Got a New Job and Student Loans?
If you just landed a new job, well done! Whether it’s your first job or your fifth, starting the next chapter of your career journey with a new company and fresh challenges can be an exciting time.
It also can be a good opportunity to review your finances, put together a new budget, and work toward some monetary milestones, like paying down credit cards or student loan debt.
Why now? As your life changes, your needs and expenses likely will change as well. So when you’re starting a new job, it might be a fitting time to take a look at where you stand and where you want to go.
If the job comes with a bump in pay, you may want to consider building an emergency fund, or set up a strategy that gets you out of debt faster and with less expense. Or your employer might offer benefits that can help you work toward both your current and future financial goals.
If you like the idea of a job change giving you a new lease on your financial life, here are some things to consider:
If there’s a boost in pay…
A pay raise is a beautiful thing, but before mentally spending that extra money, it might help to look at how much you’ll actually take home each month, as the bump may put you into a new tax bracket . Always speak with your accountant to review if you’re concerned you might be in a new bracket.
If there is an improvement over the old check, that new money could be used to pay off some old debts. A higher salary won’t change a person’s credit score, but it might improve the debt-to-income ratio lenders often use to help determine whether a borrower is likely to pay back a loan.
If the debt-to-income ratio improves, so could the chances of getting a more competitive interest rate (though of course, this is just one factor lenders consider). It also could help with negotiating for a shorter loan term, which, when combined with a better rate, could save even more money.
You also could put your higher salary to work with a debt management plan, like the Debt Snowball method. By paying all bills on time, and then putting anything extra toward the debt with the highest interest rate, it may be possible to work through those worrisome balances faster and move on to other financial goals.
If you haven’t already, you also may choose to use some of the extra money received each month to build an emergency fund. That pot of “rainy day” money could come in handy over the years for home and car repairs, medical bills, or during a temporary job loss.
This is the money our great-grandmas might have stashed in an old canister in the cupboard—but nowadays it might be more effective to put it into an account that’s easily accessible and earns interest.
If peace of mind is a priority …
You might have taken this new position for the money, but more likely it was a combination of reasons. Maybe you felt more valued by this employer, or you were offered a better chance to step up and show what you can do. Perhaps the change was meant to improve the quality of life for you and your family. It’s hard to put a price on that.
Now that you’ve actually made the move, you may be wondering if you can keep the good vibes going.
Of course, much of that will depend on the work you do and the managers and co-workers you do it with. But you also may be able to help yourself—and your work-life balance—by maximizing all the benefits your new job has to offer and staying on track financially.
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