2 Experts Weigh In Student Loan payment
1. Assess the rest of your situation.
The situation is different for everyone, so it is very important to assess your unique situation in order to determine how much you must pay to repay your student loan relief. Consider the following:
Does it depend on you financially on others (for example, spouse, children)?
How much are your main accounts? That is, what is your naked budget?
How much do you have in savings?
Do you have health insurance, rent or any other types of insurance?
Do you live in district with a high cost lifestyle?
Is your employment situation stable, that is, stable, as any work can be?
Do you have another debt, such as car loans or outstanding medical bills?
All of the above affects how much you owe and how much you should save.
Dave Ramsey, who helped many people get out of debt, recommends using the Baby Steps method to save, repay debt and create wealth. He recommends starting at $ 1,000 in an emergency fund and focusing solely on paying off debt using the snowball method.
Although the advice is good, it does not take into account the unique situation of each person. As a freelancer, I do not feel comfortable with only $ 1,000 in savings. However, if you have a reliable full-time job that pays well, then maybe Ramsey’s approach makes sense.
In any case, it is important to have some extraordinary savings, since emergencies are inevitable: car accidents, the death of loved ones and sudden illness among many others. But there are other things you might want to save, such as retirement or a trip.
The key to saving is a balanced satisfaction of your financial needs so that you are prepared for emergencies, in order not to set yourself up for debt and not take steps to achieve your financial goals.
If you are particularly focused on repaying your debt as soon as possible, then make sure that you are ready for life to be thrown at you, and also that you are not leaving money on the table.
2. Do a gut check
Because personal finance is inherently personal, it is important that you do a bowel check: how do your student loans make you feel?
Why is bowel checking important? Because you will not achieve any progress in achieving any of your financial goals without motivation. You need to know what inspires you at the end of the day.
For example, do your student loans make you physically sick? Do you have to sleep at night because of them? Are they a constant source of stress for you? In each case, I was there. I learned that one sure way to handle is to use these emotions to fuel debt repayment.
However, if you are locked in a good plan with a good interest rate and do not mind your repayment period, then why not focus on building wealth through savings and investments?
“I’m a big supporter of student loan repayments while building up your assets,” says Shannon L. Maclay, founder of Next-Gen financial corporation. “This has the same effect on your net worth as compared to just paying off debt; nevertheless, you like not only the financial gain from cash to protect you from further debt, but also the psychological gain from growing your bank account. ”
The key is to try to find a balance between paying off debt, saving for short-term and long-term goals and investing. This is a fragile balance that is always personal. All make another plan.
So, if you are wondering how much you should pay for a student loan, use these tips to develop a plan that works for you. Just make sure you have money accumulated for emergencies. To play it safely, you can save 10% of your income, invest another 10% in 401,000 with a match and put the rest to pay off your debt.
No matter what you decide to do, make sure your plan meets your goals and supports your values. Make sure you feel comfortable with your plan and understand that it can change over time, as your life and goals also change.
Related : Student Loan Payment Calculator
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