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.
#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!
#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.
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!
Amanda & Julia xx