This essay is from a finalist for the 2020 Student Loan Planner® Scholarship.
I’m not the first to say that loans and finances are confusing, and the recent economic events have led me to feel even more at a loss for how to approach them.
I have read many suggestions online and from, what he would consider, my financially savvy father. I think everyone can agree that saving is abundantly important, yet I still find it difficult how to balance this and contributing to student loans.
Up until before the pandemic started, I thought I had figured out a good system for my finances, contributing large portions of my salary to both savings and loans, but the last several months’ events have made me reconsider if I’m actually doing enough.
I am a physician assistant and in February of 2020 I started a new job- yes, I know, what an interesting time to start.
When March and April hit, I began to see my fellow PAs getting furloughed or their hours cut to part-time, so I began to worry about my own financial situation. My job began to feel like it was a ticking time bomb. Would I have enough savings to carry me through the pandemic?
I had refinanced my loans back in November, so my payments and interest rates weren’t stopping. Here we are, six months later, and still in the depth of pandemic and a worsening economy. The good news is everything going on has made me take a closer look at my finances, which I think is for the better.
I’m very fortunate and grateful to still have my full-time job, but that hasn’t stopped me from changing the way I approach my finances. My first question to look at was whether I was saving enough. I’m a sucker for lists and spreadsheets, so I compiled my monthly costs, down to food, rent, gas, loans, or any other miscellaneous costs I could think of, and made sure I would be comfortable living at least six months without a job.
To be honest I don’t think six months is long enough, as I have seen it take many more months for people with my position to find or start a job, but I figured it was a start. I’ll be honest, I didn’t have enough, which was a scary feeling.
Since then I increased the amount I contribute to my savings each paycheck, knowing that I may just have to make some adjustments to make up for it – eat out less, pay more attention to deals, etc. I haven’t noticed much overall with how I live but I feel like I’m getting to a point of more financial security.
Next up on the agenda was student loans. I had previously been contributing a significant more than my minimum payment each month, as I am trying to be very aggressive with my payoff. Since I refinanced, I have felt pretty confused about what to do and have teetered back and forth on whether I should take that extra money to save versus continuing to contribute to loans.
Unfortunately, I haven’t been able to figure out what the “right” approach is, and I actually have not made any changes on this end. Is it better to sacrifice my seven-year payoff plan or have a bit less saved for a rainy day? It’s honestly something I continue to struggle with and just hope that I’m making the right decision.
I grew up with my dad discussing finances my whole life. He made sure we knew how to be financially independent and engrained in our heads how important it is to save for retirement. Unfortunately, he never had this much student loan debt, so he hasn’t been able to give me the perfect approach on those.
For a while I thought I was doing it all right, save a little, pay off loans fast, but the current economy has really made me rethink my finances. I have realized there is a lot I should change and for that, I have seen one good to come out of a recession.
Fortunately, I haven’t had to make changes out of necessity from losing a job, but that doesn’t mean that it won’t happen in the future and I’m glad I can be at least a little more prepared. So now that the economy has given us some good teaching moments, I think it’s time for the virus to go away and for us to get our economy back.