Is it wiser to pay off your student loans faster if you can avoid it?
If you have had the privilege of graduating from college over the past ten years then am pretty sure you understand how expensive going to college is becoming. The tuition is getting raised every other day. What this means is that students are graduating but with very large debts left to pay. It so happens that at the moment, America’s total credit card debt is actually lower than the accumulated debt from student loans. You can consult the nearest bankruptcy Brampton attorney near you for more insights on the issue.The question we are answering today is; is it wiser to pay off your student loans faster if you can avoid it?
- What about your savings?
Financially, the very first priority that you should have when you have more money than you need is to set up an emergency fund. It is certain that you will save some money in terms of interest charges if you paid of your student loan early but it is not the best choice. You have to realize that anything could happen while paying your debt. You could lose your job or have an emergency. What will happen then if you had focused on clearing your debt? Be safe and have an emergency fund instead.
- Interest rates
The interest rates for student loans can be quite low as compared to some of the other debts that you may have. Older loans actually have lower interest rates. What this means is that you will be able to save more if you focus on first paying off the debts that have the highest interest rates. With that in mind, it certainly does not look like a good idea to pay off your student loans faster. If you can avoid it, pay it as scheduled.
You have just come of college and are fairly new in the corporate world. You are young and so retirement is something that you have not thought about yet. With the money that you have, it is very important to first start saving for your retirement instead of paying off your student loans because the benefits of saving for retirement will be felt for a much longer time than the benefits of paying of your student loans early.
- The future
Always think about what the future has in store for you before making any financial decisions. Do you have a family? Do you have kids? Are you expecting any kids? Do you want to buy a house in future? You will need a good amount of money to sustain yourself and to meet your future obligations. If say you need a home, you must have some money for the down payment. These are the factors you should think about so do not rush to pay off your student loans.