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

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

President Joe Biden’s student loan forgiveness plan continues to stall as the Eighth Circuit Court of Appeals struck down a $400 billion write-off Monday, its second legal victory in days.

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

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

Whether or not Biden’s student loan forgiveness plan goes through, any time you’re 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.

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Pay off credit card debt

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

With inflation driving up the cost of everyday goods, many Americans are 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 the fastest pace in more than 20 years.

But so are interest rates. Credit card rates are at an all-time high, 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 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 hits you. Putting your spare cash toward some rainy day savings—especially in a fluctuating economy—can help protect you the next time an emergency hits, like losing a job or an unexpected home repair.

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

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That said, you’ll also want to exercise some self-discipline, since this is not an account you should be swimming in.

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

Invest in the stock market

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

If you start investing early – even with small dollar amounts at a time – you’ll reap compound interest, maximizing your long-term growth.

The shaky stock market may scare some investors or fear the coming recession, but many experts say now is as good a time as any to buy. When investing for the future, this allows you to pick up stocks with long-term value and cheap shares.

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

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

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