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Q&A: I Want to Travel Before Starting a Career, But What About my Student Loans?

Q: I am about to start paying off my $30,000 of student loan debt and am wondering how to approach this. Should I go with the most aggressive [repayment plan] or not? I am a waitress, so I never know what my income is going to be. I do have about $3,000 saved, own a house that I rent out, and have two mutual funds. My student loans and the house are my only debt.

I also want to have enough money saved to live for six months while I go travel and do volunteer work before I start a “real” career? Is that a bad move while I’m facing this student debt? — Annie

A: With your goal to do some extended travel before starting a new career, I would be conservative about repaying your student loans and start funneling more money into savings for travel and the unexpected.

Some people will say that nobody should postpone working to travel for six months with those student loans – that it’s irresponsible. And there is some truth to this point of view. The cost – in additional interest and lost earnings – will add up.

I think that postponing work to travel when you’re in student debt is irresponsible if you don’t have a plan. For example, it would not be wise to simply put loans in forbearance and not pay them for six months without considering the consequences.

But life is about more dollars and cents. If you are fortunate enough to be able to swing some extended travel without creating a major financial setback (for example: adding credit card debt to your student loans), I say go for it. One of my biggest regrets is that I couldn’t travel more during my 20s because of the stupid financial decisions I made early on. Managing your money well is about spending with intention.

If your student loans offer different repayment plans, I would choose either an income-based repayment plan or a longer term (20 or 30 years) for now. This will give you a smaller monthly payment so you can save more for your trip. Then, when you start your career and get settled, you should change to a more aggressive plan as soon as possible.

As you plan for your six months of travel, remember that not only will you need cash for the travel and living expenses, you’ll need to cover your student loan payments during that time and be prepared for any emergencies that come up. For example, what happens if you lose a tenant in the house you own – or it suddenly needs a major repair? Will you be able to cover those expenses without incurring new debt?

Finally, if you’re able to set aside enough savings each month and you want to make more aggressive payments on your student loans, I’d recommend a split approach:

  1. Take any money you have comfortably left over at the end of each month.
  2. Decide how much you need to save to reach your savings goal(s).
  3. Use the remainder to make an extra student loan payment.
  4. Once you’re comfortable with the amounts, make it automatic.

What do you think? What advice would you give Annie? Did you travel or take time off from work despite student loans? How’d you swing it?

About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. I’m confused by the premise that traveling should be done before starting a “real” career, and that waitressing is sufficient for saving up money for both paying off loans and 6 months of non-employment. Does waitressing pay more than the “real” career? Why not jump into the real career while saving up for the debt and travel? I would think that a career you can delay is one you can also take time off from.

  2. Why not travel and work? I’ve got a few friends who have lived in farflung countries around the works, teaching english… That way you’re still making money and debt progress, or at least breaking even. … I hope that, like when you were planning to go on your travelling, you will have a good plan in place for your rental property… How will you do it? I do have a condo / mortgage, and great established career… if only I could leave for 6 months or a year, and be guaranteed the same job when I get back!

    • gradstudent says:

      I agree! If you wants to travel/volunteer, make sure it pays in the end. Whether the program provides you with housing and/or a stipend, or better yet a job with wages! If you do a program that provides you with all that in 6 months, do it. If you just want to travel and bum it for a while, cut down the time frame and make it a seasonal trip (ie., summer).

  3. (woops that should be the word ‘world’… Silly autocorrect!)

  4. Really appreciated this article!

    My husband and I have, what is in our opinion, a modest amount of student loan debt between us- about $20,000 total. We are both fairly settled into our careers, but want to do a bit of traveling before having a baby. At the same time, we both felt a substantial amount of guilt when we put down $1,000 to visit family on the other side of the country this spring. As we were booking plane tickets, we both wondered how we could NOT putting that kind of cash toward repaying our debt.

    In the end, we justified the cost due to the fact that our good health is not an infinite resource for us to simply count on 5 or 10 years from now. For us, continuing to pay our monthly payments on schedule is justifiable if it means we don’t look back on our lives with regrets about things we should have done.

    I really do think this is a crisis for our generation. We’re starting out life with entry-level positions, but the difference between us and our parents or grandparents is that most of us are shouldering this incredible amount of debt before we even get started. How can we justify such “frivolous” expenses when we already owe so much money to begin with?

    • David E. Weliver says:

      Thanks for the thoughts, K. I mentioned that I regretted not being able to travel more in my 20s, and you remind me of something else that I’ve learned — I have never ever regretted spending money on experiences like travel to new places or to be with good friends or loved ones. It’s not a license to go crazy, but certainly having youth, health, and the opportunity to create new memories are good reasons to do something — even if it means postponing saving/debt repayment a bit.

      • Interesting. I have a slightly different opinion than most of the posters so far. I think considering how much time to travel is important and finding a balance without taking on undue risk or additional debt. However, I fully support David’s mindset that as long as you make a plan it could make sense. I think traveling before you are in a permanent career is much easier than taking time off once you start a career. I myself lived and volunteered in Bolivia for a month after graduation (which is actually really cheap- there could be a whole separate post about how to travel on a budget) and I will never regret it. I wonder how many of the posters who suggest avoiding travel ever took the opportunity to look into it and do it. I don’t know anyone that has ever regretted making that choice, and I do know many that still have significant student loan debt but are very responsible with their finances. I say – Make a plan and go for it!

  5. No matter what, Annie, do NOT pass up the opportunity to travel. It sounds like you already are really responsible with and aware of your finances, which puts you way ahead of the game. I think David’s advice is great. Keep saving up money, budget lots, and you’re golden. Or, as some of the other commenters suggested, look for volunteering opportunities that provide housing. I’m volunteering in Nicaragua right now, and though my organization doesn’t provide housing, I know of some that do.

    On the other hand, have you considered trying to earn money while you’re traveling? Have you looked into seasonal work in fun places (mountains, beach, etc), or teaching abroad? I’ve done both and would be happy to answer any questions you have. Traveling and then getting a grownup job isn’t the only option!

    Happy travels!