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How to Declare Financial Independence From Your Student Loans

August 03, 2018
student loans

3 min read

Most people go to college or otherwise pursue higher education to improve their career prospects. Or, to earn more money and eventually achieve a level of financial independence in which they can retire and live out their lives as they see fit.

The issue, as many recent college grads are discovering, is that the cost of a college degree can be so astronomically high that it is instead acting as a financial roadblock to their future instead of opening up doors.

Student debt, in effect, becomes a pair of financial handcuffs.

How are you supposed to build a future when, straight out of the gate, you’re buried in student debt?

Financial independence: What is it?

If you’re not familiar with the term “financial independence”, it means exactly what you’d suspect—that you have enough wealth built up that your day-to-day and even month-to-month decisions aren’t dominated by what’s in your bank account.

Reaching financial independence is a long and difficult task, and for most people, is the ultimate achievement. Afterwards, you can typically retire and take life as it comes. Some people take the concept to the extremes, saving more than 50% of their income, and stashing away every last cent.

Read our full breakdown: Meet FIRE: “Extreme Couponing” For Retirement Planning

But if you have significant amounts of student loan debt, becoming financially independent may seem like a Herculean feat.

The state of student loan debt

Depending on how much student debt you’re dealing with, it may, indeed, be Herculean. For context, is a snapshot of the student debt crisis in America:

*Source: The Federal Reserve

With these statistics in mind, how can you get started building your financial future while fighting for breathing room under your student debt?

Listen: How Can I Pay Off My Student Loans?

Your student loan debt game plan

There’s no getting around it—the average college graduate has a big hole to climb out of. But if you’re thinking about how to knock out your debt and simultaneously start saving for your future, you’re already on the right track; And likely well-ahead of many of your peers.

While you may be deep in the woods with no easy path out, you can frame a long-term plan to get out of debt and start building wealth. Here’s a cheat sheet:

More: How to create a budget.

Check out: Who’s hiring in America?

Go deeper: Qualifying for student loan forgiveness programs

More details: Can I Pay Off Student Loans While Saving for Retirement?

There are also plenty of further tips on how to get out of debt, and strategies for tackling your student loan debt.

And of course, don’t forget about life after debt—don’t shortchange yourself by forgoing saving and investing.

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By Sam Becker

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