By any means necessary, save for retirement.
Retirement may seem to be a long way off, but when it comes to saving, your most important tool is time. Even if you make much higher retirement contributions later in life, you’ll have a hard time catching up on the compound interest growth that you will miss out on during your earlier career years. That’s why you should commit to contributing to your retirement fund—even if it’s only a small amount—while you make payments against your debt. The simplest place to start is by educating yourself about different approaches to saving for retirement. You can also talk to a financial professional about retirement solutions that align with your debt management and income level.
Set goals for your future while you pay down your debt.
If you cut corners to pay off your loans faster, you could end up facing financial challenges down the road. For example, you may need to make minimum payments on your loans while you build up an emergency fund because that emergency fund can protect you from greater debt or hardship. Purchasing life insurance beyond the coverage you’re offered at work can provide increased protection for your family in case something were to happen to you and they rely on your income. Depending on the amount you owe, it might make sense to prioritize saving for a near-term goal—like buying a home—before your loans are completely paid off. Keep your future goals in sight as you manage your money. Make paying down debt a priority, but don’t make it your only focus.
Simplify and consolidate your finances.
At a fundamental level, your financial plan should include having decent credit and regular income. From there, work on managing the day-to-day of what you earn, what you spend, and what you save for the future. The simplest way to do this is to consolidate categories of debt, income, expenses, and saving. With everything clearly manageable in one place, you can recalibrate as needed. If you’re spending too much to keep your household running, you may need to downsize in order to balance out your savings contributions. You can look into refinancing your student loans through a private lender to save on interest, but bear in mind that if you do so, you’ll no longer be eligible for federal repayment plans.
Setting yourself up for financial success takes time and focus. Don’t hesitate to reach out for guidance from a New York Life financial professional so you understand the value in having financial protection and using the right savings vehicles. The reality of having financial loans and learning how to manage debt should be a part of your retirement savings plan—not a barrier to it.