Next Steps After Paying Off Student Loan Debt
Say you're in the enviable position of having paid off your student loans. The weight is gone, and now you suddenly have much more financial freedom than you are used to. So what's next after you've paid off your student loans? Establish an Emergency Fund
First things first: Do you have an emergency fund with approximately three to six months of expenses in it? If not, start one immediately. If your awesome job disappears or a medical emergency hits, this will be the first place to turn to for covering those freak expenses. Don't worry about long-term plans until you get this in place.
It's never to early for Retirement Planning
Once you've established an emergency fund, you can start looking at long-term plans. Generally, it's a good idea to max out your contributions to whatever retirement plans you have in place, such as a Roth IRA or an employer-matched 401k. A psychological trick that you can play on yourself to check excessive spending is to send any raises you get straight to your savings or retirement funds. This way, you can maintain your normal thrifty habits without thinking about the extra cash in your accounts just crying out to be spent.
Next, prioritize your goals. At your current rate of retirement contributions, will you have enough to retire comfortably when you want to? Do a little math to figure out how much you need to meet your goals. If you're in your twenties or early thirties, get started investing as soon as you can. You've all heard about the quiet miracle of compound interest; it is absolutely staggering how much difference there is between the payoff of a dollar invested today, versus a dollar invested a mere ten years from now. It's worth a few years of frugal living in order to maximize those early-adulthood investment dollars.
Saving for Major Purchases
Consider the next milestone opportunity for carrying debt: are you looking to buy property, such as a house or a condo? What's the time frame for this major purchase? What do loan rates look like and how much will you need to put down? Spend some time doing some research, and come up with an estimated monthly contribution that gets you the amount you need by the time you need it.
With these major considerations taken care of, you can settle down to the nitty-gritty of budgeting for everyday expenses and figuring out your spending priorities, free of student loan debt. Folks, what was the first step you took after paying off your student loans?
by http://www.savings.com/
First things first: Do you have an emergency fund with approximately three to six months of expenses in it? If not, start one immediately. If your awesome job disappears or a medical emergency hits, this will be the first place to turn to for covering those freak expenses. Don't worry about long-term plans until you get this in place.
It's never to early for Retirement Planning
Once you've established an emergency fund, you can start looking at long-term plans. Generally, it's a good idea to max out your contributions to whatever retirement plans you have in place, such as a Roth IRA or an employer-matched 401k. A psychological trick that you can play on yourself to check excessive spending is to send any raises you get straight to your savings or retirement funds. This way, you can maintain your normal thrifty habits without thinking about the extra cash in your accounts just crying out to be spent.
Next, prioritize your goals. At your current rate of retirement contributions, will you have enough to retire comfortably when you want to? Do a little math to figure out how much you need to meet your goals. If you're in your twenties or early thirties, get started investing as soon as you can. You've all heard about the quiet miracle of compound interest; it is absolutely staggering how much difference there is between the payoff of a dollar invested today, versus a dollar invested a mere ten years from now. It's worth a few years of frugal living in order to maximize those early-adulthood investment dollars.
Saving for Major Purchases
Consider the next milestone opportunity for carrying debt: are you looking to buy property, such as a house or a condo? What's the time frame for this major purchase? What do loan rates look like and how much will you need to put down? Spend some time doing some research, and come up with an estimated monthly contribution that gets you the amount you need by the time you need it.
With these major considerations taken care of, you can settle down to the nitty-gritty of budgeting for everyday expenses and figuring out your spending priorities, free of student loan debt. Folks, what was the first step you took after paying off your student loans?
by http://www.savings.com/
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