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Pay Off Your Student Loans Now – It Doesn’t Get Any Easier Later

I recently realized that I’m turning 30 in a few weeks.  As I was reflecting on entering my 30s and the things I’ve achieved, one thing occurred to me – I must be in the minority of recent lawyers that will be entering their 30s with absolutely no student loan debt remaining.

This is sort of interesting when you think about it.  Student loans have become so normalized in our society that we just expect everyone to have them now.  This is especially true for most high income professions that require many years of post-college schooling.  When you include all the time spent accruing debt in grad school, it’s not uncommon for someone to keep their debt around for a decade or more.  A lawyer graduating at age 25 could easily still have their student loan debt kicking around until they’re 35 or older.  I know of dentists that will be paying their student loans well into their 50s!

A common refrain is that you’ll pay more on your student loans sometime in the future.  Maybe early on in your career, the money just isn’t there.  Or you’re getting used to your salary.  Or whatever other excuse you might make as to why you’re dragging out your student loans instead of attacking them hard.

Here’s the thing though.  When you’re in your 20s, paying off your student loan debt (or really any type of debt) is so much easier compared to when you’re in your 30s or later.  Why wait to pay them off when it’ll only get harder later on?

There’s No Expectation That You’re Supposed To Be A Baller

The main thing that holds most people back from crushing their student loan debt fast is the belief that they need to be a baller right out of school.  (FYI, baller = looking and acting successful or otherwise having an indulgent lifestyle).  It’s why most people graduate and immediately upgrade themselves to a luxury apartment when they were once perfectly fine living in a regular apartment.

The thing is, as a 20-something recent grad, there’s absolutely no expectation that you need to look like a big shot.  This is probably the #1 reason that paying off your loans is so much easier in your 20s compared to any other time in your life.

Most people won’t expect a 20-something to live in a fancy place or foot the bill at a restaurant.  When I went out for coffee or met mentors for lunch, all of them naturally footed the bill even though I was making terrific money and probably had fewer expenses then they did.  Heck, even when I went out to eat with my parents, they’d insist on paying even though I was making more money than they were!  But it made sense.  As a mid-20s young professional, no one expected me to be baller.

You don’t need to be flashy. Just stay under the radar like Homer.

This is actually maybe a small benefit with student loans.  They’ve become so normalized in our society that even when you graduate and land your first real job, most people assume you must have student loans, and thus assume a big part of your paycheck is going towards loans.  When you get into your 30s and older, people will begin to assume that you have money to spend.  In your 20s, not so much.  Use that fact to your advantage.

Your Friends Aren’t Baller Yet

This is the second fact that makes paying off your student loans in your 20s so much easier compared to any other time in your life.  Most of your friends won’t be making a ton of money during their 20s.  Sure, there will be some who are crushing it and will want to let you know.  But you’ll also have a ton of friends who live completely modest and normal lifestyles out of necessity.  All you need to do is mimic those people.

A lot of how you spend your money comes down to the people you hang around with.  Even if you’re not trying to keep up with the joneses, the fact is, we all do it without thinking about it.  But the great thing is that in your 20s, you won’t look weird trying to save money by living in a modest apartment and biking to work.  Most people in their 20s already do that because they have to.  As you get older, living modestly starts to look weirder and weirder.

Don’t try to look like the richest person in your friend group.  Just stay in the middle of the pack and use your extra money wisely.

Pay Off Your Student Loans While You’ve Got The Fewest Expenses Of Your Life

There’s no doubt that for most young professionals, your 20s are the time when you’ll probably have the fewest expenses of your life.  You probably won’t have kids or a mortgage yet.  At most, you have rent, some utility bills, and whatever other basic costs of living you have.  Honestly, there probably isn’t any reason that you have to spend a ton of money each year.

It’ll only get harder as you start acquiring all the things grown ups are supposed to have. People in their 30s have to worry about their kids.  People in their 40s and 50s think about their mortgage and the cost of college for their kids.  In contrast, in your 20s, you basically just have to worry about yourself.

With so few expenses early on in your life, why play around with your debt?  Just get rid of it now when you don’t have all that much to worry about.

Pay Off Your Student Loans Now While It’s Still Easy

You’ve got the rest of your life to work and earn money if you want.  Spending just a few years of your life living modestly and crushing your student loans will make the rest of your life so much easier.  You’ll be able to move without as many worries.  Or switch careers without thinking too much about it.  Really, anything you want to do.

Two or three years of investing less won’t destroy you.  You can easily catch up down the line.  But keeping your student loans around adds risk and stress to your life that most people just don’t need.

Under a standard 10-year repayment plan, I’d still be paying my student loans today and all the way into my mid-30s.  I could have played around with my debt and given myself excuses as to why I was keeping it around.

