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The hardest step to take is usually the first one.
The first step involves the most preparation, and by far, the most motivation.
Why should you think about paying off your student loans now, when you’re already making the minimum payments? Isn’t that enough?
You have oh-so-many responsibilities; your car, your apartment, groceries, and treating yourself on the weekends (one thing I could never cut from my budget was my hair appointments- can you blame me, though?).
The key is that you need to prioritize- and priority #1 is you!
Your money is serving you best when it is helping you to reach a goal.
If you need to make payments every month for the next 7, 10, or 15 years, that is money that is not helping you towards your future goals.
Yes, that student loan got you an education, which is a serious investment in yourself.
But taking a long time to pay it all off will cost you more money in interest- which is money that is not going towards things like buying a home, starting a family, or travelling the world someday.
You Could Save a Lot of Money
I’m a bit of a numbers geek myself, but even if you’re not, I think this will get your attention.
Let’s say you pay $200 a month right now on your student loans.
Let’s also say you’re on track to pay it off in 10 years, if you continue to make your minimum payments.
Over the next 10 years, you will have paid $24,000 in loan payments.
$24,000 could be a down payment on your first home, a new car, or a move to a new city.
Now say you have a $15,000 remaining balance on your loan. If you were able to increase your payments to $625 a month, it would be gone in just 2 years.
This means 8 whole years of monthly payments, back in your pocket.
And nearly $10,000 in money (interest) saved.
This is just one example, but I think it speaks for itself. By sacrificing a little bit now, you will have completely opened up your future!
Sure, your car is a priority right now. But if you sell your car and carpool for a little while? That could be just enough money each month to pay off your student loan super fast- no other sacrifices needed!
The earlier you can save for retirement, the better
Life is unpredictable. You might go through many financial ups and downs between now and the day you retire.
If you wait until you’re 35, 40,or even 45 before you start putting money aside to retire, you might be pushing back your retirement date, big time.
More importantly, you are going to save a whole lot less money.
Quick money lesson- compound interest is really powerful. The longer your money has to grow, the more of it you will have.
If you were to start saving $200 a month at age 25 for retirement, you could have $300,000 when you retire.
Guess what? Wait until you’re 35 to start doing this, and you will only have $165,000.
Starting 10 years earlier gets you almost double the amount!
This example is super simple and ignores the fact that your income will likely increase over time (so you can make bigger monthly contributions), as well as a couple of other factors, but you get the picture.
If you have any plans at all to retire early or have a comfortable retirement- you need to start as early as possible.
By eliminating your student loans now, you have lots of time to contribute to your retirement, and dream about that day you leave the working world behind!
It’s Time to Move on!
Okay, now that you’ve sat through my fun with numbers, here’s a different reason you should consider paying off your loans sooner.
Student loans are not cute- they weigh us down, cost us lots of money in interest, and are a constant reminder of the past.
University and college are not necessarily bad times. You made new friends, tons of memories, and learned a whole lot in a few jam-packed years.
But when its time to move on and enter the working world, you will appreciate having a clean slate.
Your time is now best spent focusing on your new career. Who wants to have to turn down opportunities or fun with friends because those monthly payments are still weighing you down?
I say pay them off, and start to put your money towards your new goals in life. I’m really glad I am!
Check out our Ultimate Budget Planner system if you want to get started on your goals today. Its our complete system of over 50 budget printables– the exact ones I use to this day for my budget.
What are you most excited for when you’re debt-free?
And better yet, if you are debt- free now- what do you enjoy most about it?
Let me know in the comments below!
Happy Budgeting,
Emily
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