Good Morning Everyone.  Welcome to the last post in the Investing Our Money in Our Twenties series.  Today we are discussing the crossroads in our financial lives when we move from being a student to becoming a young working professional.  When we start to earn a regular income should we pay off our student loans or invest our money?

The Benefit of Investing Money Plans

Paying off our student loans has benefits but so does investing our money. Some financial professionals feel that we should always save money, even if we have debt because we will always have some type of debt.  Therefore we should always save money, even if we have debt because if we are waiting to be debt free we will never save any money.

Saving money is a good start, but it’s not enough; we have to also invest our money.  Of course getting used to saving money regularly is a good financial habit; however we also have to invest our money wisely.  Investing Money Plans allow us to regularly save our money in the investment option of our choice through an automatic transfer.  Investing Money Plans are a form of forced savings to ensure that we keep investing our money regularly over the years.


Paying Off Student Loans May Not Be in Your Benefit

Paying off our Student Loans may be a financial priority for many recent graduates.  However, it may not be in your best financial interest to pay off your student loans.  Before we decide to make paying off our loans a financial priority we have to decide if our loans are a Good Debt or a Bad Debt.

Good debts serve a purpose such as funding our education; good debts also have an asset attached to them such as a home.  Student loans and Mortgage Loans are good debts.  Good debts also have preferential lower interest rates.  In general the interest rate on a student loan is very affordable.

Student Loans are Good Debts and therefore we should be in no rush to pay off our Student Loans.  The interest on student loans is tax deductible and therefore it is beneficial for us to pay off our student loans over time.  We should definitely be in a rush to pay off our Bad Debts.

Bad Debts are consumer debts that we accumulate for no particular reason other than indulgence. Bad Debts are used to buy materialistic items such as clothing and vacations etc. If there is no benefit for us, then we are accumulating Bad Debts. Bad Debts also have very high interest rates.  Examples of bad debts are credit cards, finance cards, and department store credit cards.

Bad debts should be given financial priority so that we pay them off first and minimize our interest costs.  I don’t know about you, but in my opinion paying interest on my education is definitely in my benefit; however paying interest on my new wardrobe is not.


Here are Previous Posts in the Investing Our Money in Our Twenties series:

Traditional Savings Accounts Are Boring!

You are only 20. So take some risk!

You Won’t Get Rich Overnight

How Much Money Do I Need To Buy My First Home?

The Right Age To Buy Our First Home


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Tahnya Kristina

Tahnya Kristina

Tahnya is 30 years old and lives in Montreal Quebec. She graduated in 2005 from Concordia University, and she currently works for a major International Financial Institution. She recently launched You can follow her on Twitter @TahnyaP.