EMERYVILLE, Calif., Jan. 12, 2018 /PRNewswire/ — Save money or pay off student loans? That’s on a lot of minds as people form financial goals around this time of year. The answer depends on priorities. Those with student loan stress weighing heavily on the mind may want to focus on paying off debt. Those who want to take a vacation this year, save up for a down payment, get together an emergency fund, or save for anything else should focus on saving money. American Financial Benefits Center, a document preparation company that helps individuals apply for and stay enrolled in income-driven repayment plans, focuses on helping its clients reduce student loan payments to free up monthly budgets for other goals.
The process of paying down debt and saving up money are not mutually exclusive. Some of the same principles of saving can be used to pay down debt, including student loans. For some, it may take a change in mindset: focus on the future goals instead of the present desires. That may help in reducing spending in favor of putting the money elsewhere, which is an important step in the process.
“It can be hard to think of saving money when making the monthly student loan payments and keeping up with other bills is difficult,” said Sara Molina, Manager at AFBC. “But with some work, it’s possible to whip a budget into shape to be able to save for a vacation, a house, or possibly even debt payoff. For a lot of people that might mean lowering payments on student loans and other bills.”
The first step in saving more money is seeing how much it is possible to save now. That requires knowing how much money goes where each month. Student loan payments should be on this list, as well as housing, food, utilities, phone bill, car expenses, and all other expenses. Compare those numbers with income — anything left over is available for saving. If that money is usually spent by the end of the month, some good advice to follow may be to set aside that money early. Automating savings can be especially useful.
To increase that number gap between expenses and income, and therefore increase savings, it might be necessary to spend less each month. Anyone can talk to their phone or cable provider and request discounts or cheaper plans. For those whose student loans are the biggest monthly expense, besides