A lot of students are now graduating college and ready to take on the big leap to “real life.” Thing is, that college degree might have been obtained through a lot of hard work and perhaps a student loan.
One thing you really have to prioritize now, aside from landing a decent job, is to pay off that student loan. Try to make prepayments. Sure, the job market’s hasn’t really recovered yet but it’s better to get out of debt real quick than lose more money in the long run.
Simple math would show that you stand to lose more by opting for longer terms. A $10,000 loan at 5% fixed interest for a 5-year term means that you have to pay $189 a month to pay it off. You spend $1,340 on interest. If you opt to pay $250 a month, in just 44 months you’ve paid it off and you save $340 on interest.
Laws have it that you can make advance payments to get rid of the load quicker. Payments are also tax deductible so that’s another load off your back.
However, make sure that you shore up your emergency funds first before making any big financial moves. If possible continue contributing to your 401(k) and retirement funds as well. You might have to sacrifice a lot of other comforts but doing all of these should safeguard you from the rainiest of days.