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What exactly is a ‘good income”?
If you have a student loan that you are still paying off, a good income is one that allows you to make your loan payments comfortably every month while still leaving a substantial amount to cover all your necessities as well as some luxuries.
While you have earned the right to indulge and spend on a few luxuries, most advice you read will suggest that you put that extra money towards your loan payments, so instead of paying the minimum amount that you agreed on, you pay extra every month.
There are two major benefits to doing this.
- The more you pay back every month, the sooner you will have cleared your debt, leaving you free from any restrictive financial obligations.
- By paying back more every month, not only will you be debt-free earlier but you will also end up paying thousands of dollars less in interest.
The key to accelerating your payments is to break down your income into a two categories:
- The amount you need for absolute essentials such as rent and utilities
- Living expenses that are necessary but not fixed such as groceries, traveling and emergencies
Whatever is left over after these expenses can be used to pay off your student loans and clear your debt ahead of schedule paving the way for unbridled financial freedom.
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