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4 Reasons Why Your 20s Are The Best Time To Pay Off Your Student Loans

Probably the best financial decision I made when I graduated law school in 2013 was to pay off my student loans as fast as I could. I was 26 years old when I graduated law school, and by the time I was 29 years old, I had paid off the entirety of my $87,000 student loan balance. Paying off my student loans as soon as I graduated made a lot of sense to me. I always believed that my twenties were the easiest time I’d ever have in my life to pay off my loans.

A lot of my classmates took a different route. Instead of buckling down and paying off their student loans right away, many of them chose to pay the minimum balance each month, opting instead to drag their loans out over a longer period of time and have more in their pockets. This always struck me as a mistake. Life will only get more complicated later on. I could have made minimum payments, and let my student loans linger like everyone else did. But if I had gone down that path, I’d still be paying them off today.

I knew one thing — the easiest time to pay off your student loans is when you’re young. The great advantage of your twenties is that life can be much simpler. So take advantage of your twenties while you have them! Here are just a few reasons why your twenties might be the easiest time in your life to pay off your student loans.

1. There’s No Expectation That You Have Money To Spend

I think the main thing that stops most people from crushing their student loan debt is falling into the lifestyle inflation trap. A lot of people graduate, then immediately feel the need to upgrade everything in their lives. People who do this are wasting a huge opportunity! When you’re a recent grad just starting out in your career, you’ve got something that you might not have at any other time in your life — low expectations.

No, I don’t mean low expectations, as in being bad at your job. What I mean is that, as a recent grad, there’s absolutely no expectation that you have a lot of money to spend. Most people don’t expect a new grad to live in a fancy apartment, eat at fancy restaurants, or drive an expensive car. You can use those low expectations to your advantage by living modestly, and saving a ton of money.

I’ve always wondered why people feel the need to upgrade their lives so fast. As students, we all probably lived pretty modest lives without much shame. I know when I was in law school, I lived in a shabby house with four roommates. Most of my classmates did the same thing. When I graduated, instead of upgrading my life, I just kept living the same, modest lifestyle. I’d been living the same way all through school.  Why change my lifestyle now?

My advice is to take advantage of those low expectations while you still can. Don’t get the fancy apartment!  Instead, keep living modestly, and use your surplus money to crush your student loan debt. As you get older, the pressure to up your lifestyle will only increase. If you still have your student loans lingering around at that point, it won’t make paying them off any easier.

2. It’s Easier To Live Modestly In Your Twenties

The great thing about paying off your student loans while you’re younger is that there are fewer people that you’ll feel the need to keep up with. As you get older, you might start to feel more pressure to keep up with your peers. If your friend or colleague buys a big house and a fancy car, you might be tempted to do the same. But when you’re in your twenties, most of your peers won’t have the money to live extravagant lifestyles. Sure, there may be some pressure to keep up with your more spendy friends. But practically speaking, the amount of money your friends can spend will be less.

This is why your twenties are the perfect time to live modestly and pay off your loans. Pack your own lunch.  Find roommates to live with. Bike to work. When you’re in your twenties, doing that stuff doesn’t seem strange at all.

3. You Have The Fewest Expenses You’ll Ever Have

If you’re a young professional just starting out in your career, my guess is that you probably have few expenses. Many, if not most, people won’t have kids or a mortgage in their twenties. If you live in a city, you might not even have a car. You might just have rent, utilities, and whatever other basic costs of living you have.

But your expenses will only increase as you get older. Because one day, you’ll likely have to worry about all the stuff that comes with adulthood — kids, mortgage, college costs, ailing parents, etc. But right now, the only thing you probably really have to worry about is yourself. With so few expenses early on in your life, why play around with your debt? Take the time now to pay off your debt quickly, while you don’t have a ton of expenses to worry about.

4. You Have Tons Of Time Left

Spending just a few years living modestly and crushing your student loans will really set you up for financial success in the future. You’ve got the rest of your life to work and earn money, if you want. Keeping your student loans around just adds unnecessary risk and stress to your life that you probably don’t need.

Under a standard 10-year repayment plan, I’d still be paying my student loans today. I could have played around with my debt, and given myself excuses as to why I was keeping it around. But I knew that I’d only be in my twenties once in my life. And there was no way paying off my debt would get any easier later. I encourage you to make things easier for yourself now, while you have fewer things to worry about.

Financial Panther is a lawyer who paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer. If you’re interested in following his journey, you can visit his blog, Financial Panther, where he writes about personal finance, crushing debt, financial independence, and side hustling using the sharing economy. Follow him on Twitter here.

Image via Unsplash

  • Charlene

    Hahaha! I appreciate the reference to the Simpsons. 🙂

  • Mj D’Arco

    as a recent law grad with your same issues i fully agree! it’s much easier to pay up loans now instead of just dragging them on.. when you are in debt, you are not truly free..

  • Marian Daniells

    Agree with this post, but encourage people to invest *and* pay off debt aggressively. Otherwise, you’re missing out on years of compound interest.

    • I totally get what you mean, but my thinking is, take a few years early on and crush that debt. By the time you’re done, you’ll still be really young and with plenty of time to catch up. If you take two or three years early on, crush your debt, then go all out on investing, you can basically catch up pretty fast.

  • Good post Financial Panther. For me the biggest reason for paying off my debt quickly as a younger person was much more about getting rid of the weight of the debt from my shoulders. It’s very true that it’s easier to continue living modestly now than it is to try to cut back after letting lifestyle inflation creep in.

    • Getting the weight off my shoulders was my biggest motivator too. It felt awesome to be done with them and not even be 30 years old yet.

  • Andrea Melissa

    The sad thing is, I’m currently in law school and 87,000 in debt seems like such a small number. 😭😭😭

    I totally agree with the message of this article though! Granted, even if I had zero living expenses it would take me longer than 2.5 years to pay off my debt. But I’m hoping to move up in my firm quickly and my goal is 5 years. Wish me luck!

  • Maz

    If you’re a full time employee of the federal, state, local government or a non-profit you can actually benefit from not paying your student loans off early. Public service loan forgiveness kicks in after 120 months of continuous loan payments so it makes sense to stick to your repayment plan if this is your goal.

    Also, I think it’s very important to figure out what your financial situation and goals are. If you have credit card debt or loans with higher interest rates, those are more important to focus on first imo. If you want to own a house soon or have other pressing financial needs, it also won’t make sense to pay more towards your student loans. Being debt free is awesome, but I think it’s important to think of the bigger picture as well. If you have student loans, focusing on paying on time and what you can afford rather than trying to get rid of it as quickly as possible can be beneficial in many situations.

  • Krista Aoki

    Great reasoning. I am actually quite passionate about paying off my student loans as quickly as possible, and hope to have them finished by 2020!

    http://kristaaoki.com