How to Balance Student Loans and Early Debt with Long-term Goals

How to Balance Student Loans and Early Debt with Long-term Goals

As of 2021, 45 million Americans owe $1.7 trillion in student loan debt. There’s a good chance you, or your kids, are among them.

It’s a staggering number and shows what a tough spot many young people are in as they start their lives as independent adults.

When they start in such a deep hole, do they ever have a chance of getting ahead?

Yes. It’s not always easy—especially for those with six-digit student loans—but you can find the right balance between managing debt and planning for the future. Just keep these maxims in mind.

Not all debt is bad, and some forms are much better than others. 
Student loans are one thing. Credit cards are another. While college debt tends to be much larger, it can carry a consistent, and often lower, interest rate. Student loans also typically have longer repayment terms and tax-deductible interest. Credit cards, on the other hand, carry much higher rates, especially the ones tailored to young students.

If you’re faced with  deciding what to pay off when, you should ditch the credit card debt first. It will save you money on interest and help you build good credit.

Think of your credit report like a report card for the rest of your life. You should strive to keep it clean and your score high so lenders will know you’re worthy of getting more credit when you need it.

See how long it will take you to pay off your debt with this calculator.

One loan is better than several.
If you’re tired of juggling terms, due dates and multiple lenders with multiple interest rates, consider bringing them together under a single loan. Talk with a financial advisor about refinancing with a personal loan or line of credit or, if you’re a homeowner, a home equity loan. Consolidating can include your credit card debt, which may bring down your average interest rate and could save you money. It can also help improve your credit score by showing that a lender deemed you credit-worthy and that you’re structured enough to pay it down.

Use our debt consolidation calculator to see if this is the right move for you.

Savings are a “must have,” not a “nice to have.”
Anything left over at the end of your pay period isn’t “extra money” to be spent. It’s a savings opportunity and deserves a line item right alongside housing and food in your monthly budget.

You need two buckets for savings: Emergency fund and retirement. The first can go into a normal savings account or anything that’s readily accessible at a moment’s notice. Once you have $10,000 or more, you can look at interest-bearing vehicles like money markets or CDs.

Retirement savings should be carefully planned, looking at all options available. First, max out the 401(k) match from your employer. It’s free money! If they don’t offer one, look at Roth IRAs for the tax advantages.

Make sure both emergency and retirement savings are written into your budget so you don’t miss a single payment.

Use this calculator to find the right balance between saving and paying off debt.

Write a budget and stick to it.
This is the most basic advice, yet it’s the most consistently missing piece. For a young professional with a promising career, there’s no reason to live paycheck to paycheck. Make a budget to account for everything you spend, including necessities and non-essentials. If you have to trim, look at the latter first before making drastic changes in your living situation.

Then do whatever you must to build habits. I’m a big fan of automatic drafts for savings and debt payments so there’s never any question of whether you’ll pay them every month. If your employer can split direct deposit payments between multiple accounts, send as much as you can to your savings and retirement accounts. You’ll never miss it.

See how much you’re spending and build a budget with this calculator.

Live within your means.
This is often the toughest part of any financial conversation, especially with young people. If you play your cards right, you will have plenty of time for an extravagant lifestyle. Now it’s important to build a foundation for lifelong success, and that requires a certain level of frugality.

If you know you have a big purchase coming, save for it rather than putting it on credit. It seems counterintuitive, but the time to take on more debt is when you have the cash to pay it off. Taking on more debt when you have no cash only puts you deeper in the hole.

Set a goal and see what it will take to meet it on our Save Towards a Goal calculator.


Explore more calculators for savings, paying off debt, planning for retirement and more.


Stacy Ferrante is the office leader for Pinnacle’s Oak Court office in Memphis, TN. She can be reached by phone at 901-309-4970 or by email at

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