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Get rid of your student loans
If You Can, Don’t Rely On Your Parents
Though I highly recommend you find a way to fund your schooling without using loans, if you’re struggling to find a way to do this, loans will help you – as they did for me.
I didn’t rush to pay off my student loans – even when I had the money to do it. My priority was to invest. The return is so much better! If I had paid off my student loans at first chance, I would have less money than I do today because of the compound interest I would’ve sacrificed in return to pay off a student loan.
Now, I’m not encouraging anyone to leave their student loan balances alone. On the contrary, keep a watchful eye over your student loan balance, interest rate, and repayment options. And when your loans are in deferment, take advantage of the zero interest and pay those f*ckers down to the ground – while still investing, of course.
Remember: It is not within your future self’s best interest to liquidate your investments or utilize your emergency fund and throw all your funds at your student loans.
What would you do in the case of an emergency? The money you could have used will be blown away and gone forever to the federal government, which is why I took a different approach.
8 Actions I Implemented To Payoff The PP Loan
1. Stabilize my income
I have spent most of my life as an entrepreneur, which means my income hasn’t always been stable. I found a way to stabilize my income but continue my entrepreneurial endeavors in addition to traditional employment.
2. Invest modestly
Contribute enough to my 401k to get the free money (match) and max out of my ROTH IRA.
3. Build an emergency fund
Before paying off any debts (aside from my last car payment), I built my emergency fund; if I did lose financial stability, I would have a backup plan to help me float.
4. Pay off personal debts
I had minor credit card debt that I utilized to help me float before I obtained my first job out of college. After paying off my car and building my emergency fund, I focused on paying off this debt.
5. Invest Aggressively
Max out ROTH 401k and diversify my other investments.
6. Pay off student loans
When it came to student loans, I always asked myself, what’s the rush?
They’re costing me barely anything with the super low interest. The balances are relatively small, and the money I could use to pay off these loans could be utilized for an investment opportunity that offers more significant returns.
Interestingly enough, as I acquired more resources, I had less drive to pay off my student loans. I really stopped caring, but the one student loan I wanted to eradicate was the one my mother took out in her name because it felt like I owed someone personally, which I hate. I don’t mind owing the bank money every now and then, but owing someone I know is an entirely different feeling.
7. Take financial responsibility
If your parents took out a parent plus loan in their name, be sure you pay it off since it’s your education and not theirs. Take financial responsibility and relinquish that financial burden from your parents. I’m pro-pay-for-your-own-education. You appreciate the experience more and take less for granted.
8. Live below my means
When you’re focused on paying debt, this is not the time to live extravagantly. Put all your focus into eradicating the debt so that you can pay off your debt faster.
The Final Payment
I felt like not making the final payment so that I could put it away in some investments. The only thing I cared about was clearing that loan off my mother’s credit; this is also why I asked her several months prior if she was planning on making any big purchases or using any credit for any upcoming financial applications.
Many of us know that your credit score sometimes drops when you pay off an account. Unfortunately, it’s the game of life; we’re only rewarded when we leave debt accounts open.
A Letter To Parents
Though my mother graciously took out a parent-plus loan in her name to help fund my education, I strongly advise against this.
If I could do it all over again, I would not have taken a loan out with her name but instead found other means.
It takes less pressure off the parents and puts the future of our lives in our hands.
It is our education, after all.
11 Lessons: How Parents Can Set Their Kids Up Financially
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.