How Ending Your Student Loan Debt Could Help You With These 6 Financial Goals

 November 12, 2019
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How Ending Your SL Debt Could Help You Accomplish These 6 Personal Financial Goals

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There are some personal financial goals to prioritize before your education debt, in part, because they could help you end it. You might create a budget to carve out an extra large monthly student loan payment, for example, or establish an emergency fund.

But there are also financial goals that will be much easier to achieve after you’re free of your student loans. Keeping an eye on these six aims can be just as important:

1. Pay off other debt
2. Increase your rate of saving
3. Live your best life
4. Focus on your career or business
5. Be more charitable
6. Borrow at lower interest rates
… And one more reason to end your student loan debt

6 financial goals made easier without student loan debt

Here are some post-student-loan goals that could motivate you to move through repayment even faster. We’ve arranged them based on which newly freed-up resource (cash, time, or space for more credit) they tap into:

With spare cash…

1. Pay off other debt

Without a monthly student loan payment, a slot should open up on that budget. That newly available cash could be redirected to other debt (if you have it).

Hopefully, you have no high-interest debt (such as most credit cards and personal loans) to speak of. Whatever is keeping you in the red, however, now would be the time to catch up. Consider the debt avalanche method if you haven’t already.

2. Increase your rate of saving

Savings money while in debt is possible, but it’s a whole lot easier without it. Take the amount that would have gone to your loan servicer each month and use it to invest in your future.

You could ramp up contributions to your retirement account, including saving beyond the percentage your company matches for a 401(k). You might also increase your recurring deposit to your family’s 529 college savings plan so that your children don’t have to follow in your student-debt footsteps.

3. Live your best life

It’s likely that repaying your student loans forced you to make sacrifices. For example, nearly half of all student loan borrowers reported not taking a vacation while in repayment, according to our “Life After Debt” survey.

While treating yourself could be more of a short-term goal without a long-term benefit, being debt-free should allow you to get closer to the standard of living you want. If travel was important to you before you were mired in debt, you can act on those dreams now that you’re all paid off.

With more time…

4. Focus on your career or business

If you’ve ever logged on to your lender’s website and found that an hour or two had suddenly passed, you know that student loans have a way of stealing your time and sapping your energy.

Although you might have had enough time and energy to start a side hustle while in repayment, being debt-free could push you to increase your income or pursue your passion at work. Your educational debt would no longer be an obstacle to taking on the project that could lead to a raise or finally starting your own business.

5. Be more charitable

It’s hard to give back when you feel like you’re giving everything to your loan servicer. Rather than have the chance to lend a hand in your community, you might have been the one with your hand out.

Without education debt standing in the way, you could seek out opportunities to help others. If you’re not already passionate about a cause, your student loan experience could provide a direction — you might help other borrowers crowdfund their repayment or become a mentor for students or recent graduates.

With better credit…

6. Borrow at lower interest rates

It’s possible that taking out student loans harmed your credit somewhere along the way. Maybe you became delinquent on an account before resuming repayment, for example.

Once you’re debt-free, though, your credit and debt-to-income ratio should reflect your accomplishment — and help you tackle your next big borrowing goal.

Consider homeownership, for example. Sure, buying a home with student loan debt is feasible, but imagine taking on a mortgage after ending your debt. With years of prompt loan payments highlighted on your credit report, your improved credit score should lead to a lower mortgage rate.

Plus, a lower rate, as you know from your student loan repayment, would make it easier and cheaper to pay off your next debt.

One more reason to end your student loan debt

Making long-term financial goals is no fun if your college debt is blocking the path to achieving them.

When you picture your last student loan payment, keep these goals in mind. They’ll be within your grasp as soon as you pay your loan servicer for the final time.

And if that’s not enough motivation, consider our tips to stay on track to the end of your repayment.

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