It can be scary to graduate and find out just how much you owe each month. But those student loans were an investment in your future, and making your monthly student loan payment is good practice for making a monthly mortgage payment. It also helps build your credit. Like a mortgage, student loans are a fixed, predictable expense that you pay back over time (typically 10 years).
When I graduated college with an oh-so marketable creative writing degree and $18,000 worth of student loans (yes, I know it could have been much worse), I hated the idea of having that debt hanging over my head. I hated it so much that I scrimped and overpaid on those loans each month so I could clear out the debt in 3 years.
It felt good at the time – but when I look back, I’m not sure it was the right decision. I saved a little interest, but I may have been better off making the minimum payment and putting my surplus funds to work earning returns in a retirement or investment account. I let my fear of debt drive my decisions instead of working toward a future goal, like saving for a down payment.
Long story short: Student debt doesn’t have to dominate your financial decisions. You can still successfully save money, qualify for loans and make big purchases – even a house! Want proof? See Amy’s story of how she bought a house at 23.