Should Millennials Pay Off Student Loan Debt or Invest for Retirement?
Millennials are one of the most misunderstood generations of our time. They are often categorized as entitled and lazy. Every generation has a little of that happening. Other than the normal percentages, this generation is completely misunderstood.
Survey after survey shows this generation as the most financially responsible generation with the highest amount of savings. Yes, you read right!
Having said that, they are saddled with student loan debt. They are being given a lot of conflicting advice on what steps they should take. Here are my thoughts:
Determine the extra amount of money (in addition to your current payments) you can put towards student loan debt and savings
Take 75% of that amount and run the numbers to see when you pay off the debt. If it is not to your liking, figure out how much more you can put back to get to a reasonable pay-off day. This might take an extra part-time job. Remember two important things - remember the goal and remember this is just a season!!
The 25% which is left - FIRST, build your emergency fund. Without an emergency fund, you risk going into debt because life happens and most are not prepared for it
After you have a healthy emergency fund account, then invest into your 401 K plan. If there is an employer match, try to at least save to where you are getting all of the match. There is no need to turn away free money.
Most importantly, let go of the emotional baggage that goes along with student loan debt. Live by my old saying - it is what it is now do something about it by taking charge of your earning power and your spending choices.
Everyone has advice from the traditional Pop Culture Textbook. To be successful you have to get out of the box and leave the text book for college.