for it. But just ensure you’re considering all other priorities you have at that time. Do you want to start your own business? If so, you’ll need a bit of cash to invest in yourself. If you put all that extra cash into your student loan, you may be denying yourself other opportunities now, that will help build up your success that would have enabled you to pay off a lot more in the future.

And Finally…

You are completely free to disagree with us on this topic, and we welcome that! It all comes down to what your goals are and what kind of lifestyle you want. We’re not saying don’t pay off your student loan (that would be incredibly silly). We’re simply highlighting that when you graduate there are so many opportunities and things you may want to achieve that will take up some of your savings. So it’s important to prioritise making a budget, know where you money is going and how you want to use it.

Do you agree/disagree with us? Let us know in the comments below!

Love Always,

Amanda & Julia xx

2 thoughts on “Should You Pay Off Your Student Loan As Soon As Possible?”

  1. I’m really grateful that we only have to pay off our student debts once we earn a certain amount (I know you guys are from a different part of Australia than me, but I’m assuming it’s the same in all states? Correct me if I’m wrong), so we DO have the option to live a little and save a little first.

    I’ve been working on my emergency fund for the last year, as I USED to have a holiday fund, and then something horrible happened and all my money went there, so now I’m focused on making sure I am safe if something bad happens again. Plus, I want to live a little. I want to buy things for my house and go out to dinner every now and then with the money I have leftover after bills. I know my student loan is there, and I am looking forward to the day I finally pay it all off, but that day can wait just a little bit longer.

    http://www.thesmalladventurer.blogspot.com.au/

    1. Indya! Thanks so much for sharing that with us… a lot of people could learn from hearing an experience where someone relied on their extra funds… despite it having been a holiday fund. We’re so sorry something happened, but so happy you had savings to put toward it. It’s so important to be able to live and enjoy those things like going out to dinner now an again, and treating yourself.

      With student loans, it’s only different in Australia if it’s FEE Help v HECS (I believe). I’m from America originally so my student loans are thru the US Dept. of Ed… and unfortunately, the loan needs to start being paid down after a 3 month grace period DESPITE your earnings. They do have alternative payment methods you can apply for, but they are extremely hard to get… so, once you have been out of school for 3 months your loan payments begin… My monthly payments are around $150-$350 if I can afford more one month than the other… so living is cruical, and so is budgeting.

      Student loans are a nightmare, but a blessing at the same time!

      Julia xx

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