Debt from student loans and financial freedom go hand-in-hand for most professionals. Maybe a better way to put it is that student loans can be a major obstacle on your path to financial freedom.
Student loans and financial freedom go hand-in-hand.
Whether you have student loan debt from college or graduate school, it’s important to have a plan to pay that debt off.
All debt acts as a roadblock to financial freedom. Student loans are no different.
Of course, the more education you’ve received, the more student loans you likely have.
When considering student loans and financial freedom, look no further than these recent stats provided by the Education Data Initiative:
- The average person with a graduate degree owes up to $102,790 in federal student loan debt.
- 54.0% of all graduate school students have federal student loan debt.
- 55.2% of people with master’s degrees have federal student loan debt.
- 74.8% of people with professional doctorates have federal student loan debt.
- 76.2% of doctors have student loan debt.
This is why it’s especially important for professionals to realize the connection between student loans and financial freedom.
Hold on before you tune out because you don’t have any student loan debt.
The journey towards financial freedom is often a shared journey for many of us.
This data shows that even if you don’t personally have any student loan debt, the odds are you are going to marry someone who does. Or, you’re the parent, or will someday be the parent, of someone who has student loans.
That’s why we all need to learn about student loans and financial freedom. You may soon find yourself in a relationship where you’ll want these student loan strategies.
If nothing else, your prior experiences with student loans can help someone else if you’re just willing to talk about them.
I’ll never forget the day I made my last student loan payment.
My family was heading out to Colorado around Christmas time for some snowboarding and skiing. Don’t worry, I didn’t break a wrist that trip.
My goal that year had been to finish paying off my student loans entirely. However, I can’t take credit for wanting to pay off my loans that year.
That credit goes to my wife. She was the first person who helped me appreciate the interconnection between student loans and financial freedom.
Here’s what happened.
About 11-12 months before that trip to Colorado, my (future) wife and I talked about how we wanted to start our marriage debt-free. We were thinking about buying a home and starting a family. Student loan debt did not fit into this picture.
She was the one who initiated the conversation.
She knew long before I did that talking about money is not taboo.
All these years later, I’m still so grateful that she didn’t shy away from having that important conversation.
Why I wanted to pay off my student loans before I got married.
M wife and I met in the days where I was just starting to tackle my credit card debt after law school. She knew how heavy that debt felt for me.
She saw how focused I was in creating a Budget After Thinking and how important it was for me to stick with it.
My wife also experienced firsthand how much better I felt once I had a plan to pay off my debt. She wasn’t just an observer, either. She was an active participant.
Whether it was budgeting games like the $500 challenge or sharing a hotel room with my friends for a wedding, she was part of my journey.
So, when I had finally paid off all of my credit card debt, it was time to focus all that financial energy on my student loan debt.
This may sound odd, but I was excited to move on to a new challenge. Not that paying off debt is ever easy. But, with my student loans, I knew it was going to be easier than paying off my credit card debt.
That’s because I had already learned and experienced the hardest part of paying off debt with my credit card experience. I had already shifted my money mindset.
By this point, I wanted to be good with money. Not only for myself, but for my future family.
Money mindset is so important to student loans and financial freedom.
Once your money mindset is in the right place, you can make informed and intentional choices about debt. It doesn’t matter if you’re paying off credit cards, student loans, or even HELOC debt.
When you’re honest and dedicated to fostering a healthy money mindset, you’re better able to establish habits like budgeting and saving. That’s how you create fuel for your Later Money goals, like eliminating debt.
Personally, my money mindset was in a much different place by the time I prioritized paying off student loan debt compared to paying off credit card debt.
With my credit card debt, it took waking up one day and feeling ashamed for how irresponsible I was with my spending before I committed to paying it off. I felt down and discouraged.
On the bright side, those negative feelings are what set me on the path to learn and eventually teach personal finance.
With my student loans, I wasn’t starting from a feeling of failure. It was quite the opposite, actually. I had a much better attitude because I had proven to myself that I could pay off debt. I had experienced how good that felt.
So, when my wife and I talked about eliminating my student loan debt before we got married, that was just one final incentive.
My wife would say that I’m a quietly competitive person. When she initiated that talk about paying off my student loans before we got married, it was game on for me.
I didn’t need any extra motivation, but I sure felt extra motivated after that talk.
I prioritized paying off my student loans the rest of that year.
For the next 11-12 months, I made it my priority to eliminate my student loan debt. I had been making the required payments each month for years, but eliminating my student loans always took a back seat to my other goals. Now, it was time to prioritize eliminating my student loans.
Using the Debt Snowball method, I used whatever excess money I had each month to pay off the remaining balance on one loan at a time.
This was before we owned any real estate, but I had begun my side hustle as a law school professor. Whenever I got a paycheck from the law school, I immediately put it towards my student loans.
When I earned a raise that year, I put the whole raise towards my student loans. I did the same thing with irregular earnings, like from commissions, bonuses and even my tax refund.
As our Colorado trip was approaching, I knew that the finish line was in sight. I waited to tell my future wife just how close I was until after I had made the final payment. I’ve always liked surprising her.
I remember telling her I just made the last payment on the day before we left for the trip. She was thrilled, and surprised, at how quickly I accomplished the goal.
I thanked her for motivating me.
The next day in Colorado, I shared the news with my parents that I had pay off my student loans. They were even happier than my wife and I were. All my siblings were there with us. We had a toast and celebrated. It was a night I’ll never forget.
It’s natural to worry about paying back student loan debt.
When I teach personal finance for lawyers, student loan debt is always one of the most important topics. It’s natural to worry about paying back such a large sum of money as you are beginning your career.
Even if I didn’t realize before, I now fully appreciate the relationship between student loans and financial freedom.
My hope is that by thinking and talking even a little bit about your student loans, you won’t have to worry. You’ll have a plan to pay back your loans in the most efficient way possible on your way to financial freedom.
In our initial series on student loans, we’ll learn how to:
- Find your loan balance, set up payments, and other important basics when you’re just getting started.
- Choose a repayment plan that works best for your personal situation.
- Strategize to pay off student loan debt within the context of your overall life goals.
- Navigate the ever-changing landscape of student loans.
Then, you’ll have your own reason to celebrate with your loved ones just like I did in Colorado.
Have you thought about student loans and financial freedom?
Where are you currently with your student loans? Just starting out, nearing completion, or somewhere in the middle?
Are you the partner or parent of someone with student loans? Have you discussed a plan for paying those loans off?
Let us know so we can learn from each other’s experiences in the comments below.
12 responses to “Personal Finance for Lawyers and Professionals”
Well written, Matt! Best wishes to you in future endeavors.
Thank you, Bill!
Excited for the valuable advice!
Thank you, Clarke!
Hey, I think your ideas are very interesting. Thanks for your thoughts. Maybe keeping money journal is a good idea for me too. A fresh outlook and clean slate for starting out the new year makes sense too.
Great attitude, Laurie! Keep me posted on your money journal!
Smart young man! He listens to people! He takes what he hears and learns from it! Great stuff here! Your law students are lucky to have you as a money mentor!
Thank you, Jeff! Glad you enjoyed the first post!
This was a great read — thanks for sharing!
Thank you, Diana!
Matt What are your thoughts on index funds vs individual stocks ?
Great question! I invest in index funds and think that’s the best choice for many of us. We’ll have to revisit this topic in a future post. Stay tuned!