73% of student loan borrowers plan to spend their debt forgiveness checks on non-essential items. Do this with it instead.

'Travel, dining out and new tech': 73% of student loan borrowers plan to spend their debt forgiveness checks on non-essential items. Do this with it instead.

‘Travel, dining out and new tech’: 73% of student loan borrowers plan to spend their debt forgiveness checks on non-essential items. Do this with it instead.

President Joe Biden’s student loan forgiveness plan keeps running into hurdles as the the Eighth Circuit Court of Appeals enjoined the $400 billion write-off on Monday, its second legal defeat in days.

While the future of student loan forgiveness remains uncertain, many borrowers already have big plans for what they’ll do with the extra wiggle room in their wallets if Biden’s plan goes forward.

In fact, nearly three-quarters of those borrowers say they’re likely to spend all that extra cash on non-essentials, like travel and eating out, according to the results of a recent survey for Intelligent.com, a college information site.

Whether or not Biden’s student loan forgiveness plan goes through, anytime you find yourself suddenly flush, it’s nice to make a little space for some well-earned leisure. But it’s wise to use it to secure your long-term financial future — here’s how.

Don’t miss

  • If you owe $25K+ in student loans, there are ways to pay them off faster

  • Over 65% of Americans don’t shop around for a better car insurance deal — and that could be costing you $500 a month

  • Mitt Romney says a billionaire tax will trigger demand for these two assets — get in now before the super-rich swarm

Pay down credit card debt

With student debt crossed off the list, the next logical step would be to prioritize paying off any other high-interest loans you’re carrying.

With inflation driving up the cost of everyday items, many Americans have been relying more on their credit cards to get by. Total household debt hit $16.51 trillion in the third quarter of 2022, according to the New York Fed — and credit card balances are increasing at their fastest pace in more than 20 years.

But so are interest rates. Credit card rates are now at their highest level on record, as lenders respond to recent Fed rate hikes.

Which means the interest you accrue from carrying a balance on your card is getting even more expensive. Clearing that debt sooner will help you avoid adding even more interest to your pile, and free up room for fun spending down the line.

Beef up your emergency fund

Once you’re back in the black, it’s time to make sure you’re ready the next time a surprise expense comes your way. Putting your spare cash toward some rainy day savings — especially in a volatile economy — can help protect you next time an emergency strikes, like a job loss or unexpected home repair.

Consider opening a high-yield savings account or a money market account. Just make sure it’s easy and convenient to withdraw money in a hurry.

Read more: You’re probably overpaying when you shop online — get this free tool before Black Friday

That said, you’ll also want to practice some self-discipline, since this isn’t an account that you should dip into on a whim.

The general rule of thumb is to keep three to six months’ worth of expenses tucked away in your emergency fund — although personal finance personality Suze Orman recently revised her advice to 12 months in order to prepare for a potential recession.

Invest in the stock market

If all your pressing needs are taken care of, you might consider growing your money by investing it. That’s what 43% of respondents in the Intelligent.com survey plan to do.

Starting to invest early — even with small dollar amounts at a time — means you’ll get the benefit of compound interest, which will maximizing your growth over the long term.

Some investors may be scared off by the shaky stock market or fears of an upcoming recession, but many experts say now’s a good time as any to buy. When you’re investing for the future, this allows you to pick up stocks with long-term value while shares are cheap.

Look to diversify your portfolio with sectors that traditionally perform well throughout economic cycles, like health care, utilities and consumer staples.

What to read next

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Source: https://finance.yahoo.com/news/travel-dining-tech-73-student-140000656.html