Should your money be looking toward the future or paying back the past?

After graduating, many students like you accumulate impressive sums of student loan debt. According to the U.S. Treasury Department, student loan debt rose to $800 billion in November 2014. If you have recently graduated, you may face the predicament of paying back loans or investing in your future.

Learning Markets outlined a number of benefits that investing your money offers, such as compound interest and diversification. After graduating with debt, knowing where to put your hard-earned dollars can be challenging when investment options offer so many advantages for financial stability as well as your future. Determine your needs, goals and financial plans to decide how to most responsibly distribute your money.

Advantages of investing early in your life
Investopedia noted starting to invest earlier provides you with the unique benefit of time. Compounding allows the money you invest to grow over time. You are able to generate more wealth with a smaller amount of money if you make moves early in life due to retirement accounts' ability to compound interest. 

In addition, as a younger investor you have more wiggle room when it comes to financial decisions. You have the ability to take more risks with your investments. However, as you age, you must become more conservative with your contributions.

Advantages of paying off debt
The Fiscal Times noted paying off student loans can save you money - especially when factoring in the annual interest rate associated with your debt. In addition, your debt-to-income ratio and monthly income would both benefit from eliminating student debt.

How to determine where to put your money
Carrie Schwab-Pomerantz, president of the Charles Schwab Foundation and senior vice present of Charles Schwab and Co., Inc, insisted on the importance of retirement and previously accumulated financial obligations. Schwab-Pomerantz noted not all debt is detrimental, and some can be potentially tax deductible. Knowing what debt is essential to eliminate right away is important when deciding where to put your money.

Schwab-Pomerantz also suggested ensuring that you continue contributing the monthly minimum toward your student loans. Know how much you owe and keep track of interest rates. Starting off early will ultimately benefit you and your spendable salary.

Setting up automatic payments toward debt, transfers to savings and contributions to your 401(k) can help you stay on top of all financial endeavors on a regular basis.
Both your future and past debts are important to balance. While you are young, divide your money among both priorities as long as you can. 

For more information about smart ways to manage your finances, contact Landmark Bank.

Investment products and services are not FDIC insured, not insured by any federal government agency, not a deposit or bank obligation, not financial institution guaranteed, subject to investment risk, including potential principal loss.

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