But instead, paying it off right away, during the easiest time in my life to pay off loans, set me up for a much easier financial future.  Make things easier for yourself now while you have fewer things to worry about.  It’ll probably only get more complicated down the line.

28 Comments

  1. I think this is true with basically all financial goals. Just do it. Right now. Because it really doesn’t get easier just because you get older. If you let them, your expenses expand over time to fill all available space and you’ll never feel like you have enough to pay more on loans or save more in your retirement accounts.

    • Exactly true Ellie. We always think we’ll be able to do it tomorrow, but something else will always come up. I think that with student loans especially, its just so much easier to pay them off right away, before all the really big responsibilities come into play.

  2. Hey FP, welcome to your 30s!

    I agree with the underlying concept of your post. Live below your means in your 20s. Fight the urge to be like everyone else and buy bigger houses, cars, etc. So many of my friends moved into big houses during their 20s. It made no sense to me. They didn’t have any kids, yet felt like they needed this huge house for just the two of them. And I know they had (and probably still have) big student loans.

    We paid off my wife’s student loans as quickly as possible. She didn’t have a ton, but I hated having it around and wanted to get rid of them. At the same time, I did focus on paying myself first and saving for my future before I allocated any money towards loans. I think that’s the most important habit to get into once you leave school. Come up with an amount to save each month, and then an amount to allocate to loans. Then automate it. If you never see it in you’re paycheck, you’ll never miss it.

    Thanks for sharing!

    • Automating is definitely key. It’s the only way I’m able to save to the extent I do now. If I was thinking about it after the fact, there’s no way I’d pull it off.

  3. Amen, FP!

    There is pressure these days to keep up with the Joneses; have a nice $20-30k car, buy a house, and posting FB pictures humble-bragging about the new purchase or trip.

    When I tell people I’m attacking debt and paying ~50% of my income towards payments most of the time the first thing they say is their excuse why they cant pay more (too many bills, kids, Christmas, not enough money, etc.).

    I ‘m determined to lift the Student Loan debt weight off my back soon so I can focus on bigger and better things in the future.

    • Will be great when your student loans are gone! And the great thing is that it’s not really all that weird to just live humbly as a young person. I could probably eat Ramen every day and it wouldn’t look that weird. But if I’m doing that when I’m in my 30s or 40s, it’ll look so much weirder. We don’t need to be big shots just yet.

  4. Hey FP!

    I agree with your instinctive hatred of debt. I left the Marine Corps Reserves when a supervisor tried to bully me into going into another unit. Since I still had a year of unobligated time left on a bonus to the Marine Corps, I had to repay the 5k at a 1% interest rate. Stupidly I wanted to pay it off for years, but of course prioritized everything with a higher interest rate. It was still paid off in good time, but emotionally I’d rather have had it gone from the get go.

    • At just 5k, I would have totally bit the bullet and just paid them off quickly. Optimizing finances is fun and all, but none of us can perfectly optimize everything.

      • Oh, if only. I had twice that in 6.8% loans from UCLA. That got the attention. I’m still unsure how, but my wife got hers consolidated into a 3%. One by one the dominos fell. Next task, the mortgage!

  5. Great points. I especially agree with the “fewest expenses” part. Most young professionals in their 20’s don’t have the other expenses you mentioned, like a mortgage, kids, or maybe even health-related expenses. These can really eat into one’s budget.

    • Exactly right. Life can be so cheap when you’re in your 20s, and the great thing is that it doesn’t look weird at all to be living pretty humbly as a 20-something year old. Trying to cut back and live on less when you’re balancing a family, kids, mortgage, and societal pressures is way, way harder.

  6. Exactly right. Like MMM says “pay off your debt like your hair is on fire”.

    Curious if you’ve ever encountered friends who insist on having savings AND debt? When I asked them why they wouldn’t just pay off their debt with their savings so they don’t have to pay interest anymore, they tell me it’s because of “peace of mind”. Mathematically it makes NO SENSE, but I guess, this is an emotional decision for them? Any thoughts on this?

    • I can see where people come from with the peace of mind argument. Once you throw the money into the loans, it’s basically gone forever. And then WHAT IF something happens and you need that money.

      The thing is, I think that a lot of us millennials overestimate how much we need for an emergency fund. When you’re in your 20s, with few responsibilities, you have so many ways to earn enough income to survive that a big emergency fund almost becomes unnecessary. Maybe keep enough to cover rent for a few months. But really, if you’re in your 20s and have some skills, you should 100% be able to either get a new job or make enough money to cover yourself while you get back on your feet. Heck, if I needed to, I could probably survive doing nothing but Airbnb and Postmates for a few months until I could get myself a better paying gig.

