So You’ve Paid Off Your Student Loan Debt – Now What?

paid off student loans

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.

1. Celebrate

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:

  1. Celebrating allows you to relax and regroup before attacking your next big financial goal.
  2. 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.

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