what to do after paying off student loans
Updated June 09, 2020

10 Things to Do After You’ve Paid Off Your Student Loans

Student Loans

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Congrats!  You’ve paid off your student loans.  And you’ve found yourself with one less $20 or $200 or $2,000 bill to pay every month.  So what should you do with this newfound monthly cashflow?  Here are my thoughts.

1. Celebrate.

Student loan debt is our generation’s weightiest financial burden, and you’ve overcome it!  That is a huge accomplishment, and you should be proud.  So go ahead, treat yourself.  But when you get back, be ready to get down and dirty with the other nine things on this list.

2. Plan Your Budget

If you’re serious about cutting your spending so that you can free up money to pay off debt and invest, you need to stick to a budget.  It’s a non-negotiable.  Budgeting really boils down to giving each dollar you make a “job,” and this course will show you how to do just that.

3. Figure Out Your Net Worth

If you haven’t done this already, figure out your net worth.  Your net worth is what you own (your assets) minus what you owe (your liabilities).  Personal Capital is a great tool to help you automatically update your net worth every month.

4. Put Together an Emergency Fund

Make sure you have an emergency fund of three months’ living expenses.  A riskier alternative to this is to obtain a line of credit from the bank or credit union that you can draw on in case of emergency, but I would only take this second route if you have an emergency fund already or have at least six months’ worth of liquid assets that you could liquidate at any time to cover emergencies.

5. Pay Off Any Other High-Interest Debt.

Your definition of “high-interest” might be different than mine, but for me, “high-interest” is anything that charges me more than a 5% interest rate.  Put as much money as you can toward this kind of debt.  This could involve starting a side hustle (see #9. below) to generate extra income that you can put toward your debt.

6. Invest in the Stock Market.

As I make very clear in this article, I believe the best way to get started investing in the stock market is through low-cost ETFs or a no-cost robo-advisor.

7. Open Up an IRA.

Retirement accounts, such as an IRA, can be a great investment vehicle.

8. Save 10% of Your Gross Income on a Large Purchase, Like a House.

Yes, there’s a back-and-forth on the Internet these days about whether or not it’s wise to buy a house.  Here’s my take: buy a house and rent out rooms to cover your mortgage — or at least help you with it.  We rent out a room for $850/month.  That’s over $10,000/year!

9. Find a Side Hustle.

I say it over and over on this blog: you need to find a way to make money for yourself.  Not for your company.  Not for your boss.  For you.  That is the only way that you will find the financial freedom you crave and the lifestyle you desire.  That’s the entire reason this blog exists: because I wanted to create a business that is able to make me as much money as I am willing to work for.  There’s no salary limit on your own business.

10. Invest in Real Estate.

Most young people’s notion of a landlord is that of a stodgy middle-aged man or woman banging on the door every month to collect rent.  Cross that out of your mind.  I became a landlord in my 20s, and you can too.  Read my article How 20-Something Me Bought a Fourplex in L.A. With Only $15k Out of Pocket.  Oh, and I don’t spend any time banging on my tenants’ door every month to collect rent; I chose great tenants who pay me every month electronically, saving me time and gas!  If you put systems in place in your landlording business, it can be a breeze.

Logan Allec, CPA

Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

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This is a great list! I should be paying off my remaining student loan debt this year and I can’t wait to allocate that money elsewhere (namely savings for retirement). Can’t wait to build that massive wealth ?


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