This piece is part of my 2016–2026 archive migration. Some original formatting, content, and external links may be missing, changed, or not be optimized.
Do this instead, and you’ll never stop thanking yourself
When you get your first job, put money aside for an emergency fund instead of putting it all into loan payments.
At my first job out of college, I made a lot of money in commissioned sales. I thought I was doing the smart thing by putting the extra cash into paying off student debt. But when I lost that job, I found myself putting food and gas on my credit card – debt I’m still managing today.”
Source: Money, US News
My Strategy For My First Job After College
After getting my first gig out of college, I thought, should I put this new income on student loans and debt, or should I build an emergency fund?
I chose the latter.
Even though popular advice suggests building a $1,000 emergency fund and putting the rest towards debt, I didn’t stop building my emergency fund until I reached the 1-year mark.
That’s when I felt safe enough to focus on paying off my student loans. Except I didn’t.
Instead, I invested my money – enough to where I could pay off my student loans if I wanted to at any point and time.
Here’s the thing about federal student loans, if you don’t have too many or a sky-high loan balance, it’s okay to take your time paying them off if you’re putting your money into something more lucrative like investing.
Sooner than later, I did have enough invested to pay down my student loan balance – except I didn’t. Instead, I continue investing while paying down my student loan balance. I wouldn’t have done it any other way.
Which Do You Prefer: Zero Debt Or Financial Cushion?
For the record, you can have both! But a little nest egg isn’t so bad to have in the case of an inconvenience (job loss) or an emergency (hospital visit). I rather have a financial cushion when turmoil hits versus zero debt.
You can have zero debt with zero savings, which is utterly unproductive because you’re 100% exposed. You’re unprotected.
An excellent strategy to implement is paying down your debts while saving (emergency fund) and investing. Eventually, if you continue this path long enough, you’ll have savings, investments, and zero debt.
Interest Breakdown
The average federal student loan interest rate is 4.12%.
The average private student loan interest rate is 6–7%.
The average rate of return of the stock market is 10% (winner).
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.