How Quickly Should I Pay Off Student Loan Debt?
Jonathan is finishing his last semester of college and landed his first job. He's revising his budget, and he has $15,000 in student loans. Jonathan wants to know if he should put some fun money into this budget.
QUESTION: Jonathan in Memphis is finishing his last semester of college and just landed his first job making $33,000 a year. He’s revising his budget, and he has $15,000 in student loans. Jonathan wants to know if he should put some fun money into this budget.
ANSWER: The faster you pay on the debt, the faster it’s gone. It’s up to you of how long you want to be in debt. I am a guy who likes to rip the bandage off. I’d rather get it over with. If I’m you, I’ll have no life. My new goal after getting this job is paying off the student loan and cleaning up the mess.
Then when I don’t have any payments, then I’ll have some money and that’s when the fun comes. That is the definition of gazelle intensity. It is no holds barred and going wide open. We are going to pour everything we’ve got into this before the debt’s gone. It means my broke friends are going to be making fun of me.
But you have to decide. The more you let your foot off the gas, the slower you’ll get out of debt, but the better lifestyle you’ll have while you’re waiting. If it were me, I’d just want to have no life. Keep living like a college student while you clean up the mess.
With the numbers you gave me and with living at home with no rent, you’ll be able to plow through this. I would look at the music equipment you have and just ask yourself what is not replaceable. That would be something like a guitar that has a lot of memories with it; something that you’ll wish you had back one day when you’re wealthy. I would put that in the same category as not selling your wedding ring.
But if it’s an old guitar and you don’t think much of it and you can get another one without a big deal, then dump everything and clean house. Let’s get out of debt. But hold onto the special things.