There is a moment of exhilaration when you click the button to pay off your student loans. It doesn’t matter the size or how long it took you to get there. Suddenly a huge burden is lifted from your shoulders. But now, what should you do after finally paying off your student loans?
No matter what the size was of your monthly payment, you now have some extra money each month. We suggest you not spend it frivolously; after all, you have been living without it now for some time. Use this money wisely.
Enjoy the Moment
Before doing anything, enjoy the feeling. You might even want to celebrate by doing something. Take yourself out for a nice meal, buy something you have been holding back on or go on a short trip.
However, don’t go overboard. Think of it as a reward for paying off the student loan, not as an excuse to spend money.
Consider Paying Down Other Debt
If you had student loan debt, you might have other debt such as credit card debt or a personal loan. The interest rate on these can be much higher than a student loan. If you have these, you should want to pay them off as well.
Maybe you have several other debt sources, contact us, and we can help you create a plan to determine which ones to pay first. Having a strategy is considered essential and can make it less overwhelming. Use this “extra” money to pay down this debt.
Build Up Your Emergency Fund
Another money area you could work on is building up an emergency fund. The next time your car needs a repair, or you have a medical emergency, you will have this fund to dip into instead of your monthly budget.
Start small on the amount you want to save, such as $500. As you increase your income, you can increase the amount you want to save into your emergency fund. A great way to do this is to automatically have a small portion of your paycheck into your savings account.
Reassess Your Retirement Contributions
Most companies offer a 401k or something similar. If you were not contributing to this before, now is an excellent time to start. Even a small deduction will add up over time. Plus, many companies have a matching contribution program. The match is like getting free money.
If you were already contributing, you may want to consider increasing your contribution. Again, this is because the company match may increase.
Save For Something Big
If you have already completed some of these financial strategies, you might want to start saving for something big. You could start saving for a house downpayment, an overseas trip, or a car. Put that money you were paying to your student loans towards your personal new exciting goal.
We can help you decide on the best way to save your extra money so that it works for you until it is ready to be used for whatever your goal is. Contact us today to get started!
