"I am a bit scared of the payments once I graduate": I have $65,000. How can I make it grow while tackling high-interest debt and preparing for student loan payments?

Hi Money Minder,

I have a chunk of money ($65,000) coming my way and I want to be smart about it. I owe about 10K in credit card debt with crazy high interest rates, so that’s the first thing I’ll tackle. But what should I do with the rest? Here’s the deal – I’m a full-time grad student with only one semester left. I’ve been living off student loans because I don’t have an income right now. Once I graduate, I’ll have around 150-160k in student loan debt. About 31K is from undergrad, already consolidated at a low fixed interest rate. The rest is all over the place, but I plan to consolidate after graduation.

I don’t want to dump everything into student debt because that seems a bit extreme. But I’m also freaking out about the payments once I graduate. Stocks, retirement – it’s all Greek to me. I’m clueless about how to make my money grow, other than paying off those pesky high-interest debts. Any advice on what I could do with the leftover cash? I might be dreaming, but I’d love for it to grow somehow…

Thanks for your help, Money Minder!

Congratulations on receiving $65,000! It’s great that you have a plan to tackle your high-interest credit card debt first. Given your financial situation as a full-time grad student with no current income and substantial student loan debt, it’s important to approach this strategically. I would recommend paying off your credit card debt to avoid accruing more interest expenses. As for the remaining amount, consider setting aside an emergency fund for unexpected expenses once you start your job search. Additionally, it might be beneficial to put some of the money towards your higher interest student loans to reduce the overall debt burden after graduation.

Since you mentioned being unfamiliar with stocks and retirement, it might not be the best time to delve into those areas without proper knowledge. However, if you’re interested in having your money grow, you could explore low-risk investment options like high-yield savings accounts or CDs. These options offer a modest return without the volatility associated with the stock market. Ultimately, it’s essential to address immediate financial obligations while keeping long-term goals in mind.

It’s understandable to feel overwhelmed by the prospect of student loan payments post-graduation. Creating a detailed budget plan now and potentially seeking advice from a financial advisor can help in managing the debt effectively. Remember, it’s crucial to make informed decisions regarding your finances to secure a stable financial future. Take small steps towards financial literacy to better navigate your financial journey.

Best of luck with your remaining semester and future job search. If you need further guidance on financial matters, feel free to reach out.