The Next Move After Paying Off Student Loans

With nearly 110K of student loans left to be paid, we have at least a few years to consider our next move. When we think about our future, it is fun to ask ourselves, “What would life be like without a monthly $1800 student loan payment?”.

The Next Move After Paying Off Student Loans

I’m convinced most of our success with money is linked back to our self-awareness. Being aware of our risk tolerance, and keeping in mind lessons learned, often helps us to strategize more effectively for our futures.

Only once we understand our debts and where our money is going, are we then able to begin the process of improving.” – From a guest post.

So, what does any of this have to do with our next move after student loans?

Knowing ourselves helps us reverse engineer our lifestyles.

For example, if travel is a high priority, especially before having children, then we should engineer a lifestyle that optimizes travel. Others may optimize for charity or family.

For more on the topic of reverse engineering, check out the podcast link:

Our Next Move After Paying Off Student Loans

Assess our goals and invest vigorously.

That’s our move.

Investing is more than deploying our working capital. Investing allows us to build a foundation yielding dividends for the rest of our lives.

Once all our tax advantaged accounts are maxed out, we plan on buying shares of Vanguard’s Total Stock Market Index. We’re fans of the low-cost and the broad-exposure to the US equities market.

As soon as the cash is rerouted to its new home — index funds — we will get back to living our lives as they were.

Like everyone else, we’re tempted to enhance our lifestyle by spending more. If we ever find ourselves in this type of situation, we’d be sure to follow our own advice regarding curbing lifestyle inflation.

Once we achieve a level of investing we’re happy with, something tells me our travel budget will be the first to go up.

In short, I see our 20’s as a great opportunity to enjoy life without indulging in too many luxuries. As we become older in our 30s and 40s, we’ll explore more of what life has to offer.

What’s your next move after paying off student loans? After paying off a mortgage?

-Matt

12 comments… add one
  • Ryan @ Just Another Dollar Feb 27, 2017, 7:03 am

    After we pay off our $107k in student loans, car loan, and credit cards, we want to buy a house. At our current income, we will be putting over $4,500/month toward debt and don’t want to just waste that once we’re debt free. We will max out retirement savings and then everything else will go towards the house we buy. We plan to retire with a paid-for house and $2-3mil invested in10-12 years. Knowing what’s on the horizon helps me to stay focused and motivated to get the debt cleared up. Great post, Matt! Thanks for sharing.

    Ryan

  • Mrs. Picky Pincher Feb 27, 2017, 9:27 am

    I think that’s a fantastic goal! We’ve paid down $13,000 on our student loans so far this year (hollah!). We won’t be done with them until the beginning of 2018 is my guess. But after that we’re actually going to tackle our mortgage while doing more investing. We want to have as few bills as possible during FIRE, so we made the decision to eliminate our mortgage. If the economy goes belly-up while we’re living off dividend income, at least we won’t have to worry about losing our home.

    • Distilled Dollar Feb 28, 2017, 7:49 am

      $13K already!? Very impressive!

      If all goes well, 2018 might be the last year either of us have student loans! 🙂

  • The Grounded Engineer Feb 27, 2017, 4:23 pm

    We paid off our student loans about 5 months ago. Since paying off the loans, we’ve tried to optimize our budget. Our next goal is to max out our retirement accounts, save for our daughter’s college, and throw the rest of the money at the mortgage!

    • Distilled Dollar Feb 28, 2017, 7:55 am

      Congrats! We can’t wait to see the day where our loans are $0. Glad to see you’ll have plenty of free cash flow now going towards those big goals! Best of luck.

  • Steven Goodwin @ MyFamilyOnABudget Feb 27, 2017, 6:17 pm

    It’s great to be thinking ahead like this and that is a big chunk to be able to deploy in a better way once the loans are gone! Also, I love this part of the article: “In short, I see our 20’s as a great opportunity to enjoy life without indulging in too many luxuries. As we become older in our 30s and 40s, we’ll explore more of what life has to offer.” As long as you don’t let lifestyle creep get in the way of your wealth building after the loans are gone, you will be in good shape!

    For us, after paying off our debt, our big thing was our lifestyle change. The fact that I can stay at home with our girls full time without having to change our lifestyle is an amazing opportunity! After the mortgage is gone, we will hopefully be socking even more into savings and freeing up cash flow to make sure our kids can make it through college without accruing debt (as long as they are pursuing smart goals and have worked for it).

    • Distilled Dollar Feb 28, 2017, 7:57 am

      It is a bit scary to think many people witness lifestyle creep before they realize they’re going to fall short on other goals (college education comes to mind). Glad to see you’re focused on the big picture Steven! Thanks for the comment.

  • Brad - MaximizeYourMoney.com Feb 28, 2017, 11:00 am

    It’s awesome that you are making such good progress on your student loans. $1800/month? Wow. I’m so glad I was able to graduate without any loans. We work with people all the time though that do have six-figures of loans. It’s certainly more common than not. What also seems to be common is just paying the minimums and leaving the loans active well into their middle age years. It’s unfortunate. Hopefully your posts and others in the FI community will help turn the tide.

    • Distilled Dollar Feb 28, 2017, 5:11 pm

      Yep! $1800 is a lot but I’ve heard worse.

      We’re most excited by the fact that we are investing AND paying down more than the minimums. The tax advantages to investing in 401k’s with matches and into our IRA’s was too good to pass up!

  • Jacq Mar 2, 2017, 11:26 pm

    I’m looking forward to a raise, because it nudges up my 401k contribution. Depending on how much of a raise, will depend on how much I then increase my 401k contribution. Extra money this year after my Roth is funded will go in my taxable account. Basically all the extra money towards FI. 🙂
    Bonuses = occasional purchase & a nice dinner, while raises mean more savings. 🙂 I am due for new shoes, so I have earmarked bonus money for that. I buy the same style shoe in black and brown and they are my go to for work and weekends. This means they need to be replaced every 2-3 years and I get promo emails from the company so I can get free shipping plus other deals.

  • MG. CPA Mar 4, 2017, 1:32 pm

    You guys are doing awesome. Putting in the work in your 20s is paying off.

    Our next goal is RE investing, I am looking for some passive income, and hopefully building a RE portfolio I can pass to my kids. Us young guys have the luxury of thinking long-term.

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