2 things Imani Porter wished she had done while paying off her student loans
- After graduating from college, Imani Porter paid off $25,000 in student loans in 16 months.
- She would have liked to be gentler with herself during the process, because student debt is not “bad debt”.
- This article is part of the “Better, Smarter, Faster” series focusing on effective choices you can make with your money to achieve big life goals.
Imani Porter graduated from college with $25,000 student loan debt. After 16 months of penny-pinching and living in her parents’ house, she was able to pay off her student loans.
Once she started working in the tech industry, she started learning more about investing. Now Porter lives with her boyfriend in Washington, DC, and invests 60% of her salary in the stock market. In addition to investing her own money, she signed up for an employee stock purchase plan, where workers can buy their employer’s stock at a discount.
1. She wishes she hadn’t seen her student loans as a “bad debt”
Part of the reason Porter was motivated to pay off her student loans quickly was because she thought student loans were “bad debt.”
Some experts call debt “good” or “bad.” Good debt is defined as debt that helps you build long-term wealth – such as a student loan, as higher education could increase your employability and earning potential, or a mortgage, as a purchased home could later be sold or passed on to the family. . Good debt tends to carry lower interest rates. Bad debts, on the other hand, incur higher interest rates and do not help build wealth, like credit card or car debt.
Looking back, Porter said she wished she could have been kinder to herself.
“Depending on your industry, student loans are a great way to increase your lifetime earning potential,” she said. “But in my mind, as I was paying it back, I would feel guilty if I didn’t spend that money paying back my loans.”
She said she “rushed and threw away every penny” she had in her loans, but wished she had a different mindset during her student loan repayment journey – a mindset that made room for investing.
2. She would have liked to invest earlier in the stock market
As Porter paid off her student loan debt, she was terrified of investing, thinking it was a “high-risk situation similar to gambling,” she said.
Now that she knew better, she said she wished she had paid “just above the minimum amount” on her loans. She has since learned that due to the low interest rates on her loans, mathematically her money could have served her better in the stock market.
In the S&P 500, she said, year-over-year returns were between 8% and 10%. The S&P 500 is a stock market index made up of the 500 largest publicly traded American companies. You can buy index funds that track the performance of the S&P 500 for easy (long-term) passive income.
Porter added, “I was literally losing money paying off debt that had a 3% to 4% interest rate when I could have invested and made more money in the market.”