Introduction
After President Biden’s forgiveness of up to $20,000 in student loans for millions of Americans this week, I was one of the borrowers eligible to have my student debt erased. However, now I don’t know what to do with the money I will save. What should I do?
What Should I Do With The Remaining Funds?
It really depends on your financial situation, and there is no right answer to this question, but there are a few things you can consider. First and foremost, make sure you allocate the money that was supposed to go towards your monthly student loan payment within your budget. What you don’t want to happen is to find extra money in your bank account being spent on dining out or shopping – at least if you want to use it for other things. So, divide that money and use it for savings, paying off debt, or anything else you find beneficial.
Do I Have Other Debts?
If you have any other debts such as credit cards with high interest rates, now is the time to pay them off. Or if you’ve recently purchased a car or a home, consider making extra payments on your loan. By increasing your payments, you can reduce the overall length of the loan, potentially saving you thousands of dollars in interest.
Investing The Money
If you have a significant amount of savings or have already paid off your debts, I recommend directing some of the money into investing in the financial markets. Stock markets have plummeted by nearly 12% since the beginning of the year, which means it’s a good time to buy assets at low prices; when the market turns into a bull market, you’ll benefit. Historically, bull markets have lasted an average of 6.6 years with an average cumulative return of 339%.
Enjoying The Money
If you want to take a vacation or buy something for yourself, there’s nothing wrong with using this increase in income to get something you or your loved ones desire. Especially if you have been looking for financial success. Just make sure to be practical in your spending and don’t waste the amount on things you’ll regret later.
– Kristen
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