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Interest on student loans is suspended: here’s how to use cash

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With closings and cancellations occurring in the United States this week in response to the spread of coronavirus, many Americans are likely to face financial charges in the near future as their incomes decline.

In an effort to ease this burden, President Donald Trump announced on Friday at a press conference that interest on federal student loan payments would be suspended “until further notice” as the United States deals with the current coronavirus crisis.

Trump also declared a national emergency during the press conference, freeing up federal dollars to help crack down on COVID-19. The disruption of interests is one of the many efforts the Trump administration is making to avoid a total economic crisis for Americans, and details of how this program will actually work have yet to be disclosed.

If your income is stable and the interest break will mean a little extra money in your bank account, there are a few ways you can use it to give your future car a financial boost.

Build your emergency savings

We don’t know how long this crisis will last or what its effects will be along the way, so do yourself a favor and inject as much money into your emergency savings fund as possible (and keep that money in a high-yield savings account so it grows without no effort on your part).

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Financial planner Natalie Taylor tells Business Insider: “Use those extra dollars to increase your emergency fund first, unless you have already saved three to six months of income. The extra money can help you get through a drop. temporary income, a potential immediate gain in healthcare costs and give you a little more peace of mind and flexibility. “

Pay off high interest debt

While you’re not paying interest on student loans, why not pay off any high-interest debt that weighs you down? They are the credit cards and all the personal loans you are working on to get out from underneath. “Prioritize debt with the highest interest rate first,” says Taylor.

Save for retirement

You might also consider depositing that extra money into your IRA or 401 (k) account – simply increase your contribution from the paycheck or the amount you automatically transfer every month.

While it may not seem like it is now the right time to inject money into retirement accounts. The decline in the market means that the shares are essentially “for sale”, so you are buying low and you will likely see a decent payoff in the future when the market picks up.

Go ahead with student loans

If you simply prefer to be done with your student loan debt, you could continue paying the same amount for your loans every month and move on. You will shorten the repayment term of the loans and save money on interest.

Whatever you do with your extra money, make sure it’s a smart choice that will help you stay afloat now or thrive in the future.

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