    • I think mathematically it depends on the interest rates. I do have savings/investments AND student loans but much of those loans are at interest rates below 2% and some slightly above it. I think I can earn a better return on my money at those rates. If I were just inflating my lifestyle and spending then paying off that debt is a much better use of my money. But if you are disciplined with your money and are frugal then the decision is different. I think many people who pay off debt at an ultra low interest rate do so as an emotional decision. They just want that debt gone. That decision is fine…different people have different mindsets and peace of mind is worth it.

      • The interest rate arbitrage idea makes sense to me, but I always wonder if people underestimate the impact of risk in their analysis. It’s not exactly just, compare interest rate on debt vs. compare rate of return, right? There’s risk of default, cash flow issues, etc. Not exactly sure how you quantify it, but I think there needs to be some thought put into for risk.

        Really though, in my opinion, the vast majority of people who say they aren’t paying down their loans because their investing more are fooling themselves. Most people I think just end up spending the money somewhere else.

        My other thought is that it’s not so hard early on to play catch up. If you’re in your 20s, take 2 years to pay off all your debt, you’re only 2 years behind. Early on, it’s not all that hard to catch up. It’s when the amount invested starts getting really big that it gets much harder to catch up.

        • Absolutely agree that most people end up spending it elsewhere, but I think for many of us personal finance blog addicts, we’re are pretty disciplined with our money. So as for the majority of people, I will say that paying off the loan is the best thing you can do.

          As to your other thought, for someone on the other side of the pay off debt versus invest debate, you can say if you’re in your 20s, if I had taken 2 years to really max out my investments, that with compounding, I might be really ahead now. How about as a compromise…do both! =)

          • Hey, I can’t disagree with doing both! It’s sort of funny, we PF addicts basically argue about which good thing to do. It’s like should I eat broccoli or should I eat brussel sprouts. I think either one will probably get the job done in the end.

  7. You got it, FP! I wish I would have taken this advice. We were in our early 30s before we paid off our student loan debt. We should have taken the opportunity to live like students in our early 20s and paid down the student loans (and we shouldn’t have bought a house and financed cars).

    • Getting the student loan debt gone in your early 30s still isn’t so bad! Oh the house thing is another thing a lot of people do. Instead of paying down the debt first when its easy, people go ahead and get a giant house right away when they don’t need it. That’s basically a recipe for keeping your student loans around for a decade or more.

  8. People don’t realize when they’re buying these baller things and trying to be like these other people that those supposed “ballers” have $20K car loans and only make $26K (true story I heard yesterday.) So many people are trying to live an unrealistic lifestyle in their 20’s. That’s why I love read other PF blogs. I can vent about this stuff to people who understand. 🙂

    • Haha, I know, we’re always venting about this stuff with each other. I used to look at people with all the baller stuff and assume they were loaded. But the interesting thing is, now when I look at people with that stuff, I assume they must be broke. It’s the unassuming people that I assume must have some money in their pocket.

    • 😭 the 20k car loan on a 24k salary reminded me of “Bumblebee.” I deployed with him to Africa when I was in the Marines. We made pennies, but there were zero expenses out there so most of us came back with solid chunks in savings.

      Bumblebee’s one obsession in life was ownership of a Cadillac CTS. Unlike most people’s deployment dreams, Bumblebee came back and made his dream a reality.

      Unfortunately, it was repossessed in short order since he couldn’t make the extortionate payments. But for a time, he lived the baller dream.

  9. Guys, I’m *ahem* like old n stuff (40 ish) and still have student loans! It’s disgusting (and what happens when you go back later to get another degree). At the very least, pay off the first one before you get a second one! Finally getting around to crushing g it now.

    • Totally agree with paying off the first one before getting the second one! Better to not keep accumulating if you you can help it.

      I have a vague dream one day that I might go back to school when/if I become financially independent and snag myself a library science degree, then try to become a law librarian. I don’t think you hear a lot of people talking about financial independence to then go back to school.

      • The best part of FI, from my perspective, is that you don’t have to follow any set of rules! It makes a ton of sense to me…going back to school while managing a FT career is extremely challenging.

        I have a vague dream that I’d like to go back (again) someday and get my law degree! I’m in the pharmaceutical industry and there is a need for health/regulatory legal expertise. I’ve looked into it a bit…but unless it becomes possible to obtain a law degree on-line, probably not something I’ll actually wind up pursuing.

  10. It’s so true that folks look at modest living differently once you’ve reached a certain age and they assume you should care about X or Y.

    • Right! Once you start having kids especially, I bet the pressure to keep up and look a certain way mounts. But when you’re just some 20-year old, no one cares how you live. There’s not a lot of pressure to live large in your 20s except if you want to impress all your friends with how baller you are. Now, if you’re 30 with kids and living modestly, people start thinking you’re very weird.

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