With the resumption of student loan payments, many investors find themselves facing a new financial landscape as the burden of student debt is once again a significant factor in their financial lives after a three-and-a-half-year reprieve. At the end of 2022, the Federal Reserve reported that roughly 43.5 million Americans have student loan debt totaling more than $1.7 trillion. On average, each borrower owes just shy of $38,000.
Just because you now have a “new” monthly bill that may range between $284 and $584 doesn’t mean the fundamentals of financial planning have changed. You need to maintain your emergency fund with a three- to six-month cushion of expenses, and you still need to prioritize making retirement plan contributions. Above all, it’s essential to avoid defaulting on student loan debt, treating it like any other financial obligation. If, over the past three years, you’ve allowed a “lifestyle creep” by diverting what should have been your loan payment into your monthly spending, it’s time to revisit your budget and account for your current spending levels.
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