The vast majority of Americans leave University with a massive chunk of debt. It probably took you years of hard work and sacrifice to finally achieve that milestone, and now you have that extra money available in your budget. Now you are probably wondering what to do after paying your student loans. Here’s what you should do:
After months or even years of sacrifices, you finally reached that milestone. Now it’s time to celebrate this accomplishment. It is important to treat yourself to keep you motivated, because you deserve it. You can do that in many ways such as ordering a nice dinner, planning a trip somewhere nice, or buying anything you wanted to purchase, but didn’t, because of the student debt. You should be careful not to go overboard.
Pay Other Kinds Of Debt
Now that you paid your student loans, it doesn’t necessarily mean that you are completely debt-free. Do you have other types of loans or credit card debt? These particular types of debt often carry a lot of interest and can be very harmful to your budget. In order to solve the issue, it’s important to write everything down on paper or even use an app and create a plan to pay the remaining debt. You can also consider consolidating it or transferring your main debt into a zero percent APR credit card.
Boost Your Emergency Fund
If you don’t have an emergency fund, consider starting one now, and if you already do, it’s a good idea to boost it with more money. An emergency fund is crucial, especially in today’s economy. You could get in an accident, need to repair something quickly, or even lose your job, you never know. It is recommended that you have at least 6 months and up to 12 months of monthly expenses on a liquid investment such as a high-yield savings account.
Invest in Your Career
Now that you don’t have to pay student loans anymore, you can start investing in extra skills for your career. This could mean learning a new language, marketing, business, applying for a postgraduate degree, or anything else you wish, depending on the career path you want to follow. Thanks to the Internet and online courses, you don’t need to pay a lot of money to learn something new.
Put Money Aside For Other Financial Goals
Creating financial goals is great for motivation and better financial choices. Many people want to own a home, an amazing car, save money for their kid’s college education, or even a dream vacation overseas. It’s worth noting that deciding if the goal is in the future, mid-term, or short-term is vital in order to decide the type of investment you will need to make. If your goal is in the future, you might be able to get a better interest rate.
Think About Retirement
Most young adults don’t even think about retirement, or if they do, they don’t plan for it. Saving money for when you retire is essential, especially if you’re self-employed. You should start by thinking of the amount of money you’ll need to retire and when you plan on doing that. Then you will need to calculate the annual return rate you expect from your investments. You can do that calculation quickly by using a retirement account calculator. There are many ways in which you can save money for retirement, but the most recommended ones are traditional or Roth IRAs.