Importance of Celebrating Paying Off Your Student Loans
Seeing your final student loan payment post might elicit cheers of joy, sighs of relief, or both. Your epic, years-long journey to be free of student loan debt can only be capped off by an equally epic celebration, whether you want to simply treat yourself to dinner, or host a massive payoff party.
But, the huge sense of accomplishment you feel can often lead to overspending once you are finally free from student loan debt, so make sure to acknowledge the investment you’ve made in yourself and celebrate paying off your student loans smartly.
Plan a Celebration, Big or Small
Throwing a student loan payoff party allows you to relax, regroup, and refresh before thinking about your next financial goal. Also, rewarding yourself can help improve your self control , meaning you may be less likely to go back into debt in the future.
Getting rid of student debt is the result of years of hard work and sacrifices. In spite of all of that effort, final payments are often made in quiet apartments without much fanfare. While the idea of paying for a celebration after you’ve just paid off your debt might seem counterintuitive, hosting a loan payoff party doesn’t have to cost much.
You could host a small dinner party, go to a nice restaurant, or even head out to a bar with friends. You can turn the party into a charity event that gives back to a community organization of your choice, or make it a potluck.
A party may also be a great motivator for you to reach your financial goal and cross the finish line to make that last student loan payment. Plus, you can budget to take an amount equal to one student loan payment and use that to pay for the party—after all, it’s money you aren’t used to having to pay out every month anyway.
Plan for Your Future Self
Celebrating with friends and family is a great reward in the short term for when you finally make that last loan payment. And in the long term, it’s also worth celebrating that you are now able to use money that was once going toward loan payments for something else.
Of course, it’s tempting to want to reward yourself right away once you suddenly have more room in your budget. There’s no harm in treating yourself to something that’s been on your wish list for a while, whether it’s a new couch or a few new updated pieces for your wardrobe.
But remember how you got here in the first place—smartly attacking your finances and planning ahead. Celebrate your wins now, but consider what options are available for that money down the line.
Once you take a breath and recover from your in-the-moment celebration, it’s time to take on your next big financial goal. What will you do with that extra money? A lot of people might choose to save for a dream vacation, for a wedding, pay off other debt, or for starting a family.
Have you been able to build up an emergency fund while paying off your student loans? You could put the extra money into savings, or amp up your retirement contributions.
Savor this success and reallocate your money smartly, but in a way that works best for your financial situation. Make a new budget—you now have some flexibility with your money.
Plan to Stay Out of Debt
The freedom and choice that comes with paying off your student loan debt will make it feel like anything is possible. Hopefully those years of paying off loans have made you think responsibly about your money and finances.
The reason it’s so important to celebrate your loan payoff is because you probably do not want to go back into debt by spending irresponsibly afterward. If you throw yourself a party, it’s a way to signal to yourself and others that a chapter of your life is (happily) concluded, and you are making a commitment to keep your finances organized in the future.
Of course, there’s likely no harm in having part of that celebration include a purchase you’ve been putting off. But really, you may want to eventually make a plan for that money so that it doesn’t all end up as extra spending cash.
Remain optimistic about your future and don’t fault yourself if you do slip up, especially right after paying off your loans. After all, you’ve had this huge, heavy payment looming over your budget for so long, it’s very easy to suddenly want to upgrade every part of your lifestyle once that cloud is gone. But don’t let getting rid of your student loan debt mean you suddenly can’t be bothered with other obligations.
Still Planning Your Payoff?
If you are still working on eliminating your student debt, it can feel like you are putting all of your dreams on hold to pay off your loans. Consider throwing yourself mini-celebrations when you reach milestones if you think it will help motivate you to reach the bigger overall goal of your final payoff.
Whether you have just graduated, or you only have a few months left of payments, you can also think about implementing some strategies for paying off student loans.
You may want to consider switching to an Income-Driven Repayment plan, which might lengthen your repayment period, but could help lower monthly payments overall if you need to free up some cash flow. Or consolidating loans from different lenders may be an option that could result in a lower overall interest rate, meaning you might pay less over the life of the loan.
Refinancing your student loans is also a way to simplify your repayment process, since all of your loans can be taken care of with one monthly payment. A private lender, like SoFi, can loan you the money to pay off your student loans , and then you pay back the new, singular loan. One thing you need to know is that refinancing federal loans with a private lender can cause a consumer to lose federal benefits.
Because refinancing might come with a lower interest rate, you could potentially save on overall interest or be able to get more time to pay off your new loan.
The key is to prioritize your loans first—you can’t pay down debt and buy a new car and travel without likely adding more debt into the mix. But once you make that final payment, don’t be surprised if you feel a huge sense of accomplishment worth celebrating.
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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