It’s not easy being a young professional these days. Graduating into unclear career paths and loads of student debt is enough to make anyone want to rewind to the simpler days of childhood.
As if that’s not enough, there’s an unspoken pressure to have the perfect apartment, wardrobe, and Instagram-worthy life. It doesn’t matter if you earn enough to afford such things, the pressure is on to get them. Because the sooner you do, the sooner you can call yourself an “adult.”
But it’s the actions you take, not the things you own, that signify adulthood. Nothing about having a picture-perfect life is required. In fact, I’d argue that living with less until student debt is paid off is the most adult thing you can do.
Living like you used to in college can lead to some pretty great benefits.
1. You’ll build credit by paying off debt
If having things like a nicer apartment and furniture are high on your list for adulting, then you’re going to need to build credit. After all, it’s not easy to get an apartment without a decent credit score.
If you live like a student for a while, you can apply the money you save to your student loan debt. You can live with roommates, move back in with your parents, or live in a cheaper apartment. Spend a year or more doing this and you’ll be able to build up a credit score that will make you eligible for the apartment you really want.
2. Your “income” will increase when you pay off debt
Living like a student to focus on paying off debt can also help you increase your “income” in the future.
How so? Let’s say you earn $2,000 per month and pay $500 per month for student loans. That’s 25 percent of your income going to debt! But when you pay it off, then you can do whatever you want with that $500 per month (or $6,000 per year).
Paying off debt is a lot like getting a pay raise without even changing a thing about your current job. That’s a lot better than having to change jobs or ask for a raise!
3. You’ll pay less for your debt by paying it off sooner
If you focus on living with less until your debt is paid off, you’re more likely to pay it off sooner. And if you pay your loans off sooner, you’ll pay less for them overall.
Note: If you pay extra on your debt, make sure your student loan servicer processes your payments correctly. As noted by The Washington Post, some servicers don’t automatically apply your extra payments to your balance. Rather, they apply it to next month’s payment due. You can fix this, though. Go to your servicer’s website and make sure the option to send extra payments to the principal balance is checked off. If you can’t find it, give them a call to have them walk you through the process.
4. You’ll get good at distinguishing between your needs and wants
There’s more to cheap living beside the benefit of debt payoff. This type of lifestyle allows you to better distinguish between your needs and wants.
There’s a concept in business called “hire when it hurts.” The idea is to ensure you only hire the kind of people you really need so you don’t waste money on resources you could have done without. Use this concept in your money management and only “spend when it hurts,” and you’ll quickly understand where you need your limited funds to go.
5. Living with less is good practice for mindfulness
If you choose to live with less for as long as possible, you’ll be forced to become more mindful of your spending. In fact, this mindfulness can help you manage your money wisely long after you’ve paid off debt and upgraded your lifestyle.
No matter how much money we earn, we all need to be mindful of it lest we want to spend it on things that don’t really matter to us. Learning mindfulness will make living on a budget easier to do for the rest of your life.
6. Living on a budget will help you appreciate what you have
I’m going to sound like a parent here, even though I’m not one yet: living with less will give you a greater sense of appreciation for what you have.
Over my career, I’ve seen a few fluctuations in income. Because I didn’t practice the mindfulness I mentioned above, I would inevitably spend more freely whenever my income went up. Then I’d make some life change that required me to tighten the budget and suddenly I didn’t feel like I needed the things I thought I needed before.
Instead, I became more appreciative of what I have.
When you live like a student and focus more of your money towards debt payoff, the little bit you spend on yourself will feel a lot more special. Enjoy that appreciation for as long as you can. Because when you let it go like I did, then you could end up wasting money on things you don’t want, need, or appreciate.
7. Less financial obligations = more flexibility for life’s adventures
This is my favorite result of cheap living. The less money you spend on stuff and the less financial obligations you have, the more flexibility you’ll have for life’s adventures.
Want to take a job across the country? It’s a lot easier to pay for that move if you’ve been living like a student and paying off your debt. Get bit by the travel bug? Living with less will make it easier to pack your life away and hit the road. Is your dream house for sale? It’s a lot easier to pay for a mortgage when you’re student loan debt free and used to living on a budget.
Whatever it is that strikes your fancy, the less financial obligations you have, the more flexibility your life will have. If that’s not motivation to live like a student until your debt is paid off, I don’t know what is.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|