By Kyle Richert, Financial Advisor
For most nurses, especially those just beginning their careers, debt is the biggest concern. Between student loans, car payments, and credit cards, it can be overwhelming. Rightfully so! Short-term debt can be a destructive force and can greatly affect your wealth building results. It’s also difficult to know where to begin. “Should I save or pay off debt?” “Should I pay down my loans as quickly as possible? Or take my time?” Things can get confusing. However, knowing when to handle debt is equally as important as not having it.
Here are 4 things every nurse should do before paying extra on their student loans.
1. Protect Your Today’s
Most people insure their cell phone, their car, and their home or condo. But they often overlook insuring their most 
important asset – their ability to earn an income. Your income is the primary source of funding for a lifetime of things, from basic necessities to the hopes and dreams you have for yourself and those you love. Without a paycheck, how long could you pay your rent and utilities, buy groceries, make student loan payments, etc.? In all likelihood, your life would be thrown significantly off course.
Risks + threats that could devastate a nurse financially:
- lawsuits exposing your assets and future earnings
- a sickness or injury that renders someone unable to work
- premature death of a partner and/or spouse
To properly protect yourself and against life’s unknowns, make sure you’re carrying the maximum amounts of protection of: umbrella insurance, disability insurance, and life insurance.
Before you set your sights on moving forward, first make sure you can never go backwards.
2. Become a World-Class Saver
Saving the right amount of money, and having access to that money, will give you the freedom to breath. It will give you the flexibility to avoid the bad and take advantage of the good.
If all your extra money goes to the student loan company, where can you turn if you need cash for an unexpected medical bill, to pay the deductible for a car accident, or to repair a furnace that breaks in the middle of winter? Odds are those expenses end up on a credit card. You’d also have to pass up on opportunities such as putting a down payment on a home or starting a business. The list goes on.
Instead, make it your goal to save 15-20% of your income before taxes. This won’t happen overnight. But you can take steps today to become a better saver.
Here are some tips to find extra cash to put away.
- Pay raises
- Tax refunds
- Overtime and/or holiday pay
3. Prepare for Life Events
Becoming a world-class saver is a great! However, the money you save must be in a place where you can access it.
The biggest mistake nurses make is over relying on their 401(k). While retirements accounts are great for 30-40 years from now, they’re not so useful if you need that money before then. In fact, money inside of a retirement plan cannot be accessed without taxes and penalties until the age of 59 ½. Rather than putting 100% of your annual savings into a 401(k), consider reducing your 401(k) contributions to the company match and saving the difference in liquid places.
Here’s an example.
A nurse making $50,000 should save $10,000 to become a world-class saver. That $10,000 should be equally divided between: cash savings, taxable investments, and a retirement account.
It’s about balance.
4. Pay Off High Interest Debt First
You’ve protected your today’s, become a world-class saver, and prepared for unexpected life events. You’re ready to attack debt! But where should you begin?
High interest non-deductible debt should be the first to go. It’s nearly impossible to make progress with investments when they’re paddling upstream against 15-30% interest rates on credit cards and personal loans. Pay off cards with the highest interest rates first. As balances are paid, reroute the money that was going to the credit card company to somewhere productive on your balance sheet. That might mean you boost your emergency fund or start saving more into longer term strategies. But regardless of where choose to save it, the goal is not to spend it!
In Conclusion
That’s it! You are now ready to pay extra towards your student loans!
Doing things in the right order creates a solid foundation on which to build your financial future. You can’t let extra payments get in the way of protecting your income, saving for your future, preparing for what life has in store, or eliminating credit card debt.
Before worrying about taking care of the student loan company, be sure to take care of yourself.
Kyle Richert is a financial advisor on the Wealth Innovations Team at Lifetime Financial Growth, LLC. Visit him on Facebook.
By providing this material, we are not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. 2018-53621 Exp 02/20
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Lifetime Financial Growth is not an affiliate or subsidiary of PAS or Guardian. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services, and make no representation as to the completeness, suitability, or quality thereof.