Cue the orchestra, break out the party balloons, and start the celebration: you finally paid off student loans in their entirety! You’re a debt-slaying ninja for sure.
Now that you’ve checked a massive goal off of your adult “to do” list, you may be wondering what comes next. After all, the last years have been spent focusing on a single result: becoming debt free.
5 next steps after you’ve paid off student loans
It’s natural to feel adrift once a goal is met – but don’t despair. Here’s a list of what you should do once you’ve paid off student loans.
This is the most important thing to do after you finish paying off student debt. You’ve just accomplished something massive and what better time to treat yourself?
The reasons to make sure you take time to celebrate are two-fold:
- Celebrating allows you to relax and regroup before attacking your next big financial goal.
- Rewarding yourself has been proven to improve your self control. That means you’re less likely to get back into debt if you take the time to treat yourself.
Whether it’s going on a vacation, upgrading your home decor, or buying a nice pair of shoes, be sure to take the time to truly savor this success (within reason, of course).
2. Pay off other high-interest debt
If you have other high-interest debt after paying off your student loans, it’s best to use your debt-payoff-ninja momentum to tackle it before focusing your attention on other major goals.
You should especially focus on high-interest debt like credit cards, as these (typically) have much higher interest rates than the ones that come with student loans.
3. Save up an emergency fund
During your debt payoff journey, you were likely contributing every spare penny to paying off student loans; keeping your eyes on the prize is likely how you were able to meet your goal in the first place!
Now that you’ve paid off student loans, it’s time to start thinking about the future. Set up an emergency fund; experts recommend three to nine months of living expenses in the event of true emergencies such as unexpected medical expenses, costly home repairs, or job loss.
This will keep you out of the debt cycle – you don’t want to have to rely on credit cards or personal loans in the event of an emergency, especially after working so diligently to be student loan debt-free.
By funneling your student loan payment money into a savings account each month, you should be able to save up a sizable emergency fund in no time, which will increase both your net worth and peace of mind.
4. Automate retirement contributions
If you’ve been putting retirement contributions on hold to pay off debt (hey, we can’t do it all!) now is the time to play catch-up.
Once you’ve paid off student loans, other debts, and built an emergency fund, consider automating contributions to your 401(k) or IRA. Remember: the more you contribute to your retirement now, the more time your money has to grow!
5. Tackle other goals such as homeownership
Now is the time to begin thinking about other major milestones, such as buying a home. Your debt-to-income ratio is now low thanks to being debt-free, which makes it easier to qualify for loans such as a mortgage.
Of course, homeownership isn’t for everyone. What else did you dream of doing while student loan debt held you back? Now’s the perfect time to plan that wedding, start a family, or travel the world.
Just remember, take a moment to savor and celebrate before diving back in. Your financial goals will always be there waiting for you, and best of all, after paying off so much debt you now have even more money to make your financial dreams come true.
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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|